Tag Archives: Hyundai

3 Tips for Improving Customer Loyalty

In 2008-09, during the height of the Great Recession – a time when the U.S. economy was in a meltdown and every auto manufacturer was seeing sales plummet – Hyundai Motors increased its market share by a remarkable 40%.

Understanding how Hyundai did it offers a valuable lesson to any company that’s trying to navigate a period of consumer crisis. Here’s how the story goes:

In October 2008, Wall Street and the banking sector began to implode, car sales fell precipitously and Hyundai sought an answer to a question that was vexing most auto industry executives during that dark time: Why weren’t people buying cars? Why weren’t they coming into showrooms? Why weren’t traditional car buying incentives (rebates and financing deals) – which were always effective in past economic slumps – driving foot traffic into the dealers?

To answer these questions, Hyundai executives did something extraordinary. They talked to their customers. Through those conversations, Hyundai was able to put its finger on exactly what was going on in consumers’ heads.

What Hyundai executives came to realize is that – even in the depths of a financial crisis – plenty of consumers were still interested in buying cars, and plenty of consumers still had the money to buy cars. But people were staying away from the dealer showrooms because they were afraid.

They were afraid that they’d buy the car, get laid off shortly thereafter and be saddled with car payments they couldn’t afford. (Remember, at this time in the U.S., the economy was shedding hundreds of thousands of jobs each month.)

With the benefit of hindsight, the fear might sound like common sense. Back then, however, the realization was an “Aha!” moment for executives, and it triggered an entirely new line of thinking at Hyundai around how to arrest, if not reverse, the sales decline.

The company shifted its focus from sales incentives to fear mitigation and tried to figure out how to eliminate (or at least alleviate) the emotionally charged worries that were keeping consumers away.

The answer lay in an entirely new offering that Hyundai rolled out in January 2009 and dubbed the “Job Loss Protection Program.” It was a guarantee whereby the automaker basically said to consumers: If you buy a car from us, and within one year you are laid off (for any reason at all), just bring the vehicle back and – no questions asked – we’ll forgive all remaining payments on the car.

This single tweak to their customer experience was a game changer. With the fear of job loss impacts removed from the purchase decision, consumers flocked to Hyundai dealers, boosting sales by double-digits, increasing market share by 40% and elevating the brand’s prominence in the marketplace to levels never before seen.

Hyundai weathered the Great Recession better than many other automakers. The approach the company used to accomplish that feat has clear relevance now, as both B2C and B2B companies navigate an even bigger consumer crisis triggered by the COVID-19 pandemic. To emulate Hyundai’s approach — so that you better engage your target market, as well as strengthen loyalty with existing customers — follow this three-part formula:

1. Look at the world from the customer’s perspective.

This is, of course, the golden rule of customer experience design.  ts importance, however, is accentuated during challenging times, when customers are thinking and feeling in a way that’s very different from normal. Understanding those dynamics is critical to adjust your customer experience so it resonates even more strongly with your target clientele.

Doing this effectively requires truly immersing yourself in the customer’s perspective, which is not something that can be achieved solely through dry research surveys and satisfaction studies. In times of crisis, teasing out what’s on your customer’s mind requires getting close to them (physically or virtually), stepping into their shoes and seeing the world through their eyes.

Hyundai accomplished this by having in-depth conversations with sales prospects and customers. Other avenues for immersing yourself in the customer perspective include consulting with front-line employees (as they can tell you what they’re hearing from customers), as well as actually observing customers as they interact with your business (to spot existing pain points or new ways to better serve them). All of these insight-gathering techniques help reveal those not-yet-obvious consumer needs that fuel customer experience innovation.

See also: The Messaging Battle on COVID-19: Are Insurers Losing?  

2. Pay attention to emotional needs, not just rational ones.

In the two-year life of the Hyundai Job Loss Protection Program, only 350 cars were returned to the company – a minuscule percentage of overall sales, and a statistic that belies the impact the program had on the automaker’s brand recognition and business success.

The fact that so few cars were returned under the program, despite its tremendous popularity, suggests that consumers’ perceived risk of job loss (and the resulting impact on one’s ability to make car payments) was much greater than the actual risk of that outcome. What that really means is that the true value of the Protection Program was in its ability to satisfy consumers’ emotional needs, as opposed to rational ones.

That doesn’t make it any less of a beautiful solution to what consumers clearly viewed as a real problem. Indeed, the program underscores the importance of not just thinking in terms of rational, logical requirements that customers might have during times of crisis. It’s equally important to satisfy their emotional requirements, which in the case of Hyundai amounted to the mitigation of fear. For other businesses (or other types of crises), those emotional considerations might be addressed, for example, by giving customers peace of mind, by making them feel like they’re part of a community or by instilling in them a sense of pride or confidence.

Whatever the tactics, the key point is that in a crisis (as we’re experiencing with the COVID-19 pandemic), people are in a vulnerable, emotionally charged state. While creating emotionally resonant customer experiences is important at any time, it’s even more vital during difficult times, and presents a unique opportunity to create an indelible, positive impression on the people you serve.

3. Advocate for your customer in tangible ways.

Being an advocate for your customer means putting their interests ahead of yours. Importantly, it’s not about good annual report copy, website content or an advertising campaign that touts “putting your customers first.” It’s about showing customers that this company’s got your back, that we’re in your corner. It’s rare that people see companies do this, so, when it does happen, it creates a memorable peak in the customer experience that helps cultivate loyalty.

The impact of customer advocacy, however, is amplified during crises because of the vulnerable position in which many of your customers will find themselves. When you’re in a stressful situation, when you’re in a pit of despair due to tough circumstances, if someone extends a hand to help you get out of that quandary, it’s an engaging gesture for which you’ll be eternally grateful. That’s the power of advocacy in forging new customer relationships, as well as cementing existing ones.

The Hyundai Job Loss Protection Program transferred risk from the customer to the company. It was a tangible demonstration of advocacy by the automaker – a gesture of support and goodwill, even if it was grounded in a very business-focused desire to get consumers back into the showrooms. (No apologies for that are necessary, because the fact is, over the long-term, customer advocacy is simply good for business.)

In the current COVID-19 pandemic, you can spot those organizations that are employing Hyundai-like tactics. Instead of responding to the crisis by invoking platitudes in one of those “we’re here for you” broadcast e-mails, the smart organizations are being thoughtful. They’re thinking carefully about what people are going through, and they are making tangible changes to their customer experience as a result. Examples include:

  • Australian supermarket giant Woolworth’s, which in mid-March was among the first retail stores to establish dedicated shopping times for elderly and disabled customers. Their move was in response to panic buying by the general public, which left vulnerable populations struggling to get their basic necessities. Woolworth’s made it easier for them to do so.
  • American Family and Allstate insurance, which, within hours of one another, were the first U.S. auto insurers to announce they’d be refunding a portion of their policyholders’ insurance premiums. Both insurers noted that people were driving far less (due to stay-at-home orders), and this was a way to help ease some of the financial strain that their customers were experiencing.
  • Scholastic, which recognized the difficult task that teachers, parents and children faced as they moved to remote schooling. In response, the company curated an online library of virtual lesson plans to help instructors and caregivers minimize the disruption to kids’ education.
  • U-Haul, which saw an opportunity to help scores of college students who, on short notice, were instructed to vacate their dormitories as schools shut down to prevent the spread of COVID-19. The moving and storage company offered any college student in the U.S. and Canada 30 days of free storage while they figured out what to do with their belongings.

These are all examples of companies that carefully considered how the landscape in which they operated had changed, and how the lives of people in their communities had been altered. Were these firms being purely altruistic? Perhaps not, but that doesn’t diminish the significance of their actions.

These companies are, after all, for-profit entities. It’s okay if they aspire to earn a better brand reputation. It’s okay if they hope to attract some new customers via their actions. The point is, they’re doing it in a noble way, a way that genuinely aids people in the short term, even while potentially helping the company in the long term.

Their actions were guided not by what was legally required, not by what a regulator mandated and not even by what many of their customers (or non-customers) may have reasonably expected. Their actions were guided by what was fair, what was right and what served the best interests of consumers.

See also: COVID-19: Stark Choices Amid Structural Change

Critics might note that some of these firms’ customer experience enhancements were quickly copied by competitors. That’s true, but there is a first-mover advantage here. Those businesses that drive experience innovations (rather than follow them) tend to be viewed by consumers in a more positive light. (Hyundai’s 2009 Job Loss Protection Program was copied by other automakers within a few months, but none achieved the notoriety that Hyundai did.)

Furthermore, while a single, specific experience enhancement may be easy to copy, what’s much harder to replicate is the outside-in mode of thinking that customer experience leading firms possess. That’s where they derive long-term strategic advantage, because they’re the ones that are perpetually devising new and improved customer experiences that become a hallmark of their brand.

With every crisis comes opportunity. Not an opportunity to exploit a bad situation for business gain, but, rather, an opportunity to enrich the lives of those you serve by genuinely and selflessly helping them during a time of need. In a crisis, that’s how you cultivate customer loyalty, that’s how you generate positive word-of-mouth and that’s how you come out stronger on the other side.

The article was previously published here.

Keys to Loyalty for P&C Customers

In a rapidly changing industry, some P&C insurers are pulling ahead of their competitors by focusing on customer satisfaction and retention.

“The insurance industry as we know it is at the edge of a new business environment,” says  Michael Costonis , head of Accenture’s global insurance practice. “Breaking away from the pack and capturing new revenue opportunities requires a shift in business mindset – a shift from product-focused to customer-focused.”

Customers want extra benefits, and one way to provide them is to offer value-added services. Travel companies and other insurance branches are already exploring the benefits of value-added services for retaining customers, as  Jamie Biesiada  at Travel Weekly points out. Because P&C insurers have been slower to adopt this strategy, however, many opportunities for capitalizing on this strategy remain.

Here, we look at some of the most popular value-added services in P&C insurance, which of these services focus on building loyalty and how to create the right service offerings or packages to encourage your customers to stay with your company in the long term.

Value-Added Services: The State of the Industry

For many years, P&C insurers have struggled with the challenge of selling a product that is substantially similar to their competitors’ products. “Because customers don’t discern much difference between insurers, companies end up competing largely on price,” write Bain & Co. partners Henrik Naujoks, Harshveer Singh and Darci Darnell . A downward spiral occurs, in which costs and profits are cut and customers jump ship the moment they see the same coverage for a few dollars less.

See also: How to Build Customer Loyalty in Insurance  

When insurers compete on price, customers do what Brandon Carter at Access calls the services shuffle: quitting or threatening to quit their insurance providers to access the same price-lean deals that new customers receive. “My goal is to pay less in a system that actually punishes people for being loyal customers,” Carter explains. Focusing on cost decimates loyalty. Focusing on value can boost it.

Yet insurance companies aren’t making value-added services their first choice when it comes to customer retention  Tom Super, director of the P&C insurance practice at J.D. Power, adds that many P&C insurers are turning to digital tools to court customers, particularly in the auto insurance business.

But digital technology is only a tool. The insurers that will stay ahead of their competitors in the race for customer retention and loyalty are the ones that best leverage that tool to provide the value customers want, says Mikaela Parrick  at Brown & Joseph.

Which Value-Added Services Boost Customer Loyalty?

Value-added services provide an extra benefit that enhances the core product or service. This additional service may be offered at little or no cost for the customer, yet it may make both the customer’s and the insurer’s work easier.

Connecting experience-based services to the product and brand can be a powerful way to encourage loyalty, adds Roman Martynenko , the founder and global executive vice president at Astound Commerce. While this approach is most commonly seen in retail, P&C insurers can adapt it to their needs. A top-of-the-line mobile app or a personalized starter kit featuring smart tools for each customer’s home can make customers feel like they’re part of a family.

Unique, innovative or specially tailored value-added services can also help encourage loyalty and boost customer interest by becoming a cornerstone of an insurance company’s brand.

Value-added services don’t have to be expensive or complex, suggests Mike McGee of Investment Insurance Consultants. For instance, a disaster preparation email sent at the start of tornado or hurricane season can help customers take loss-prevention steps, address safety and feel supported by their insurer, at very little cost to the insurance company.

Partnering with other companies can boost loyalty for both organizations while providing value-added services that attract customers, digital transformation executive Fuad Butt says on the IBM insurance industry blog. For instance, working with telecommunications providers to offer reduced-rate packages can help both companies succeed.

A highly specific partnership that uses existing technology to add value for both customers and companies is the recently announced alliance between Hyundai Motor America and data analytics firm Verisk.

“Hyundai customers will have access to their portable Verisk driving score, which can lead to discount offers on UBI programs and support driver feedback that helps improve their driving,” says  Manish Mehrotra , director of digital business planning and connected operations for Hyundai Motor America. A similar arrangement through an auto insurer can help both insurers and drivers have access to more information to improve safety and make better choices.

Choosing and Implementing Value-Added Services in P&C Insurance

The changing landscape of insurance offers one significant advantage to companies seeking to improve their value-added services: access to data about why customers remain loyal.

“The connections that enable excellent customer experiences aren’t always easy to make,” says Chris Hall of Pitney-Bowes. Siloing fragments customer information, leaving staff without a complete picture of each customer. This fragmentation makes it difficult to determine which value-added services will actually pique customers’ interest.

If data access is an issue, start by de-siloing information to get a better sense of each customer. Then, find the services that best support your organization’s key differences from your competitors.

Kirk Ford , compliance and T&C manager at RWA Business, suggests first considering how you’d like your clients and customers to perceive your brand in relation to competitors. Balance your differences against your similarities so that customers see they’ll receive all the services they need, but with the value-added extras that make their relationship with this particular insurance company meaningful.

See also: The Future of P&C Distribution  

However your insurance organization chooses to add value, resist the urge to announce it to customers merely as being higher-quality. “It doesn’t matter whether or not a company can pull off quality or exceptional service because quality and customer service rarely are differentiating strategies,” adds  Mac McIntire , president of the Innovative Management Group.

Instead,  Ryan Hanley  formerly of Agency Nation, now at Bold Penguin, recommends finding ways your value-added services can improve customer lives. When customers feel a sense of shared values, they’re more likely to stick with their insurance company, rather than risk their luck with a company that may not share those values—even if the prices are lower.

One way to connect with customer values is to change your company’s language surrounding insurance. “If you can sell insurance and not talk about insurance, it’s a win-win,” says  Rusty Sproat , founder of Figo Pet Insurance. He notes that many customers find insurance language obscure and frustrating. That’s why Sproat’s company focuses on providing quality information on pet care and health, switching the conversation to insurance only when necessary to complete a transaction.

Finally, don’t shy away from technology—but use it as a tool rather than a cure-all. Smart home sensors, telemetrics for vehicles and other tech tools are increasingly common in U.S. households, plus they can greatly improve the customer experience, says  Ramaswamy Tanjore  at Mindtree. Consider the best ways to manage telemetric or other data, as well as how to position these tools to best showcase their value to loyal customers.

Work Comp: Simpler Can Be More Effective

I was only home from WCRI’s annual conference a little more than a day when I saw a reminder that “simpler” systems often offer more effective solutions than more complex ones that are supposed to make our lives better. It was a lesson that overlays easily on the world of work comp with its all-too-complex and rigid structures.

My wife and I were returning home from breakfast at a local restaurant Sunday morning when we stopped by a grocery store for a quick errand. We had taken my wife’s car, and as we stopped she took the opportunity to try to reset the auto’s clock, because Daylight Savings Time had “sprung us forward” an hour the night before. My wife drives a 2013 Mercedes Benz. It is by no means a top-of-the-line Mercedes, but it still has a plethora of electronic systems and services customary in a luxury car of this day. The car must be stationary to access the clock controls and other system features, so this was a good time to tackle this task.

I watched as she scrolled through the menus on her digital display behind the steering wheel, looking for the correct one. After a few moments, she remembered that her previous car, also a Mercedes, controlled the clock via the main instrument display gauge. The clock control on this Mercedes, on the other hand, was to be found via a large knob on the center console. That knob controls a variety of commands on the audio and information center display to the right of the instrument panel. She decided very quickly that trying to find the clock control was a hassle and that she would just “get it later.”

Juxtapose this scenario with my car, a 2009 Hyundai Santa Fe. To reset the clock for springtime DST on my unassumingly low-tech ride I simply need to press a button. Once.

The clock in my car, near the top center of the dashboard, has three buttons next to it. One resets the clock to the next increment hour. The other two handle both hours and minutes on the clock. Pushing either adjusts the appropriate time segment with ease. Apparently, the Koreans who engineered my car, and the Alabamians who built it, are not as concerned with my safety as those overprotective Germans. I can change the clock whether the car is moving or not. I could be careening down the interstate at 90mph, cellphone wedged between my ear and my shoulder (no Bluetooth) and holding a doughnut firmly clenched in my left hand. A quick reach and push of a simple button still accomplishes on my humble Hyundai what others can only dream of — an automobile clock set at the correct time.

Admittedly, fall is more difficult, as I have to hold that button a few seconds while it scrolls forward 11 digits to actually set the clock back one hour. No AM or PM in my car, baby. The Koreans know I can tell the difference.

Metaphorically, the workers’ compensation industry, born of the grand bargain in 1911, started life as a Hyundai but has since evolved into a Mercedes. Nothing in comp is simple anymore. At the Workers’ Compensation Research Institute Annual Conference, attendees were treated to a myriad of statistics and analysis related to a variety of topics in workers’ comp. We learned that despite complex legislative efforts to control outrageous abuses by physicians who dispensed their own drugs, doctors in Illinois simply changed the dosages to bypass the law. We learned that states that set low fee schedules see increased costs because of more expensive office visit codes as well as an increase in doctors office visits. There were many similar topics and discussions, from California’s independent medical review (IMR) process to Florida’s exclusive remedy challenges. The entire conference highlighted the complexities of managing a process-intensive system that still at times manages to lose people through a somewhat tangled safety net.

It is another perfect example of how complexity and process can eventually stumble and collapse under their own weight, and every attempt to fix the previous crisis simply adds more layers of complication, furthering the potential for failure and disappointment.

Sometimes, simple is better. Pay doctors a fair wage, and reward the ones who perform the best by using them more often. This would stop much of the gamesmanship we see in the pricing of medical services today. Improve and facilitate communications between the employer and the injured worker. Better communication between these primary parties can reduce lost time and litigation. Train adjusters well, keep their workload reasonable and let them actually manage a claim. This would minimize dependency on a plethora of specialty firms, each performing specific tasks that empowered adjusters of yore used to handle. Streamline regulation, making the care of the injured the most important task rather than focusing on useless and resource-sucking paperwork. A simpler, focused effort in these areas would fairly quickly see improved results for all the players in comp that really matter.

I can speak personally of the benefits of simplification. The car I owned prior to my Hyundai was a BMW Z4 Roadster, with sequential manual gearbox transmission. While it was an incredibly fun car to drive, I never could change the stupid clock. Setting it in that car was not dissimilar to following a pre-flight checklist for the space shuttle. It was much easier to leave it alone and let it only be right for 1/2 of the year.

But while getting it right half the time may be acceptable for the clock in your car, it is an abysmal concept where injured human beings are concerned.