Tag Archives: Maddock Douglas

The Missing Piece for Customer Experience

Many people in the insurance industry fantasize about creating a customer experience that rivals those of other categories, like retail, or that of specific companies, like Zappos. But some may say the fantasy is just that. After all, insurance and shoes are not the same when it comes to demand, so we need to set our expectations lower. It’s a valid point of view.

However, many things have been achieved in the world that, at one point, were thought of as just fantasy. Breaking the four-minute mile, achieved by Roger Bannister in the 1950s, is a favorite example. Bannister, who passed earlier this year, always will be remembered for what he taught the business world. At Maddock Douglas, we have a phrase that sums up this lesson: “Impossible is only an opinion.”

Bannister took impossible out of the equation by mentally visualizing that a four-minute mile was possible. This led to a series of behaviors and training that ultimately got him there. Then, once he broke through, many others did, too. In sports, most would agree that attitude is the single most important key to success — it was the missing piece.

So how does his breakthrough relate to the fantasy of a world-class customer experience within insurance? We need to first let go of the barrier of “impossible.” That will give us the open mind to look at what’s truly happening within the customer experience in another way.

A helpful framework for looking at the customer experience is the Experience Cycle, developed by Dubberly & Evenson in 2008. In this framework, a customer’s interaction with a product or service is broken down into five phases: Connect & Attract, Orient, Transact, Extend & Retain and Advocate.

See also: What Really Matters in Customer Experience  

Let’s look again at the contrast between products like shoes and products like insurance. The biggest difference between the two is demand: For the former, it’s already there; for the latter, there’s a need, but demand must be cultivated.

Further, you can’t pay for insurance with just money like you can with shoes. You must also pay for it with two other currencies: information and time. Information is needed to assess the risk, and, depending on what kind of insurance is being purchased, that can be quite extensive (e.g., personal financial data, credit data, health data). Then, if that information is not at the ready, it takes time to get it.

That’s our missing piece.

I am not suggesting eliminating the need for data, because we know what happens when we take that out of the equation. Prices go up. Many attempts have been made to offer higher-priced products that require little or no information, but uptake is generally not impressive. Rather, we need to help consumers understand why we need this information, help them get it efficiently and in a more pleasant way — and perhaps give them something more immediate in exchange for it (e.g., feeding it back in a helpful report about what it means to their insurance rates and how they can improve).

The part of the cycle that this activity falls under is Orient. The Orient phase is most often skipped completely by insurance companies, expecting people to go right from the Connect & Attract phase to the Transact phase. Then, when consumers are hit with all these requirements, they get turned off and maybe even bail out. This can happen in an online environment, for sure, and it can also happen in a face-to-face sales environment if the agent hasn’t set expectations correctly.

So in what ways might we fill in the missing piece? First, we must understand what questions must be answered in the consumer’s mind to get oriented and prepared for what happens next. These include:

  • Do I really need insurance?
  • If so, what kind?
  • How much do I need?
  • How are my costs determined? How much will it cost?
  • What does the process look like?
  • How much time and information do I really need to give?
  • How will you use my data? Will it be used against me now or down the road?

Next, we can take pages out of the lesson books of other categories. A few of my favorite examples of successful orientation are:

  1. Credit Karma: Here’s a service that not only aggregates your various credit reports but also breaks your score down into key behaviors that help people understand how to improve their score, and how it’s used by credit card companies and lenders.
  2. Domino’s Pizza: The tension of not knowing what’s happening with your order or when it will arrive can be maddening when you’re hungry. So Domino’s created the “where’s my pizza” function, enabling someone to see exactly when it’s being made, in the oven and in the car on the way. For users, knowing that they will have visibility into the process is very comforting.
  3. RealAge Test: This test, taken by millions of people, engages the user in a series of questions and instantly delivers back a “real age” based on health and risk factors. For example, your calendar age may be 40, but your “real age” could be 38. This is a socially engaging way to help orient people around the behaviors that lead to longevity and health, while also leading them to understand risk factors.

While the above are somewhat elaborate digital experiences, orientation can also happen with simple FAQs, videos, chat and many other easy mechanisms. This is an area to unleash your innovation team on for sure.

See also: 4 Insurers’ Great Customer Experiences  

The key is, we must fill in the missing piece. Orient is undernourished in the industry, and the uniqueness of the heavy data requirement means it needs even more love than if we were selling shoes. Proper orientation means the transaction has a much greater chance of happening.

When Customers Lie, We Learn

As the insurance industry pushes ahead into the next decade, adapting to change and, in some cases, leading change, those committed to the industry and its purpose face an underlying tension that they all wish would just go away. They wish the industry were not so hated by the public.

While “hate” is a strong word and potentially offensive, insurance definitely ranks toward the bottom relative to respect when compared with other industries, products and services.

In my personal quest to end this problem, I find that you can learn a lot by examining the worst of the possible behaviors—that is, insurance fraud.

Recently, my colleagues at Maddock Douglas and I engaged in some conversations with both LexisNexis and Swiss Re on this subject. Both organizations have some interesting lenses to look through. In fact, the three companies will be doing a webinar to share these views on Aug. 10.

See also: Happy Producers, Happy Customers  

First and foremost, it was surprising to hear how big the problem of fraud actually is. LexisNexis Risk Solutions, through a variety of sources, has reported that fraud costs the insurance industry more than $80 billion a year. There are many flavors of fraud, ranging from out-and-out intent to steal money from insurance companies all the way to “little white lies.” The ability to detect and size that behavior is very helpful in creating realistic expectations around costs and isolating areas for improvement.

I find the white lies more intriguing and potentially helpful in understanding the problem because they are more widespread and harder to detect. I suspect that some of that behavior stems from a lack of understanding about how insurance systems work, with consumers not necessarily realizing that “misbehaving” has a cost.

Swiss Re has some interesting insights about the behavior, as well. They’ve leveraged behavioral economics to learn that the context, order and style in which we ask basic underwriting questions can make a big difference in the truthfulness and accuracy of answers.

I believe there is yet another lens that we can put on this challenge: social norms. Insurance is a social construct; however, we treat it like a product. Social constructs—such as electricity, cable TV, public transportation, public parks, schools and community resources—are shared. The behavior of a few with respect to those shared constructs affects the many. It is the many who have responsibility for their preservation, especially when they start to break down.

However, that big picture is often lost after those social constructs age way past the people who invented them. So perhaps it’s time to reinject social norms into the insurance conversation, helping the public see how their behavior affects others.

Some great role models for this type of shift would be:

  • The Keep America Beautiful campaign from the 1970s
  • Mothers Against Drunk Driving
  • Quit-smoking campaigns

On the surface, it would seem like the common denominator is a giant advertising expenditure. While that may be true, there is another common denominator we can learn from—that is, a social label.

Keep America Beautiful, best known for the crying American Indian, is the campaign that also created the term “litterbug.” “Don’t be a litterbug.” Litterbugs are socially unacceptable. But, prior to the invention of that term, it was socially acceptable to dump litter at a traffic light out your car window.

Mothers Against Drunk Driving (M.A.D.D.) created the concept of the designated driver. The “DD” is a hero to those who like to have a good time but want to stay safe.

Quit-smoking campaigns created the concept of “secondhand smoke.” Yes, scientifically proven, but, more important, the concept brought into focus the innocent victims, often children or nonsmoking co-workers. The result was ordinances and family rules banning smoking in many locations.

Is there such a social label that can be created around “little white insurance lies”? The label could cast out the villains, glorify the heroes or spotlight a victim. My colleagues and I have done a little brainstorming on this subject, and there are some interesting ideas we will talk about during the webinar.

See also: How to Get Broader View of Customers  

The bigger question for the industry is whether this labeling is a job for a single brand or a coalition. In my opinion, either is possible with the right passion to make a difference.

While the past examples all had large ad expenditures behind them, they were all invented before the internet existed, when ad spending was the lever that brands and coalitions would pull to raise awareness. However, today we have unlimited access to technology and social connectivity.

Think about the success of the Ice Bucket Challenge. This social campaign raised $115 million for ALS research in just a few months. Why? It created millions of heroes. It let people, for a moment, feel what it was like to be a victim and then do something about it, either through raising awareness or raising money. Those who didn’t participate were, socially, some level of villain. After all, couldn’t you sacrifice your comfort for a few seconds, or kick in a few dollars, for a good cause?

Wow. Hmmm.

Do you have any thoughts about how we could create that sweet spot within insurance? If so, I would love to hear.

5 Critical Traits for an Adviser

After decades of experience working with and getting to know thousands of people whose job it is to give advice around insurance, investments and real estate, I’ve observed a few traits that I personally believe are critical to long-term relevance. Frankly, I also believe they will make certain advisers immune to the threat of their job being eaten by technology.

There is quite a bit of concern over robo advice threatening these livelihoods. We must consider that the underlying reason is a trust problem with those who make their living giving advice while at the same time selling products for a commission. But the underlying cause of mistrust may actually be the absence of one or more of the following five characteristics of advisers that matter more in the trust equation:

1. They seek to help their community first, then benefit from it later.

There’s a not-so-subtle distinction between people who join a community group because they want to network for business purposes and people who join because they are interested in helping advance the mission of that group. While oftentimes both motivations can exist at the same time, the real test would be to ask those people if they would have either joined or stayed with that group even if their prospecting need were not there.

While those inside the business may not see the distinction, others can see it a mile away. Trust erodes when intentions are not clear.

See also: 3 Major Areas of Opportunity  

2. They see work and life as inextricably intertwined and are in love with both.

Advisers who will stay relevant, who are “nondisruptable,” are people who always seems to be there for what’s most important, whether the market is crashing, an individual lost his/her job or someone’s kid or grandkid is in a little league game. From the outside, it may look like those advisers are either always working or never working. And the answer would be: yes, they are.

3. They keep score based on outcome versus income.

While earnings and sales numbers are important for a successful practice, putting numbers on the board is not what makes nondisruptable advisers sleep well at night. Rather, they create metrics of their own, consciously or unconsciously, counting things like how many people they have advised, how many thank you letters they receive, how many people they’ve helped employ or even how many hugs they have ever received from their clients. Counting these means they never need to count sheep.

4. They are described similarly by families, friends, clients and communities.

Nondisruptable advisers show one face to everyone. While they may have many interests, they bring their best to every situation and see the role of adviser as a calling and not just a career. Anyone can give advice from his/her own point of view. However, it takes care, skill and emotional intelligence to deliver advice that’s in someone else’s best interests.

The question remains as to whether these traits can be taught. Sure, someone could write a book or perhaps create a coaching program around them, but I’m not sure either would help. I suspect that people are either raised in such a way that these traits develop or they experience something dramatic that shifts their perspective quickly and forever changes their attitude.

5. They leave a mark that lives past them.

While this trait certainly isn’t realized until the adviser passes away or can no longer do his/her job, that individual’s ability to make an impact is unmistakable and therefore nondisruptable. You just know it when you see it.

See also: Insurance Coverage Porn  

This article was inspired by and is dedicated to my long-time friend Jane Lopp from Kalispell, Montana. Jane and I met at Prudential, where she built an impressive practice with an outstanding team, a supportive family and a community that felt her presence in countless ways. Nothing stopped Jane, including being confined to a wheelchair due to a muscle disease. Jane’s life was taken after a car accident on April 21 of this year, and, as her husband, Bob, noted, she was full of life and at the peak of her career.

If you know someone like Jane who embodies these five traits, please give them a hug. They deserve it.

Let’s Keep ‘Digital’ in Perspective

Call me old-fashioned, but I believe we have forgotten that technology is not a “what,” it’s a “how.” Technology is intoxicating, because it comes complete with millennial attraction, new vernacular, hip-looking office space and sometimes a lot of money. However, keep in mind that the cool new app, acronym or buzz phrase is only as valuable as your vision.

Innovation has so rapidly become the most urgent skill set to develop that many new innovation leaders are skipping over the basics and are thrust straight into the “tech” side of their industry. They are left thirsting for and examining every new technology and looking for a place to apply it. In fintech and insurtech, particularly, this list of technologies is long, as many startups jump on the bandwagon of opportunity. For the untrained eye, this can result in a lot of time and money spent on the wrong things.

Let’s get back to the how versus the what. “What” means the offering and experience you want to deliver. “How” enables that experience. When you are crystal clear about the what, it is much easier to find the technologies you need, and, more importantly, deploy them effectively.

See also: Do You Really Have a Digital Strategy?  

Becoming crystal clear on the “what” takes careful examination of the current offering, consumer feedback and trends shaping the future. These insights can be quantified so that you know which ones are the most important to focus on.

In insurance, for example, some might be focused on price comparison as the consumer need. While this was a strong need years ago, the market is now flooded with comparison sites. This is the reason why even the great and mighty Google couldn’t scale its first attempt.

Less obvious — but emerging — in our industry are the ways to make insurance more transparent. This can include everything from the decision process to approve an insurance application, all the way to rate-making and even company profitability. Insurance startup Lemonade has interesting approaches to satisfy this need, and the area of transparency is rich with opportunity. After all, it is the flip side of trust, and we know that the insurance industry is not trusted.

However, just because others are going in a specific direction does not mean it’s right for your company. It’s important to spend time thinking about your own true core competencies and then match them to unmet needs and emerging trends.

After six years working in innovation, I have seen that more companies need to spend time choosing the strongest insights that are a match for their power. Then they should hunt for startups and partners based on those insights. While on the surface this approach may appear to narrow the field of choice, it actually widens it because it will help to uncover the non-obvious companies that don’t list themselves as serving a particular industry, and are more clearly just about the “how” that you are looking for.

So, back to digital as a “how.” Yes, digital experience, digital interface, digital platform, digital communication, but no, not just plain digital.

If you need to kick that habit, imagine yourself managing dinosaurs in Fred Flintstone’s town of Bedrock. What would you do? You wouldn’t just focus on how cool dinosaurs are; you would  find the right dinosaurs that could work very hard behind the scenes to create the “what” that the customer expects.

See also: 5 Accelerating Trends in Digital Marketing  

Watching that show as a kid, I remember some small dinosaurs fit nicely under Wilma’s sink, eating scraps like a garbage disposal. Others were large, and used their mouths to haul rocks like a crane. Some flew with chairs tied to their backs to get people from place to place.

We just need to replace those dinosaurs with the modern digital technology, or whatever is next after that, keeping in mind what the consumer demands now and, more importantly, what they will be demanding in the future.

RIP to the Idea of ‘Sold, not Bought’

Let’s have a moment of silence for the “sold, not bought” paradigm. Before anyone gets panicky, we’re not laying agents to rest, but rather recognizing that sold, not bought is about a mindset that served our industry in the past and that holding on to it for too long is now hurting us.

It’s not about favoring a particular distribution method. Agents can live without this paradigm — and likely be better off for it.

Learning from other paradigms

If people in your company are still having arguments internally about this, let’s first look at what we can learn from other arguments that have died over time. These include:

  • “the Earth is flat;”
  • “the four-minute mile is impossible;”
  • “HIV is a death sentence;” and
  • “Pluto is a planet.”

What’s common about all these arguments? New capability. Somewhere along the line, a scientific breakthrough, a person with new knowledge or a separate discovery caused us to see the argument in a new way. Then we eventually agree on the new truth. It’s time to do the same for the sold, not bought paradigm.

What’s changed?

There is new capability in the hands of consumers that did not exist when the paradigm was created. The modern consumer has so much new capability that the term “prosumer” was invented by Alvin Toffler in his 1980 book “The Third Wave.”

A prosumer is a very active consumer who blurs the lines between professional and amateur and controls information flow, the experience and, even, the sale. Modern companies like Amazon, Apple and Google have done a great job, both leaning into this trend and shaping it.

See also: Paradigm Shift on Cyber Security

As an industry, we have convinced ourselves that nobody wakes up in the morning and wants to buy insurance unless someone makes her do it. This drove the sold, not bought paradigm. It had truth to it in the days when consumers did not have access to information like they do today. However, the prosumer found this concept disrespectful and, perhaps, even arrogant. Hanging onto this notion has caused the industry to lose focus on the end consumer and shift the focus to the agent as customer. We then end up with:

  • Complex products that please a few key sellers but damage the customer experience;
  • A heavy push in marketing strategies that result in expensive incentives and margin pressures; and
  • Compensation models that provide incentives for the wrong behavior and lead to onerous regulations, such as the DOL fiduciary rule.

Opportunity to relearn

There’s a lesson here, but we need to revisit the nature of demand. Economics lessons tell us that there are several nuanced styles of demand, dictated by the nature of a product.

It’s the manufacturer’s job to cultivate demand, manage demand or both. Historically, creating demand was in the hands of the agent and was fused with the sales process. Because of the prosumer’s new capability, the role of demand creation and the sale are now decoupled.

See also: Taking the ‘I’ Out of Insurance Distribution  

For those who think nobody wants life insurance, think again. While it isn’t as highly sought after as beer or shoes, the 2014 study by LIMRA and Maddock Douglas indicated there are almost 19 million “stuck shoppers” (people who intend to buy but the current experience causes them to get stuck along the way) for life insurance. In addition, if you talk to some of the new startups/disruptors in the insurance space, they believe insurance is a bought product, and it is simply their job to cultivate more demand and create a superior experience.

So if we replace the paradigm of “sold, not bought” with “bought, not sought,” we can put the responsibility back into the manufacturer’s hands to cultivate demand, deliver better on the experience and, most importantly, ask ourselves what role advice plays in the new world. Many are pointing to robots as the answer.

But can an industry so deeply rooted in social purpose really operate without humans helping humans? If not, we have an opportunity to reinvent the agent role in a profound way.