Customer Driven Innovation

Customer Driven Innovation

Today the British PM, David Cameron, is holding a summit with the heads of many of British motor insurers to address the spiralling costs on insurance premiums, driven mainly by the compensation culture that has grown rapidly over the past decade making Britain the Whiplash Capital of Europe.

With the growth of “no win, no fees” lawyers forcing up the daily claims to more than 1,500 a day, the premiums have shot up on average by some £90 per driver. Whether the Government can force enough change to halt the problem quickly seems a distant reality – but it’s good that they are trying.

What caught my eye is how the Insurers themselves are reacting to this pressure. Cynics may suggest that as it may hurt their revenue targets, they will do nothing of consequence. That’s not true of The Co-operative Insurance.

True innovation these days must be completed from the customer’s point of view rather than that of the company per se. Companies that understand the issues their customers face and change their service offer to help meet those needs will reap the biggest reward – that of differentiation and better still, customer preference . With customer preference – based on a great experience – comes advocacy and positive word of mouth. Word of Mouth is the most sought after of all marketing communications today.

The Co-operative insurance deserves this positive word of mouth.

Young Drivers are the hardest hit by these rising insurance premiums. It’s quite normal for young drivers (17-23) to pay three times more for their insurance to drive a car, than the car actually costs! Many young or first time drivers can be charged £3,000 plus for insurance – without having had an accident!

The Co-op insurance has recognised the inequality of this situation by developing a special package for young drivers that measures how the driver is actually driving – driving safely is measureable – and then rewards the driver by reducing their premiums. This “Smartbox” is installed in the car and, like satnav, records how the car is driven and feeds back to the Coop people. They then update the online dashboard to show the driver how they are driving too. Good, safe, consistent driving is then rewarded. And the premiums come down.

Customer driven innovation comes from listening to customers and doing something about it. Sounds simple, but it usually involves much investment in time, energy and focus – traits that are a scarce resource these days in many companies. However the upside in the relationships those customers have with those companies that clearly recognise their needs and not only listen, but do something about it, are enormous.

When my son starts thinking of driving in a couple of years, the Co-operative Insurance should be a market leader in the UK for Young Driver Insurance. Quite right!

Marketing Small Businesses

Marketing Small Businesses

Had a very productive session with a small business this week, when bringing the company together around a new brand proposition. It’s interesting to note that if all the changes that are affecting marketing & branding in the 21st Century is hard to grasp for some big multinationals, it’s pretty mindboggling for those SME’s who represent the engine of most economies.

As people, the leadership of these small companies are aware of the big marketing tools like Advertising and Social Media but know that to fully engage with them is costly, confusing and time consuming – in many ways they are scared off. But given that most are B2B organisations, the fundaments are actually relevant to them.

As a service focussed company, there are two important shifts that are usually needed to help bring  a marketing approach  that can help them grow.

First, a deeper understanding of their customers’ needs (current and future).

Second, to reframe their service offer, less as a series of products, but as a way of helping meet those customer needs.

Making these 2 shifts will allow the company to tell a new brand story from an outside in point of view. These new stories will make future growth more achievable. Most small businesses are constantly trying to sell. Often, they are all consumed in the process of selling and doing, they spend all their time in the business they’ve always done. There’s no time left to think about where their business could go…let alone how to get there. By chasing the sell, they can end up differentiating more and more on price and price alone. This means their offer is treated as a transaction rather than a service

Making these 2 shifts, will allow their service to be more valued – over and above the transactional price negotiation. While there will be a fair bit of change in getting to understand their customers and amending their dialogue and future conversations with these customers, the cost will be mostly an investment in time. Time with their own people. It will also involve time for deeper conversations with their clients.

Both these “time investments” will be rewarding. There will be no need to have big, new, costly campaigns in marketing communications. It will need focus around clarifying the brand story and a way of sharing the customer insights amongst the whole company, so that the new story is told consistently and coherently by everyone. But the service will become more valued as customers will feel more engaged. And they will value that engagement over and above the price they may receive from competitors who offer a similar service. That customer-centric approach, when delivered, will also cause these customers to become advocates of the company and generate a better word of mouth for them too.

And positive word of mouth is the most valuable of all marketing communication there is today.