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!