Customer experiences that matter
Stimmt.Blog

Last week I got a call from a market research firm. They asked me about our company accident insurance. In great detail, they wanted to know how satisfied I was overall (5 out of ten), how much I valued the friendliness of their back-office (5 out of 10), their call-center (5 out of 10) and their sales agents (don’t know, we have a broker).

I realized how little I was connected to that insurance company. Two days prior, my broker called me and asked whether another insurance company could prepare a quote for us. I said yes. Because I don’t care where we are insured as long as the services are the similar and the price is the same or lower.

Our accident insurance company is living on dangerous grounds. They are competing on price and features.

What if they would offer me some emotional attachment to them? Maybe a face to my administrative contact would do. Maybe just a service that automatically send out birthday wishes and an accident-free year to our employees. It doesn’t need much to differentiate on experience.

Of course, my accident insurance could also go the entire way and instead of provisioning the same customer satisfaction study every year, go out and try to really understand their customers. Maybe they could then offer me a package that integrates all business insurance. One single point of contact, a consolidated invoice payable according to our financial planning, an easy to use online interface and maybe send out little cards with their emergency number on it, so I don’t have to print them myself for our employees.

I don’t think I’d switch easily if they enabled good experiences for us – even if they’d higher the prices.

The day before yesterday I was having a beer with a friend and I was telling him this amazing story about this really cool experience. It wasn’t my experience. It was another friend of mine who told me the story the night before.

The no-hassle claim

It’s the story of a insurance claim for a stolen bicycle.

My friend had his bicycle stolen. This is annoying. Apart from having to buy a new bicycle, it is mainly the administrative hassle that normally makes such things awkward.

First, he called his insurance company to report the theft. The customer representative sent him an e-mail with a link. The link led to a page where it stated which bicycle was on the insurance’s record and asked whether this was correct. Clicking “yes”, a page listed three bicycles in the price range of the stolen one and the nearest bicycle shop to pick it up. There was also the option to have the amount transferred to the bank account on record.

That was it. My friend was really happy.

The power of smooth processes

He was telling me this story because I was stating how little loyalty I have towards my insurance companies. He said that since he had this experience, he would not easily switch his provider. Simply because knowing about the smooth process is very comforting. So for him, price is not the differentiator. Experience is.

Surprisingly, I couldn’t find this clear competitive advantage searching the product webpage. Maybe the process wasn’t designed outside in, but inside out. Maybe the insurance company found out that it’s just not worth the hassle to do a lot of research and administration. Maybe they don’t want to advertize their claims process to prevent fraud. What ever the reasoning behind it was: It’s a classic win-win situation based on providing the basis for good experiences.

I at least know now where to switch to.

Did you also have insurance experiences that you can’t wait to talk about? Looking forward to your comments.

Some posts ago I mentioned McKinsey’s study on the customer decision journey. Besides the fact that the journey is not as company focussed as a classic sales funnel proposes, they discovered another interesting fact: Loyalty comes in different shades. In this recent paper they mention active loyalists and passive loyalists. In their 2002 article “Customer retention is not enough” they mention 3 types: Emotive loyalists, Inertial loyalists and Deliberative Loyalists.

Loyalty comes in many shades.

Emotive loyalists are the clients who love your company and the products you offer. They tell their friends about you, they recommend you to others. A friend converted to the iPhone recently and told me: “There is a life before the iPhone and there is a life with the iPhone”. He’s an active loyalist.

Inertial loyalists are customers that stay with your company simply because they don’t care or because they fear the switching costs. I’m one of those for my household insurance. To me, they are all the same, so why bother switching?

Deliberative loyalists frequently reassess purchase decisions and reaffirm their choice by rational criteria. At Stimmt, we are frequently reassessing our SAAS project management tool. So far, nothing better has emerged for our clearly defined needs, so we stay customers.

According to McKinsey, in life insurance, 41% are deliberative loyalists, 31% are inertial loyalists and 26% are emotive loyalists.

A customer centric strategy for life insurance therefore is: Increase the number of emotive loyalists and get as many of the deliberative and inertial loyalists from your competitors to switch. Compelling especially in saturated markets in Europe and the US.

So what makes emotive loyalists? Providing for processes and interactions that meet and exceed expectations.

What makes inertial loyalists switch? Making switching easy (the processes are usable and pleasurable) and making it desirable to switch (by offering truly desirable components in your services and products that stand out).

And what makes deliberative loyalists switch? Offering a better deal that stands out.

Do you know what makes your customers loyal?

Now all of this is hard to find out in the ivory tower of corporate head quarter. Do you know what really matters to your customers? What is more important: Not having to wait longer than 2 minutes on hold when calling the call center or an easy to understand invoice? Competent advice in one-on-one meeting with a client advisor or nicely layed out brochures? The new special product feature that nobody else can offer or a hassle free downgrade process? All of it? What if you need to prioritize? And what exactly means “easy to understand invoice”? Certainly, there are also different priorities for different user groups. Phew!

The solution: Get out and find out.

Slide from Stimmt’s Customer Experience presentation

It’s best to start by understanding your customers through qualitative research maybe validated through quantitative surveys. This will let you segment your customers by needs. Mix this with profitability and you know exactly who to target how. Then configure your offering by reassembling not only products and services but also processes and maybe even your recruiting and incentive philosophies, go on to orchestrate your touchpoints to create a consistent experience throughout your organization. And then design your touchpoints to meet and exceed your customers expectations.

Being customer centered is more than a promise in the annual report. Being customer centered is focussing your company around your customers. Because they pay your bills. It’s safer if they do so with joy.

A new McKinsey study of 20′000 consumers showed: The customer purchase decision process is not a funnel approach. It is a multi-facetted journey full of irrationality and emotion, taking place on a multitude of touch points. Some of them include the companies directly, some of them don’t.

Jeffrey Rayport calls this new sort of customers “Customers 3.0″. Customers that are in power and dictate how they will purchase and consume products and services. They are well informed not only through their own research but also through their social networks, reviews, recommendations and the like. The McKinsey study found: In the active evaluation phase of a purchase, consumer driven marketing (Word of mouth, online research and reviews) is the most important factor considered by customers.
In short: Customers put higher trust in unknown reviewers than in high gloss brochures and expensive prime-time commercials.

So how do you get your customers to talk about you? Make them “active loyalists” by providing for a good customer experience. Bruce Temkin found in February, that good customer experience correlates to loyalty. In fact, he states in his latest post, that customers of companies in the top-quartile of customer experience are almost 17% more likely to recommend that company than customers of their peers in the lowest quartile. It’s time to divert some of your marketing budget from banner advertisement to efforts relating to improving your “moments of truth”.

The first step to enable your customers to have good experiences is to know them. Only if you truly understand their motivation, expectations, past experiences and emotions when interacting with you or your products, you can start to think from the outside in and start to build environments that enable for great experiences and ultimately will make your customers your best sales agents for free.