Using customer insights to create insurance people actually want
There is only one thing worse than not getting any customer insight, and that's getting customer insight and ignoring it.
Insurance companies are constantly building new products. But many of those products end up failing because what insurance companies think consumers want is often at odds with what consumers actually want.
With so many layers of checks and balances inside insurance organizations, you’d expect this not to happen. Perhaps the problem is that companies often make big assumptions about their customers’ preferences and behavior in order to support their ideas and then take them to market. If those assumptions are wrong, then the idea may turn out to be flawed, and the launch a total flop.
Most of us have probably witnessed this: Someone in the company has an idea for a new product or proposition. That individual gets very excited about it, and then says that all that is needed now is some customer research to “validate” the idea.
The implication is very clear: “We need to make sure customers agree with us, so we can proceed.”
Validating an idea is very different from testing it, however. By using consumer insights to drive decisions, rather than to simply support them, insurance companies can make sure they’re only investing in products that people want.
For the past two years at iptiQ, a Swiss Re startup, we’ve been running customer research every three days with the help of our Feedback Loop platform. This technology lets us identify target audiences and get their feedback within days rather than months. It used to be that long research cycles were an excuse for bypassing research altogether, but now there’s really no excuse not to get consumers’ opinions.
We use what we learn during that process to help shape our products, our customer journeys and our innovation.
Following are three steps we’ve introduced to this process, to ensure we’re using consumer insights to understand preferences rather than simply rubber-stamping our assumptions.
No. 1: Agree to the percentage of customer buy-in necessary to move forward with an idea before running research.
The results are in! Time to unveil the insights from the customer research. Everyone gathers around a (virtual) table: Oh look, 30% of people say they like this new feature. But wait… Is 30% good or bad? And who decides? Inevitably, those who want to proceed with the idea will say that 30% is a great backing for our idea… But is it?
Here’s where our solution comes in: It generates a “pre-mortem.” What we mean by a survey pre-mortem is a pre-determined threshold that we all agree on before we see the results of the research.
For example, if we are exploring a new feature for a product, we will ask all stakeholders involved to tell us what threshold they would need to see, in order to show that our customers back the idea.
Let’s say we all agree the threshold is 70%; that is, the proportion of customers who need to view this as an attractive feature if we are to proceed. This means that when the results come in and “only” 50% of customers view the feature as attractive, we are duty-bound to put this idea on hold, or least explore ways to improve it.
This has really helped the way we conduct our customer research at iptiQ. In fact, 65% of surveys we’ve run in the past 2 years with Feedback Loop have had a concrete impact on the product we’re building, which shaping the direction in which we’re going. Within that, a whole number of projects or ideas have even been stopped or re-visited as a result of the customer insight we’ve unearthed.
The bottom line is that there’s only one thing worse than not getting any customer insight, and that’s getting customer insight and ignoring it.
No. 2: Don’t lead the witness.
Let’s be honest: Most surveys make it very clear to the respondent what a company wants to validate, and usually respondents are all too happy to oblige! This is in large part due to the “yea-saying” effect, which means that people have a natural tendency to want to agree with what is put in front of them.
A good trick we use to overcome this is to try to hide our hypothesis from respondents, which is not as easy as it sounds. For example, if we are exploring the idea of a certain brand name for life insurance, we won’t ask people if it’s a good name for life insurance. Instead, we’ll ask them if they feel this name would be well suited to a furniture brand, a clothing brand, a gadget brand or… a life insurance brand.
We also often ask questions that actively seek to disprove our hypothesis. This requires real courage, but remember: We need to really test our ideas, not just “validate” them. For example, if we are exploring the idea of giving people access to a free medical-second-opinion service as part of their life insurance policy, we will want to explore if there is anything about this idea that sits awkwardly with people. So, we might ask them whether getting a second medical opinion is intuitively a difficult thing to do because it shows you don’t trust your doctor. Seeing the level of agreement to this statement helps inform us about whether our new idea might be pushing up against the grain of human nature.
No. 3: Ask people about other people.
Psychology tells us that people like to maintain a positive view of themselves wherever possible, so they don’t want to admit to cheating, lying or another other “bad” behavior, even in a low-stakes environment like a survey. The way to overcome this? Ask people not what they would do personally, but what they think other people would do.
When we want to find out if a certain feature might make people more likely to engage in any type of “questionable” behavior, we have found that re-framing the question to ask about “other people” gets us much closer to the truth.
For example: We wanted to find out if advertising a life insurance policy as not requiring any medical tests might encourage people to apply. Rather than ask people directly, we asked them if they thought this might make “other people” be more likely to apply. This way, we got much more honest and insightful results.
Consumer insights can be more actionable and valuable than simply a checked-off box in the process to get an idea to market. They have the ability to drive the creation of products that consumers want — and to help avoid the ones that they won’t. Insurance companies need to have the right processes in place that will allow them to do so.
William Trump is head of the Behavioral Insights Group at iptiQ, a Swiss Re digital startup that enables major brands to extend insurance products directly to their customers rather than sending them to third-party insurers.
Opinions expressed in this article are the author’s own.
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