Lemmings, Move Over

Hmm, I thought. Minimum cost. Maximum hope.

The insurance and financial services sector has some similar thinking going on. Jack Bragg, an actuary and a regular columnist for National Underwriter, has mentioned how the industry is veering away from doing serious product innovation right now. Meanwhile, numerous companies in 2002 have rolled out one product upgrade after another, some telling me this is the best strategy for weathering the tough economy.

Sadly, product development lore is awash with stories of companies that flopped from trying to make the A-team with product upgrades. Just look at Cokes introduction of “New Coke.” Or look at any life policy or annuity upgrade you can think of; if well executed, marketed and administered, the tweaks help keep the product in the ballpark, but rarely do they usher in loads of new customers.

Most product literature says that, to make a big splash today, companies need brand new, heavily researched and intensively marketed concepts. This might give the product a crack at being first, second or third in the market, with profitability the big payoff.

Yet even that commonly held notion is none too predictive. Sales and product leaders can slide. Remember Equity Funding, Monarch Life and many others.

My message: It takes more than advertising, more than upgrades, more than all-new initiatives, and more than being number one, two or three to create a product winner.

Some insurance developers try to get more predictability by running the numbers before a sales campaign or product debut. That is, they do the specs, build the prototype, conduct the consumer and market research, launch pilot tests, fine-tune the launch, map out the marketing, and on and on. Others put their confidence in designs by cross-division teams.

Yet, even with the best of efforts, some launches dont fly. Right now, for instance, index annuity sales are booming on an industrywide basis, but some companies in the market arent selling very many of the products, even designs that are pretty well constructed. This is typical of all businesses. Slow-, low-, and no-sellers exist in every product line, and the reasons for their status are as unique as their structures.

That grinds some executives, who believe that, if one company is doing well with a particular product or strategy, their own company should be able to do so.

As we have seen, no “one answer, one person, one product” will make a product fly, and no one thing will make it fall. Because one insurer finds success with building products by the numbers doesnt mean another will.

Everyone involved with products–executive, developer, lawyer, strategist, advertiser, marketer, financial manager, distributor, customer relations rep–needs to keep that in mind.

Product people today are under tremendous pressure to build policies that sell. They need to revisit how lemming-like solutions get in the way; how product tweaking doesnt replace innovation; and how customizing products to their own operation and customers can yield results.

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 30, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.