It’s a new dawn … It’s a new day ... It’s a new life ... For me … And I’m feeling good.
These lyrics from the song “Feeling Good” were composed by English songwriters Anthony Newley and Leslie Bricusse for the musical The Roar of the Greasepaint – The Smell of the Crowd, and the song was first performed on stage in 1964 by Cy Grant. This classic song has since been reinvented and re-released, by singers Nina Simone, Michael Buble, and Muse to name a few, and has become a part of pop culture, used in films and TV shows. Just like this song, it’s a new dawn, a new day and a new life for every business, including insurance. But the question is … are you feeling good about it? I mean good about competing with new industry challengers?
Today’s new challengers may not compete directly by offering and underwriting insurance, but they are competing in more profound and disruptive ways that capture customer relationship, loyalty, pocketbook and much more through innovative offerings, engagement and business models. These new challengers are the big tech and Silicon Valley companies, Google, Amazon, Twitter, Apple, Facebook, eBay, and others.
Why do insurers have to compete with companies like these? Because of the massive numbers of users the challengers have as engaged and loyal customers. Insurance companies’ numbers pale in comparison. This disparity between the growing numbers of challenger versus insurer customers highlights the dramatic foundational shift occurring in terms of customer engagement, loyalty, and expectations. It also shows why these technology and Silicon Valley companies pose a competitive threat to insurance.
So how can insurers and independent agents and brokers prepare and respond? In an SMA research brief, The Shifting Competitive Landscape: A New Breed of Industry Challengers, we identified and discussed key attributes that contrast the differences between these new challengers and insurers. The differences could not be more stark. If knowledge is power, then insurers, independent agents, and brokers should be gathering all the facts and making all the plans and strategies they can. Here are some good places to start.
1. Customer vs. product
In today’s digital world, it’s all about the customer. Customers seek simplicity, personalization, and connectivity, and they demand value-added services. No longer is it just the product; it is about all the services built around, included within or leveraged by the product. How will you redefine your insurance products? Wrap them with new, personalized services or build a digital platform that engages the customer? Might you need to seek new partners for services?
2. External vs. internal
Look beyond the traditional boundaries of insurance. What companies can you partner with to reach new customers or expand what you can offer to your customers today? Think of new startups like overstock.com and traditional retailers like Walmart. Could it be automotive companies, home repair services, grocery stores, a local community or crowdsourcing groups? What others?
Think outside the box.
3. Create an experience vs. process a transaction
Customers have rapidly become accustomed to the experiences and personalization they get from these new challengers, and they now expect the same from all other types of companies. It is all about the connected, consistent and personalized experience. Does your portal or website create this experience? Do you augment your digital with your face-to-face or personal touches? When your customers have a claim, can you make it less stressful and be more helpful? What unique services do you offer that create and enhance the experience? It is all about the experience and outcome, rather than the product and transaction.
4. Connect customers to an ecosystem vs. connect them to the company
Customers expect more than just connecting with a company; they expect an ecosystem of relationships that are organized and available through a company. Remember eBay, Amazon, Apple, and other challengers. Their product offerings (with services) are the center of a relationship and a portal to an array of other services, often integrated with them. So what are your relationships that provide access to a unique ecosystem? To potentially discounted offerings? To new services and experiences?
Think more broadly, recognizing that 1+1 can equal 3 instead of just 2.
5. Pull and engage vs. push and inform
Become modern, digital and “cool,” to become a digital company that customers will seek and engage independently. Rather than “pushing” and trying to get them to engage, attract them with technology in entertaining and enticing ways. Set new standards for businesses in customer engagement and loyalty by using the right mobile, gamification, or social media technologies.
Think like an entertainment or gaming company, like CandyCrush or Farmville.
For insurers, independent agents and brokers, the question is not how you combat the challengers, because their impact and influence are here to stay and are increasing every day. The more important question is: How do you play in the new world these challengers have defined? In today’s hyper-connected, technology-driven, digital world, those who reimagine, experiment, innovate, and then challenge the status quo will gain the competitive advantage over those who hold on to their legacies and traditions.
Just like the changes that have taken place in the music, retail, media, and publishing industries, these extraordinary changes will require every business, including insurance, to rethink and reimagine their business models and fundamentals. Will we be a product manufacturer, an underwriter of products, a distributor of products, a provider of services, or all of the above? And how will we leverage new and emerging technologies and redefine the customer experience? These are the questions you should be asking.
Insurance leaders of tomorrow will be asking, “How can we connect, educate, inform, and enhance our customer’s lives or businesses through innovative offerings that provide meaningful value in helping to eliminate, reduce, or manage risk in a world of changing risk?” Planning to win, let alone succeed, at the dawn of this new world will require a bold vision and strategy. It will demand fast and precise execution. It will require partners and ecosystems. And it must be digital.
It’s a new dawn … It’s a new day … And it’s a new digital life. Are you feeling good? If not, it’s time to rethink and reimagine your business. Time won’t wait. Define your future now and start feeling good.