Insight - Customer centricity

                    Insight – customer Centricity                              

Happy to share more than 50 topics have been written about in Insight which was started 1.5 years ago.  Today’s topic is much talked about in board meetings.

A recent “Customers 2020” report predicts that by 2020, customer experience will overtake both price and product as the key brand differentiator. Many say that it already has. In this article I will share what some of the best companies are doing in customer centricity

• When it comes to customer centricity “Amazon” is considered to be a forerunner. It comes as no surprise that this value is driven from top. It’s a common knowledge now that CEO Jeff Bezos leaves one seat open at the conference table and states that the seat is occupied by the “the most important person in the room – the customer”. What is important that he believes “Everyone has to be able to work in a call center” so that they get insight into the customer’s perspective. As such, each year he and thousands of Amazon managers attend two days of call center training and field calls periodically. This drives not only centricity but transparency and innovation.
• Customer centricity is not only limited to “person to person interaction” though it is an important aspect. Companies can do a lot with automation, process and technology. An excellent example is of USAA, a financial group whose customer base is primarily made up of military, retired military and their families. Customer centricity approach led its banking arm (USAA FSB) to put a high priority on developing and deploying checkscan technology, which they did before almost any of their competitors. Why?  Their many members or customers who are deployed overseas, where mail home can be painfully slow. Along with this they offer to text account balances – an extremely helpful feature for soldiers in the field. This is an ideal example of “listen, understand and act”. This philosophy is applied across their insurance arm which provides discount on car insurance while soldiers are deployed overseas. For claim their “My account” system provides customers with the status of their car insurance claim 24/7 so they can be informed as early and as often as needed. No wonder their NPS rates are as highest among insurers and retention rates are in 90%’s.
• Social media is  becoming a great tool to drive customer centricity, Hilton worldwide have identified this, they noticed 42% of hotel guests expect a response to their post on social media within an hour and this increases to 72% if it is a customer service related issue. Hilton has rolled out policies and procedures to help meet these expectations. In fact, they have taken this so seriously that they tweaked Conrad Hilton’s original Hilton vision to, “Fill the earth with the light and warmth of hospitality – one tweet at a time”.

Customer centric is a way of life as kevin stirtz author of loyal customer says “Every contact we have with a customer influences whether or not they’ll come back. We have to be great every time or we’ll lose them.”

In the coming articles we will look at more example of customer centric organization 

Are we rational ???

We deal with people, Humans like to believe that they are rational but research shows most of the time we are not. A field that increasingly recognized in providing insights into understanding this is Behavioural Economics. Lot of people would have heard about it or read about it. In this article I will share how this can be practically used in our line of business.

Rule 1 :- Don’t overload consumers with too much choice (Decision Paralysis)

We generally believe that we like choice; the more choice, the better, and we assume that our desire for choice and our ability to manage it is unlimited. The reality is that consumers often struggle with the number of options available to them, as illustrated by the classic ‘jam sandwich’ study. This research involved setting up an ‘exotic jams’ tasting booth at a high end grocery store in California. On one occasion there were 6 jams at the tasting booth, while on another occasion 24 jams were displayed. Consumer reaction and subsequent purchase was tracked with compelling results; despite the initial appeal of the wider choice of 24 jams, in this case only 3% of consumers actually purchased a jar. In contrast, of the consumers browsing the tasting booth when only 6 jams were available, a staggering 30% went on to purchase a jar.

Consumer product company Proctor & Gamble has since made use of these findings, reducing the number of versions of Head & Shoulders shampoo from 26 to 15. Sales subsequently increased by 10%. Even Apple uses this to give minimal product range to consumers, they have gone to the extent that the new version of the iPad is referred to as exactly that, ‘the new iPad’, not even giving it an upgrade number as has been common practice in the past. We all know the market cap for Apple.

A point for customer service, Giving multiple options (call, SMS, Whatsapp, twitter, FB, Linkedin ) is good but keep tracking that you don’t end up  turning off people. In a Cross sell campaign we tried an experiment to give only one specific task to people to execute and got great results from the campaign.

RULE 2: Consider the positioning of your most profitable options  (Dominated Alternatives: )

Prior to making a purchase choice, consumers generally review the market and begin to identify their preferences. Behavioral Economics research has shown that it is increasingly clear that preferences are actually very malleable and influenced by all manner of context effects. An interesting example is the effect of a decoy option on preference for The Economist subscription renewals. Participants for this were shown a combination of 3 options: (1) Online only for US$59 (2) Print only for US$125 (3) Print and online for US$125.

The first group saw all 3 and unsurprisingly no body picked option 2 and 84% chose option 3. So what is the point of option 2? Well, when it was removed for the next group the number of people choosing option 3 dropped to 32%. Option 2 effectively acted as a decoy making the print and online subscription seem far more attractive than when it was absent.

This can be effectively used in online marketing in making profitable propositions by playing around with Riders.

Rule 3 :- Help consumers make fast and frugal decisions

Consumers struggle to juggle a large number of variables at a time. One study illustrated this well by looking at the way in which magistrates (a court official in UK courts) make decisions concerning whether to allow defendants to have bail (go free until their next court appearance) or whether to retain them on remand (keep them in jail until their next court appearance). Although magistrates are instructed to make their decision based on a wide range of different variables, in the vast majority of cases the researchers found that it was ultimately only one or two pieces of information that influenced the decision (in this case the advice of the prosecution). This ‘fast and frugal’ means of decision making is a useful, adaptive skill we adopt in an attempt to simplify the otherwise complex myriad of everyday decisions we may have to make.

This is highly effective for the branding and product team, The proposition should be not more than 3 and should be strong enough to drive the point.

Rule 4 :- Encourage consumers to take ownership of your services

Once consumers make a purchase and own an item they revalue it, resulting in a reluctance to give it up or exchange it for any other item. People are disproportionately affected by loss compared to what they might gain. This partial ownership changes our perception, so instead of gaining a product at the point of purchase we are effectively losing one, making it hard for us to give up what we just had. A great example of this is online retailer Amazon’s free trial of its express delivery service Amazon Prime. Their limited trial makes customers focus on what they will lose if they cancel their subscription.  A food for thought for the renewal team to work upon communication.

Studies have shown there to be a difference between what consumers have actually experienced and what they remember experiencing. This is a subtle but critically important distinction that has significant implications for the way in which brands manage customer experiences. The clear lesson here is to create positive peaks and positive endings. The former could be a surprise free gift. Meanwhile, a positive ending might be extending a subscription for a short while. Many companies aim to deliver on these. A good example is food-delivery company Abel and Cole which regularly puts tasty surprises in its vegetable boxes. We suspect that the often low value items, such as an avocado, have a disproportionately high impact on consumers and are, therefore, a great means of driving customer loyalty.

Based on the same concept, small and tangible offering were given on  a regular basis to customers which has helped in changing the perception of customers and make them open for cross sell and retention. Customer service team should focus on creating such positive peaks for customers.

The bottom line is insurance companies have to start thinking in the new way and align their processes with the way customers are behaving. As peter drucker says “Doing the right thing is more important than doing the thing right”