How Do Insurance Companies Treat Loyal Customers?

Who Benefits From Customer Loyalty?

Back in December 2015 Annette Franz in her post titled So, What Exactly is Customer Loyalty? made the following statement:

I had a situation recently that caused me to call on a provider to whom I’ve paid thousands and thousands of dollars by way of monthly premiums for the last 20+ years. I’ve never filed a claim, but I did six weeks ago. It’s not been a good customer experience since that day.

Annette went on to question the concept of Customer Loyalty.  Does it refer to the customer being loyal to the organisation? Or to the company being loyal to the customer?

This was my response to her question:

Hello Annette, I have been and continue to be clear that customer loyalty is a marketing concept. As such it is consists of a bunch of tools and techniques for getting the customer to stick with the organisation as long as the customer is generating handsome revenues and profits for the organisation. It is certainly not the organisation being loyal to the customer. Put differently, customer loyalty is a company centric concept.

I assert that as a customer you either have to be naive or stupid to think the organisation is loyal to you. Take insurance, if you are loyal customer you will be worse off. How so? When it comes to renewal time you will pay higher premiums. Why? You will accept the renewal premium without shopping around.

What Is The Cost of Customer Loyalty When It Comes To Insurance?

Want an example of how insurance companies penalise loyal customers?  Thanks to the Guardian newspaper, I have an example for you.  Allow me to share some passages from How Halifax penalises its insurance customers for their loyalty (bolding mine):

How much should the buildings insurance be on a £250,000 terrace house in Redcar, north-east England? It probably wouldn’t be difficult to find quotes for less than £200.

Mrs Laurie (I’ve changed her name) had always been good with managing her money. She dutifully paid the home insurance premiums demanded by Halifax every year, even though it kept going up. But when it hit £450 she could no longer afford to pay it.

What was Halifax’s response? Did it review the premium and reduce it to reflect the prices that other people were paying in the market? Oh no. What Halifax appears to have done is reopen her former mortgage account with the bank, then charge the insurance premiums to that account. Halifax then continued jacking up the price every year, to a vastly inflated £800 at the time of her death – a figure her son says is around six times the going rate. The final insult was that Halifax charged interest on the unpaid premiums, making ever more profit out of its elderly, loyal and vulnerable customer.

When Does It Make Sense To Stick With Your Insurance Company?

If you are a customer then here is my advice: never ever take the renewal quote offered to you by your insurance company. Why? Because from an insurance company perspective the most logical course of action is to offer you an inflated premium. Why? To take financial advantage of those folks who are either ignorant (of how companies work) or lazy (cannot be bothered to shop around).  When you have millions of customers, even a mere 20% of customers renewing automatically can generate £millions in extra revenues and profits.

Having said the above, I wish to point out that the insurance premium should not be the only factor that you consider. Why?  Because one takes out insurance just in case one needs to make a claim.  Which implies that you should, at a minimum, consider other factors including:

  1. Coverage – what is and is not covered?
  2. Time and Effort  involved in making a claim;
  3. Claims track record – how good is the insurer at dealing with and paying out on legitimate claims?

For example, for the last two years running I chose to stick with my home insurer even though I get a cheaper premium from other insurers. Why? Because for the first time (2 years ago) in 20+years I had to make a claim. The process of making the claim showed up as effortless. The claim was dealt with quickly by the insurer and in full. And, when I was dealing with the loss adjuster he told me that my insurer is among the best insurers when it comes to paying out legitimate claims.

If you are regular subscriber to this blog then I thank you. And take this opportunity to wish you the very best for this year.

Experience Engineering: How Do You Engineer Authentic Humanity Into The Customer Experience?

I have been working in Cheltenham for a few weeks now. I like, really like, the folks (at the client) that I find myself working with. It has something to do with their kind of accueil- a word that my French family often use.

Let’s just consider accueil. How is it translated?  It is translated as: welcome, reception, acceptance, hospitality. It is also used to refer to the home page of a website.

Many years ago I chose not to specialise – going against the dominant trend and advice. I chose to do what comes naturally to me: be a generalist. Today, that means I get involved primarily in some combination of digital transformation, customer experience, CRM, marketing automation, change leadership, programme management. And I get involved in one of many levels – from helping devise strategy through to drawing out the systems architecture.

Why did I share that with you? To set the context. Why?  Because the more I see of what organisations are doing under the CX umbrella and the way they are going about it, the more I find myself falling out with the whole CX thing. I also find myself disagreeing with many CX gurus – many of whom are self-appointed. It is not a domain where one can criticise and remain in the CX club – as I have learnt. That is ok by me.  I can criticise CX because I do not depend on it to make my living, build a reputation, or safeguard one.

Call it Customer Experience design, call it Service Design, call it Experience Engineering. Whatever you call it, here is my question: How do you engineer accueil – authentic, spontaneous, warm accueil?  How do the BPR/six-sigma folks (I always find plenty of them working under CX umbrella) engineer/standardise processes for generating authentic warm accueil?  Or let’s turn to the business change or HR folks, how do they train the frontline staff (who are often on minimum wage, or some of the lowest wages in the organisation, in the economy) to generate authentic warm accueil?  Let’s not leave out metrics – according to conventional dogma only what gets measured gets done. What metrics does one use to assess if authentic warm accueil is experienced by the experiencer: the customer, the guest, the employee, the partner, the supplier?

In my first week in Cheltenham, I found myself staying in the Holiday Inn Express.  I checked in late on a Sunday. Lady on check-in was polite, helpful (gave me ‘map’ of Cheltenham centre), and quick. The lifts were plentiful, clean, quick. Room was easy to find through the signposting. The room was clean and spacious. And as promised it was on the quiet side. The breakfast was in line with expectations for that kind of hotel.  The right folks ‘faked’ the right kind of smiles. And behaved in the appropriate scripted manner. In short, all was in line with a well run hotel in that class of hotel.

If I had to put it into words, I’d say that the experience engineers (through design or accident) had engineered a professional competent experience.  Did this experience evoke any kind of emotional bond to this hotel, or anyone in the hotel? No. Why?  The whole experience felt corporate – efficient yet inhuman.

One evening I returned to the hotel after a busy (full) day of consulting work.  I found myself keen to get changed and go walkabout around Cheltenham: walk, look around, check out potential dining choices, pick a restaurant. Problem: it was raining heavily and I had no umbrella. Further, the situation did not afford the purchase of an umbrella as it was about 7:30 in the evening.

Remembering that some hotels (of the expensive kind) stock umbrellas for use by guests, I approached the lady staffing the reception desk. “You don’t happen to have an umbrella I can borrow do you?”  Her polite answer? “Sorry, we don’t have any umbrellas.” Hope dashed. Mild disappointed – mild because I did not expect this kind of hotel to offer customers umbrellas.  Then the most amazing-delightful thing happened.

One of the employees working at the bar (which happened to be adjacent to the Reception desk) said “I have an umbrella, you are welcome to borrow it. Mind you, it’s girly. Are you ok with that?”  Then she went into a back room and handed me her own (private) girly umbrella. Surprise. Delight. Gratitude. I accepted her gift, thanked her, and promised to return her umbrella to her by the end of the evening.

Here’s the thing, I was so deeply touched (and continue to be touched) by this young lady’s humanity (kindness, generosity) and her placing her trust in me (without me having earned it first) that some deeply human dimension of me wanted to both to hug her. And to cry. Why cry? Cry of joy. Joy of what?  Joy that fellow feeling – genuine human compassion – is still alive in some people.  She did not know me. She did not owe me anything. She had no script to follow. In fact, if there was a script to follow I suspect it would advise employees not to lend their or the hotels private property to guests (customers).

It is the accueil – the acceptance, the welcome, the warmth, the hospitality of this young lady’s humanity in action that I remember and carry with me. I am moved by how she showed up. Her way of being makes me feel good about being a member of the human race. Gives me hope for the human race despite the savage/violent aspects of human existence.

Which brings me back to experience engineering and the question I posed: How do you build authentic humanity into the customer experience?  What I can tell you is this: you cannot do it by the means that most folks are using to design/engineer customer experiences: putting lots of channels in play, collecting lots of data (small and big) and using this to do ‘personalise content’ to do targeted marketing/selling, engaging a bunch of BPR/Six Sigma to redesign processes, handing out vision/value cards to employees, sending employees on training courses, using VoC measures (NPS) to reward/punish employees…..

If the quality of the accueil matters (and I say it matters a lot in service environments) then you have to deliberately attract and welcome folks who embody warm accueil in their way of being. And then you have to continually cultivate an environment/climate where 1) those in management roles generate that kind of acceuil for the folks working in the organisation; and 2) folks working in the organisation can agree or disagree with one another – passionately against a background of warm accueil for their fellow colleagues despite challenging their ideas, proposals, and behaviours.

Do this and you dispose your organisation to spontaneously and appropriately generate the kind of humanity/accueil that build genuine affinity with your organisation / brand.  And yes, the right tools, and behind the scenes processes can make it easier for your folks to deliver outstanding accueil.

Notice, the technology (tools) and process – are there in the background to serve your people.  Your people become real-time, flexible, experience engineers – treating different customers differently and even the same customer differently depending on the context.

Enough for today, I thank you for your listening.  Until the next time, I wish you the very best – may you receive and grant the kind of accueil that makes you proud to be a member of the human race.

 

 

 

 

 

 

 

 

Customer Experience: The Road Less Travelled

It has been a while since the last conversation. First, I took time out for a month of holidays. And then in September I was asked to lend a hand in a CX centred next generation CRM and omnichannel programme.  Given the demands on my time I will be keeping this conversations short – at least shorter.

Let’s start.  It occurs to me that just about every organisation is talking about the importance of the customer experience. Many may even be doing something under the label of Customer Experience.  Few are going about it in a way that tilts the scales towards success.  What, in my opinion, tilts the scales towards success?  This is what has been unconcealed to me to date:

  1. CEO totally committed in his very being to competing on the basis of insanely great customer experiences with the organisations products, people, interaction channels, the brand, and the organisation as a whole;
  2. An organisation which is impeccably organised (people, policies, practices, processes, partners, interaction channels, technology) around the principle of ‘producing’ insanely great customer experiences;
  3. Managers who tackle anything and everything that gets in the way of the people in the organisation ‘producing’ insanely great customer experiences;
  4. An organisational climate where breakdowns and honest communication are welcomed as an opening for learning that feeds the thinking, design and ‘production’ of insanely great customer experiences.
  5. Genuine competition (and/or effective regulation) that generates motivation within the organisation’s leadership and management teams to compete for the customers business and loyalty.

It occurs to me that this is the road less travelled. Why?  It is a very demanding road. It is not a road for sprinters – those seeking a return in a year or so. It is road only for ‘marathon runners’ who put in impeccable effort consistently, make substantial sacrifices, and who tolerate (even welcome) pain beyond what they are comfortable with.

Thanks for your listening. I wish you the very best. As the French say until the next time….

Does Customer Experience Leadership Require Straight Communication And Fair Business Practices?

Are UK Supermarkets Conning Customers?

According to the press, the consumer watchdog Which? has been investigating the UK’s dominant supermarket chains for the last seven years. Based on the ‘findings’  Which? put forth a super-complaint against the supermarkets. A super-compliant is not something that is done lightly. So what is the basis of this super-complaint?

Despite Which? repeatedly exposing misleading and confusing pricing tactics, and calling for voluntary change by the retailers, these dodgy offers remain on numerous supermarket shelves.”

– Richard Lloyd, Which?

How Are The UK’s Supermarkets Conning Customers?

As I understand it, Which? is asserting (based on the evidence it has collected) that the UK’s dominant supermarkets are misleading customers through dishonest communication. Through which mechanisms is this dishonest communication occurring? Through “dodgy multi-buys, shrinking products and baffling sales offers”: the supermarkets are communicating / promoting illusory savings and fooling shoppers into choosing products they might not have bought if they knew the full facts.

What is the purpose of this dishonest-misleading communication and customer facing practices?  As I understand the purpose is to keep existing customers and protect margins by conveying the illusion of a good deal – as opposed to providing a genuinely good deal.  Does Which? have any examples?  According to the Guardian:

Seasonal offers: higher prices only applied out of season, when consumers are less likely to buy the item. It found a Nestle Kit Kat Chunky Collection Giant Egg was advertised at £7.49 for 10 days in January this year at Ocado, then sold on offer at £5 for 51 days.

Was/now pricing: the use of a higher “was” price when the item has been available for longer at the lower price. Acacia honey and ginger hot cross buns at Waitrose were advertised at £1.50 for just 12 days this year before going on offer at “£1.12 was £1.50” for 26 days.

Multi-buys: prices are increased on multi-buy deals so that the saving is less than claimed. Asda increased the price of a Chicago Town Four Cheese Pizza two-pack from £1.50 to £2 last year and then offered a multi-buy deal at two for £3. A single pack went back to £1.50 when the “offer” ended.

Larger pack, better value: the price of individual items in the bigger pack are actually higher. Tesco sold four cans of Green Giant sweetcorn for £2 last year, but six cans were proportionately more expensive in its “special value” pack, priced at £3.56.

Are these crafty (the marketing folks will be saluting themselves for their ingenuity) yet dishonest business practices of any significance?  Given that some 40% of supermarket sales are driven by sales promotions of this kind, it occurs to me that the answer is likely to be yes.  Further, these are the practices that these chains are using to stave off the genuine price-value completion introduced in the supermarket sector by the likes of Aldi, and Lidl.

What Are The Customer Experience Implications?

At one level, it occurs to me that the key customer experience is rather simple: it is relatively easy to fool customers and keep fooling them over years through misleading communication, misleading pricing, and dishonest business practices.  As I look into this, I find myself concluding that most customers, most of the time, are trusting of the folks they do business with.  Why? Because in the absence of this trust, human lives become practically unlivable. The cost of being constantly vigilant is too high – those who can afford not to pay this cost choose not to pay it. These creates the space for businesses (supermarkets, utilities, banks…) to do that which they do do: take advantage of customers to extract ‘bad profits’.

What Is The Cost Of Addiction To These Dishonest Business Practices as Opposed To Focusing On Creating Genuine-Superior Value For Customers?

It occurs to me that the cost is paid over the longer term. Whilst the folks in your organisation are busy congratulating themselves on their ability to dupe your customers, or provide the bare minimum to keep customers,  there is someone out there busy doing the work of coming up with compelling value propositions. Think back to the american automotive industry and the rise/dominance of the Japanese automakers.  Think about Amazon and what it has done to retail.  Think about Apple and the impact it has made.  Think about First Direct ….. I say that the use of misleading communication and dishonest business practices is a form of subsidy to the least competitive players in an industry. From whom is the subsidy extracted? Customers.

Does an Organisation Get To Be And Keep Being A Customer Experience Leader Through Misleading Communication And Dishonest Business Practices?

Is USAA a CX leader because the folks in the business genuinely show up to do the best for their customers or because they have found slick ways of conning customers?  Is Apple a CX leader because the folks in the business create great products that resonate with customers or because it has found a slick way of conning customers – perhaps through advertising and the outward veneer of its products?

I am clear that sustainable CX leadership requires straight communication and fair business practices in the context of going full out to simplify-enrich the lives of the folks impacted by the business: employees, customers, suppliers / partners….

You are welcome to disagree. If you find yourself in disagreement then I invite you to share your perspective by commenting.  I am opening to learning that which I am not present to.

Thank You And A Little Gift For You This Christmas

Thank you. I take this opportunity to thank each and every one of you. When I speak “you” who is it that I am speaking of?  I am looking at you: the person who subscribes to this series of conversations; the person who turns up here and listens to my speaking; the person who is sufficiently touched enough by my speaking and his/her listening to share his/her perspective – by commenting or by sharing through Twitter etc; and the person who reaches out to me and asks for my permission to have my speaking appear on their website/blog.

Do you make a difference to my existence? Yes! I can say with complete honesty that your listening – the quality of your listening – provides fuel that fuels my speaking. I wonder if you are present, really present, to the difference you make – the lives that you touch for better or for worse. It occurs to me that this is worth pondering this Christmas. We exist in relationship and the quality of our relating shapes our experience of life and the world that we co-create.

During the summer holiday the thoughts of becoming silent occurred to me. And here James Lawther showed up at just the right time. I am clear that his encouragement is exactly the encouragement I needed at that time to show up and continue speaking. What left me deeply touched is that James noticed – he noticed my silence and he reached out to me to ask if I was ok.  As I re-experience that experience (of reading his email) I find my eyes tearing up – I find myself deeply moved-touched as I was the first time. Do you/i sufficiently notice those around us and from time to time simply ask, “Are you ok?” And then really listen to that which is spoken and not spoken.

Which brings me to the heart of speaking here on this blog: our shared humanity. Bringing the best of our humanity into play so that we co-create a better world. I am clear that a better world has necessarily to be one that works for all – none excluded.  It occurs to me that if you subscribe to this series of conversations then there is some part of you that connects with that which I am about: co-creating a better world – a world that works for all, none excluded. A world that includes Customers (as fellow human beings) and yet is not limited to just customers.

If you find that which I speak of here, resonating with you then I leave you with this gift. Why this gift? Because it is in tune with that which I stand for and for which this blog is vehicle.

Yes, I get that it is 7 hours long. If you are limited to the amount of time you are willing to set aside then I recommend watching and listening to the first 90 minutes or so.  As with everything in life – you/i are confronted with choice. You choose what you will do with this gift.

Turning directly to Christmas, I invite you to ‘step up’ and create a great Christmas – for yourself, for your loved ones, for those whom you touch this festive week or so.  And I leave you with these quotes:

A hero is an ordinary person given being and action by something bigger than themselves.

– Werner Erhard

Respect your uniqueness, and drop comparison. Relax into your being.

– Osho

Be a hero. And Respect your uniqueness, drop comparison. Relax into your being. Respect the uniqueness of each of our fellow human beings, drop judgement-criticism. Allow each of our fellow human beings to relax into his/her being.

– maz iqbal

At you service | with my love

maz

What Does It Take To Shift To A Human-to-Human Way Of Doing Business?

I find myself interested and caring for the human.  So the following slogan caught my attention: “There is no more b2b or b2c: It’s human to human”.  This got me wondering: What does it take for us to show up and operate as ‘human to human’?

If we are to do business in a ‘human to human’ way then it helps to have a good grasp of what the defining characteristic of human is.  In Being and Time, Heidegger asserts that ‘Care (Sorge) is the being of dasein’. For the purposes of this conversation dasein = human being. What does Heidegger mean by this?  I take it to mean that I do not find myself indifferent: to myself and my experience of living, to the world in which I find myself in, to my fellow human beings.  It matters (to me) how I live and how my life turns out. It matters (to me) how my fellow human beings live and how their lives turn out. And it matters (to me) how this world is and is not.  I care as I am aware that I am being-in-the-world-with-others-towards death.

If we are going to show up and operate from a ‘human to human’ way of doing business then we must genuinely care for ourselves, the people we work with, the people we sell to, the people we buy from, the people whose lives are touched by us and our way of showing up and operating in the world.  How best to illustrate this?  Allow me to share a story the following story with you (bolding is my work):

Harry, an emergency physician …. One evening on his shift in a busy emergency room, a woman was brought in about to give birth…….. Harry was going to deliver this baby himself. He likes delivering babies, and he was pleased…… The baby was born almost immediately.

Whilst the little girl was still attached to her mother, Harry laid her along his left arm. Holding the back of her head in his left hand, he took a suction bulb in his right and began to clear her mouth and nose of mucus. Suddenly, the baby opened her eyes and looked directly at him. In that moment, Harry stepped past his technical role and realised a very simple thing: that he was the very first human being this baby girl had ever seen. He felt his heart to go out to her in welcome ….

Harry has delivered hundred of babies. He has always enjoyed the challenges of delivery, the excitement of making rapid decisions and feeling his own competency, but he says that he had never let himself experience the meaning of what he was doing before. He feels that in a certain sense this was the first baby he ever delivered. He’s says that in the past he would have been so preoccupied with the technical aspects of delivery, assessing and responding to needs and dangers, the he doubts he would have noticed the baby open her eyes or have registered what her look meant.  He would have been there as a physician but not as a human being. It was possible, now to be both…

-Rachel Naomi Remen, Kitchen Table Wisdom

This is what I notice about the whole Customer thing: the focus is almost exclusively on the technical stuff (metrics, data, analytics, technology, processes) and almost no recognition of the human.  Does this matter?  Yes. Why?  I leave you with these words of wisdom:

 

Quality matters when quantity is an inadequate substitute. If a building contractors finds that her two-ton truck is on another job, she may easily substitute two on-ton trucks to carry the landfill. On the other hand if a three star chef is ill, no number of short-order cooks is an adequate replacement. One hundred mediocre singers are not the equal of one top-notch singer…

– Richard Rumelt, Good Strategy Bad Strategy

We may not be able to define-measure-calculate quality. Yet we are present to it when we experience it. The quality that you/i/we experience from the people we interact with, work with, sell to, buy from, makes a huge difference to our experience of living.  This quality of caring cannot be faked, though many folks make the attempt to fake it.

Interestingly, in our age, it is easier to build this caring into the ‘product’ itself (Apple) or the digital interface (Amazon) than it is in human to human conversation-encounters.  Why?  Because we have become so wrapped up in the technical that we have lost touch with the human – including our own humanity.  Yet, it is possible to get in touch with this humanity and give it expression: to show up as a CEO and as a human being; to show up as a CMO and as a human being; to show up as CFO and as a human being; a sales person and as a human being; to show up as call-centre agent and as a human being……

Please note: I am about to go on vacation and will be out of touch for several weeks.  I wish you well and look forward to being in communication after the holiday.

Mazism 2: It Comes Down To People And Relationships!

This conversation follows on from an earlier conversation: Mazism 1: There Is Always A Price, It Is Always Paid.  

What lies at the source of organisational effectiveness? Is is strategic planning in the guise of strategy?  Is it process standardisation / reengineering in its many disguises?  Is it restructuring the business, offshoring and outsourcing?  Is it about embracing and making good use of the latest information technology?  Is it about embracing the latest management fashion: customer-centricity, customer experience, digital business?  Is it leadership? Or organisational learning?

After 25+ years spent engaged in the challenge of improving organisational effectiveness and business performance, I am clear that the access to organisational effectiveness and superior performance does not lie in any of these domains. Why?  Because they do not get to the heart of the matter: of what is actually so about organisational life and the game of business.  What is so?

I am clear that organisational effectiveness (team, function, business unit, corporate) comes down to the people and their relationships with one another.  By ‘relationships’ I mean the communicating-relating that has occurred and is occurring between people.  If the job of ‘leaders’ is to cultivate organisational effectiveness then it occurs to me that leadership involves-requires a focus on people and relationships. I invite you to read-consider the following passage (bolding is my work):

The lone warrior myth of leadership is a sure route to heroic suicide. Though you may feel alone at times with either creative ideas  or the burden of final decision-making authority, psychological attachments to operating solo will get you into trouble. You need partners. Nobody is smart enough or fast enough to engage alone with the political complexity of an organisation or community when it is facing and reacting to an adaptive challenge. 

Relating to people is central to leading and staying alive. If are you are not naturally a political person, then find partners who have that ability to be intensely conscious  of the importance of relationships in getting challenging work done. Let them help you develop allies. Then, beyond developing your base of support, let them help you relate to your opposition, those people who feel that they have the most to lose with your initiative. You need to stay close to them to know what they are thinking and feeling, and to demonstrate that you are aware of their difficulty. Moreover, your efforts to gain trust must extend beyond your allies and opposition, to those folks who are uncommitted. You will have to find appropriate ways to own your piece of the mess and acknowledge the risks and losses people may have to sustain. Sometimes you can demonstrate your awareness by modelling the risk or the loss itself…..

Ronald A. Heifetz and Marty Linksy, Leadership On The Line

Time after time I have witnessed promising ‘strategies’ and plans come to nothing during the implementation phase because those leading change have been blind to the importance of people and relationships – during the strategy development phase, the implementation phase, and/or the post implementation phase.  

I say look at any effective organisation (team department, business unit, corporate, society) and you will find healthy communicating-relating occurring between the people who collectively constitute that organisation. And healthy communicating-relating occurring between members of that organisation and the people who they interact with in the broader environment in which that organisation organises and executes its work.

I continue to be amazed that some Tops and Middles want to work on improving customer relationships and the Customer Experience. Why? Because they and their organisations have little appreciation-consideration-feeling for the quality of communicating-relating that is occurring in the organisation. And no lived experience nor appreciation of the the Employee Experience: whether on the front line or the back office.