The Buzz Insurance launch an innovative new customer loyalty program

July 28, 2010 By Leave a Comment

The Australian general insurance business has become a hot house of competition, with heavy promotion by new overseas online insurers.

Intense competition can be a catalyst for innovation and we believe that one insurer is innovating in a refreshing and effective way – by collaborating directly with customers.

The Buzz began life co-creating with customers. Through focus groups, market research and an online community / ideas exchange called ‘My Insurance Ideas’ the IAG-backed team shaped the company that became The Buzz. (Interest declared; we help The Buzz).

A consistent and dominant theme in these thousands of customer conversations was that insurance consumers are looking for an insurer who appreciates and recognises customer loyalty and customers want to be treated as an individual.

Given the ubiquity of no-claims bonuses in Australian car and home insurance,  and a belief by some  customers that Years of Insurance and multi product discounts are a pricing factor not necessarily about recognising individual needs , the insurance sector  are clearly not satisfying this desire. Unsatisfied customer needs offer an opportunity that The Buzz is determined to respond to.

As a formal response to this demand for recognition of customer loyalty reached the top of the task list, The Buzz asked existing customers what they liked and did not like about their other loyalty programs; ‘Simplicity and Fun’ was popular. But the stand out result was that 70% of customers responded with; ‘Give me more time to enjoy it” when asked what they would like most in their lives. Overwhelmingly customers did not want another card in their wallet and a high proportion felt that getting money back for not claiming was hypocritical as it was rewarding you for not using the product you had already bought. So the challenge was to come up with something with the customers that they would value.

Jacki Johnson, CEO at The Buzz, responded with a loyalty charter that says; implement a program that recognises customer loyalty with rewards that save time or make their time more enjoyable and safe. Give them gifts of time.

Buzz Time is the result.

The program concept is simple, as you renew your policies you receive points that can be redeemed for time-saving services from partner organisations such as Dial an Angel (home cleaning, gardening etc), Gizmo (PC and network set up & support etc), and Galmatic (driving and car maintenance courses). A range of novel merchandise and product options, real and online, fill out the reward choices available at program launch.

These rewards are a start, Buzz Time will next reach out to customers to ask and listen to determine what other rewards will appeal most to loyal customers. Co-creation is second nature in The Buzz.

To us, the strategic thinking underpinning Buzz Time is just as interesting as the points and time-saving rewards;

  • Program costs do not impact policy premiums which remain risk-based and competitive
  • No Claim bonuses are not required – The Buzz believes that claims are the reason for insurance and a service ‘moment of truth’ that may be the best customer loyalty creator. Loyalty should be recognised independently of claims.
  • Financial returns from Buzz Time investments will come from increasing customer lifetime value as higher rates of policy renewals result from giving customers an additional reason to stay with The Buzz when their renewal notice arrives.

We wish success for The Buzz – any company with such a laser focus on the needs and recognition of customers deserves to thrive.

Filed Under: Case Studies and Statisitics, Customer Loyalty Management Tagged With: , ,

4 ways to involve your customers in new product development

June 20, 2010 By 1 Comment

Over the last 18 months or so we have been working with an innovative client who has looked to their customers to co-create their business model, products and loyalty strategy. It has been an exciting and thrilling journey in a typically conservative industry; financial services. In their case an online, conversational, community was an invaluable supplement to focus groups and market research and the conversation has been extended to social media such as twitter and Facebook.

This experience has us thinking about the opportunities organisations (those not afraid of public dialogue with their customers) have to develop new products in concert with their customers. We came across this useful paper recently and recommend it to anyone looking to make new product development a lower risk proposition; Customer Co-creation: A Typology & Research Agenda (O’Hearn & Rindfleisch, 2008).

Interest in this new product development (‘NPD’) approach is due to our skeptical view of the traditional wisdom that says NPD is an internal function, where passive, dependent customers rely on suppliers to satisfy their needs. A single visit to any of the large scale social media or public rating sites (e.g. Trip Adviser) will convince most of us that there is nothing passive about today’s connected consumers!

We are in the customer loyalty business and  - ‘If you want to have the most loyal customers, always have the obviously best products at the clearly lowest price’ – is the tongue in cheek mantra we use to remind ourselves that, the product matters. Anything that helps build a better product from the customer’s perspective is part of  your loyalty strategy.

Hence our interest in co-creation.

You can retain or relax control of customer co-creation projects

The authors distinguish between customer contribution of new ideas and their selection of ideas and features for further development and come up with a useful set of co-creation styles and choices which can be adopted, to suit your particular business style and risk appetite (if exposing plans early poses a risk of course).

Collaborating – this style gives the customers the greatest power to contribute their own ideas and select components for new products and the best known example of this approach is Open Source software development. Best suited for information rich applications, it requires customers with relatively high skill levels.

Tinkering - is where customers make modifications to commercially available products, some of which are incorporated into later releases. The computer game industry is a good example of this, with enhancements made by players. Downside is that you may end up competing with customer modifications…

Co-designing - a relatively small group of customers provides the majority of the new ideas and the bulk of the customers select which ones get implemented/developed. Threadless, the t-shirt manufacturer is a good example, as is the news site Digg.

Submitting - the toughest on the customers who are asked to communicate more fully formed concepts, with the company maintaining full control over the NPD process. Ducati for example has a ‘Design your dream Ducati’ process where customers submit full designs. The customer rewards for adopted concepts can be substantial in this style of co-creation, whereas the pleasure and status of participating is generally enough to engage customers in the other 3 styles.

Filed Under: Customer Strategy Tagged With: , ,

Achieving Better Customer Retention through Social Marketing

April 13, 2010 By Leave a Comment

We’re putting on a half day seminar on Social Marketing strategies and their relevance to commercial marketers.  See below for more information.

A half day seminar – 4 May 2010 Sydney

Book Achieving Better Customer Retention through Social Marketing now

Direct Marketing has spent decades perfecting “the right message to the right person at the right time through the right channel,” decreasing segment sizes toward 1-to-1 Marketing. The focus has been on determining how customers are different and then marketing to those differences.

Social Marketing changes the attitudes and habits of a community. Reducing the smoking rate in many countries is just one example of the power of Social Marketing. Generally funded with public monies, Social Marketing also has a focus on individuals, but through community.

As customers become less responsive to direct marketing communications, they have become more involved with online communities and more receptive to recommendations from people like them. Increasingly, the task for commercial, for-profit, marketers is to work inside a community of pseudo-anonymous customers in sites like Facebook, YouTube or Twitter, because that is where customer attention is now concentrated.

In this brand-new world, the skills of Social Marketing are hyper-relevant. In this session, Tim Tyler will discuss successful Social Marketing strategies and their increasing relevance to commercial marketers.

In this practical 3 hour seminar you will learn:

• The changing ways that customers are consuming content
• How you must following customers – or lose them
• Connected marketing and how to use it
• The Influentials and the new 30 second spot?
• How to develop a Social Marketing framework

What to know more? Download the booking form for Achieving Better Customer Retention through Social Marketing

By Adam Ramshaw

Filed Under: Customer Retention, Social Media Tagged With: , ,

Word of Mouth Programs – Making Money

April 5, 2010 By Leave a Comment

Another thought-provoking piece of research from one of our ‘must read’ organisations, the Marketing Science Institute: Sources of Social Value in Word-of-mouth Programs.

Using computer agent models based on 12 real world communities (several provided by Lithium), Libai, Muller and Peres focussed on the impact Word of Mouth (WOM) has on the value (discounted cash flow) generated in a new product introduction.

Their particular interest was on the WOM generated by ‘seeding’ programs, where organisations give new products to a portion of the customer population in order to invoke WOM. I believe the principles discussed in their paper probably apply to any WOM initiative, not just seeding programs.

The focus on hard dollar returns is notable and useful for marketers considering WOM programs (and certainly plays to our bias for ‘do’ marketing). The authors call these hard dollar impacts changes in ‘social value’ for the customer population.

Two ways that WOM can increase the value of the social network, i.e. make you money (versus new product diffusion with no WOM) were examined;

  1. Acquisition of new customers who would not have bought without the WOM, and
  2. Acceleration of purchases from customers who would have bought anyway, just later. In this case, the added value is the time value of getting money earlier.

They also contrasted WOM programs that randomly select customers with Influentials programs that specifically target customers with large numbers of social links.

The findings, in plain language, were;

  1. Competition amplifies WOM effects. With 1 brand, i.e. a monopoly, WOM increased value by 17% for random customer selection and 27% for influentials. Adding a competitor jumped these numbers to 80% and 107%!
  2. The stronger the brand relative to competition the less value delivered by WOM; stronger brands benefit less.
  3. You can select too many customers: Random customer selection WOM programs including 20% of the target population deliver the maximum social value

    Do not try to recruit all customers in launch WOM programs

  4. Compared to random customer selection, Influentials’ effects decrease faster as you increase the number of customers in the program
  5. Most of the value from WOM can be achieved by random customer selection. Targeting Influentials can increase the return; an additional 33% in these networks
  6. If you target Influentials, acceleration drives the majority of value, not acquisition

This is good news for our start-up customers introducing new products, using social media, in highly competitive markets…

Filed Under: Case Studies and Statisitics, Customer Analytics, Customer Feedback Process Tagged With: , , ,

How to evolve on-line customer advisory panels to add value to your business

March 28, 2010 By 2 Comments

On-line customer advisory panels are a relatively new feature in the market research business.  Often these panels are created by dedicated market research companies to provide ready access to a large number of respondents for a market research survey.  In that way they can be quite valuable to organisations wanting a quick way to get feedback on a new idea.

These types of panels can be very useful for two reasons.

  1. They have large sample sizes, ie. the entire online community group, not just small focus groups, online surveys and face to face interviews.
  2. You can receive feedback quickly on product and on-line design,  from customers and prospects; often within hours or a day or two.

However, they can also be quite limiting because they do not develop a relationship with the company for which the research is done.  The individuals on the panel have a relationship with the market research company that “owns” the panel.

Recently we created and ran a dedicated on-line customer advisory panel for a leading insurance company that wanted to launch a new direct (on-line) brand into the market place.  This panel was different to the panels noted above in that the insurance company concerned built and ran the panel from scratch.  This allowed the company to build a relationship with the panel participants and allowed a range of secondary areas of value to be created.

Initially the role of the panel was to gather market research style insights and segmentation information.  In this way it was similar to the market research company owned panels above. The similarity stops there however.

As the research process evolved, we were able to link internal company information with portal member profile type.  Then judicious use of questions, blog posts, quick polls and surveys enabled the client to extend their understanding of each segment’s needs and key drivers.

That’s not all however.  The role of the on-line portal evolved over time from a source of on-line segmentation insights to a forum for the co-creation of products and value propositions to a powerful advocate based launch platform for the business.  Each phase layered additional depth and value into the client’s relationship with the portal users.

This evolution of value elements does not happen immediately but over time the value of the panel far outweighs the initial market research function.  The final outcome of this process is, in the right circumstances, for customer lead support to occur.  This is where customers help each other regarding questions and approaches to using your product.

This customer lead support has been occurring in the technology/software space for many years but this approach brings it within the realms of more mainstream products.

By Adam Ramshaw

Filed Under: Customer Analytics, Customer Feedback Process Tagged With: ,