Uh-oh… Amazon just entered your market, acquiring a competitor in your product category and bringing all of their technology, customer experience and logistics capabilities to go after your customer. How will you stay competitive?
Grocery stores found themselves asking that question in August of 2017 when the giant online e-commerce platform acquired brick-and-mortar grocery chain Whole Foods. Insurers have been asking the question, too. It’s been a popular topic of conversation at insurers and at industry conferences over the past few years.
A recent Harvard Business Review article took a look at how some grocery store chains are staying in the game, “What the Grocery Stores Holding Their Own Against Amazon Are Doing Right”. Insurers can learn from their observations as competition fueled by emerging technology and insuretechs is increasing from both traditional and new entrants to the insurance market.
First, they mention that major Amazon grocery competitors are driving down operating costs and introducing new business models with new delivery capabilities, including some non-traditional approaches using online and emerging technologies. This is analogous to the priorities in the insurance market in North America.
Next, the article explored the issue of brand loyalty and what grocery stores can do to promote it. In that part of the retail sector, customers are typically not loyal to one particular brand, but online shopping is providing an opportunity for companies to differentiate themselves based on flexibility and proactive communication to help develop loyalty among customers.
Essentially, these two factors are about customer experience. Leading grocery stores, like leading insurers, are rethinking how to provide customers with service that is simple and convenient, and developing the communication and delivery capabilities to support the service. This is an example of outside-in thinking: in the past grocery stores focused on getting products on shelves and keeping the store clean, but now focus on flexible ways to shop and receive groceries along with proactive communication to keep them updated and provide related information important to them, including recipes, coupons and other items to keep them loyal. Insuretechs and leading incumbent insurers are focusing more on providing flexibility and communication, but there may be one element missing compared to grocery stores.
The article mentions another key factor in loyalty: emotional connection. This is built based on how the brand makes a customer feel. For the grocery business, the focus is on having customers feel respected and understood. These are important to insurance customers as well, but the experience is also one where the customer needs to feel covered and protected, since this is the basic premise of why a customer needs insurance in the first place. To do this, insurers need to have good ownership around the end policyholder, and many don’t interact with their end customers except during the billing cycle or a claim event, arguably among the most emotionally negative parts of the insurance process.
Insurers need to find ways to transform customer experience initiatives into emotional connections, helping customers feel covered and protected, and respected and understood during the various phases of the insurance process. With more options for insurance available via more distribution channels, insurers need to consider loyalty based on more than setting up automated payments and relying on customers to not look into competing products or companies. Before the internet age, distribution depended on personal connection from agents who listened to customer needs, helped them understand how insurance could cover their risks and provided personalized services and insurance protections. This type of personal and emotional connection needs to be considered as carriers apply technology to customer experience initiatives.
Add new comment