2013 12 25 social media and the (uk) insurance sector


Published on

Published in: Technology, Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

2013 12 25 social media and the (uk) insurance sector

  1. 1. Social Media Threat or Opportunity for the 21C Insurance Company ? Alan Newman agnewman.is@virgin.net and uk.linkedin.com/in/alangnewman/ December 2013 www.fitn.co.uk
  2. 2. We’d like to acknowledge the insights and contributions we’ve had from a number of sources in preparing this presentation: • Anthony Burke at WSI • BDO and their EIU Report on Customer Service Trends • Dr Will Reader at Sheffield Hallam University • John Bancroft at Incognate • Martin Hill-Wilson at Brainfood Consulting • Neil Sharp formerly Insight Now; currently The Pen Partnership • Reachfurther.com (Leeds based)
  3. 3. The audience for this presentation • The busy-but-curious who are supposed to know what’s going on the market (but are too busy with Solvency II, RDR, MiFID, MMR, TCF etc to find out). • Those of you who have a job spec or performance measurement that means you have to think about “What to do next (and why)?” • Those of you who will have to implement a poorly informed and badly thought-out ‘plan’ once your company decides, “we have to do something.” 1
  4. 4. The Presentation’s Objectives & Agenda • The Objectives: – To inform and energise • The Agenda 1. It begins with behaviour and . . . . 2. Behavioural economics 3. Technology is having a BIG IMPACT on consumer behaviour 4. What do you really know about your customers? 5. So what to do next? 2
  5. 5. THE BIG PICTURE: 4 FACTORS CONVERGE IT BEGINS WITH BEHAVIOUR. How well do you and your colleagues really understand human behaviour? NEW TECHNOLOGIES MATTER here. A lot. How technology savvy is your company? How agile is it? Does it experiment? CONTEXT & STRATEGY. Do you have a good basis on which you can assess threats and opportunities? HOW WELL DO YOU KNOW YOUR CUSTOMERS? Why have they bought what they’ve bought: and why from you? 3
  6. 6. It begins with behaviour . . . . Despite what our personal experiences might tell us, human behaviour isn’t simply common sense. We have Stone Age brains in 21C Skulls. For the purposes of this document there are three important consequences: 1. Our brains don’t do ‘Money’. The architecture of the modern human brain is about 180,000 years old. Money is about 8,000 years old. We’ve evolved special areas for speech, vision, or music , for example, but not money. 2. We have two different processes for making judgements about risk and reward: the first is fast, subconscious and emotion driven (the basis of the brain as a ‘habit machine’). The second is slow, conscious and logic driven. The former is our default. The latter takes up a lot of time and energy. 3. We’re a social species. One consequence of this is that judgements can be strongly influenced by other people and by social context. BEHAVIOUR 4
  7. 7. It begins with behaviour . . . . BEHAVIOUR 5
  8. 8. It begins with behaviour . . . . You’ve not met the young woman whose face is shown on the opposite page. You’ve not spoken to her. But can you interpret her expression? What do you think she’s going to do next? Now look at the arithmetic question. Think about what you’re brain is doing as you process the information to answer these questions. From an information processing point of view the first task is much more of a challenge but most of us find it easy. Regarding the arithmetic, most of us will know, quickly, that the answer is less than 400 and more than 250 but it’s time-consuming and energyconsuming to work out the exact figure in our heads. Why is this so? What can we conclude from this? BEHAVIOUR 6
  9. 9. It begins with behaviour . . . . 17 x 23 BEHAVIOUR 7
  10. 10. It begins with behaviour . . . . BRAINS ARE HABIT MACHINES. From an evolutionary point of view, the brain’s natural priorities are food (we need to survive) and sex (we’ve a subconscious drive to produce offspring) and it has developed shortcuts, habits, to satisfy them. A business has much more chance of succeeding if it can build on or utilise consumers’ existing habits. It is unlikely that a proposition will be readily accepted or acted upon if people have to change their habits to do so. BEHAVIOUR 8
  11. 11. It begins with behaviour . . . . FOOD & SEX BEHAVIOUR 9
  12. 12. It begins with (social) behaviour . . . . ONE BRAIN IS ONLY HALF A BRAIN. We’re a social species. Brains are at their most powerful when they connect with other brains. We create problems collectively and we solve them collectively. By definition, language, one of the most important aspects of human behaviour, is a social phenomenon and stories from family, friends, and our culture affect how we perceive risk and reward. BEHAVIOUR 10
  13. 13. It begins with (social) behaviour . . . . BEHAVIOUR 11
  14. 14. It begins with (social) behaviour . . . . Stockmarket bubbles and the tendency for an index such as the FTSE 100 to overshoot or undershoot illustrate how social factors affect judgement. And if the vast majority of UK adults believe that in the long run ‘you can’t go wrong with property’ and that rent is money down the drain, the perception can be selfperpetuating. Two books, The Madness of Crowds and The Wisdom of Crowds both have merit even though they appear to contradict each other. BEHAVIOUR 12
  15. 15. It begins with (social) behaviour . . . . BEHAVIOUR 13
  16. 16. Social behaviour: The Dunbar Number Within primates there is a general relationship between the size of the brain and the size of the social group. We fit a pattern. Our ‘natural tribe size’ is about 150. This is the number of people we can have a relationship with involving trust and obligation: there's some personal history, not just names and faces. Typically this is the size of an average village; the size of a company of soldiers in most armies, past and present, and the average number of friends via LinkedIn or Facebook. There’s recent evidence (http://arxiv.org/abs/1105.5170) that it applies to Twitter as well. Intimacy groups are smaller – typically 5 or 6 people – and close friends typically number about a dozen. It seems as if our brains organise social information as quantum steps rather than as a continuum. www.guardian.co.uk/technology/2010/mar/14/my-bright-idea-robin-dunbar BEHAVIOUR 14
  17. 17. Social behaviour: The Dunbar Number BEHAVIOUR 15
  18. 18. Social behaviour: Hole-in-the-Wall The hole-in-the-wall experiments that were pioneered by Sugata Mitra, now a professor at Newcastle University, inspired the book and film, Slumdog Millionaire. For the purposes of this presentation/document, there are three important lessons from the work of Professor Mitra and his colleagues. First, we should not underestimate the power of self-organising behaviours. Second, it was children who were unable to attend school who were the project’s early adopters and they worked collectively rather than individually to solve specific problems. Third, when looking at new media, we need to think in terms of ‘Internet Speed’ where focused web-users, working together, can accomplish in days what would normally take weeks or months in circumstances that have been the norm hitherto. www.hole-in-the-wall.com www.ted.com/talks/sugata_mitra_shows_how_kids_teach_themselves.html BEHAVIOUR 16
  19. 19. Social behaviour: Hole-in-the-Wall BEHAVIOUR 17
  20. 20. Information foraging Information foraging theory which was developed at the Palo Alto Research Center by Peter Pirolli and Stuart Card. They wondered whether the mathematical models that biologists use to study how animals forage for food could be applied to how web users ‘forage’ for information. In the wild animals benefit if they know how nutritious a food is; how easy it is to obtain; how far away an alternative supply is; and how much time and energy can be afforded to obtain it. Substitute ‘information’ for ‘food’ and we see that web visitors (who ‘feed’ on information) face the same challenges as food-foraging animals and we respond with similar strategies. BEHAVIOUR 18
  21. 21. Information foraging BEHAVIOUR 19
  22. 22. Evolution & social behaviour Three illustrations to help our thinking: From the perspective of a biologist parental investment is a trade off between energy spent reproducing and energy spent investing; energy spent investing cannot be used for reproduction and energy spent reproducing cannot be invested. It does not take a great leap of imagination to see how this applies to financial behaviour too. Genealogy is one of the most popular uses of the Web. Families matter. Always have done, always will. But who is in your family and how might that change? Consider how divorce affects ideas of who’s entitled to inherit what from whom. Mathematicians and biologists like to use Game Theory, of which the Prisoner’s Dilemma is a well-known example, to model how we perceive risk and reward. The ‘best’ strategy in a one-off game is different to the ’best’ strategy if you’re likely to encounter the same person (or his friends and family) on several future occasions. BEHAVIOUR 20
  23. 23. Evolution & social behaviour BEHAVIOUR 21
  24. 24. Evolution, social behaviour and trust Insurers are selling us a promise, so trust matters. Indeed, much if not all financial services rely on trust – and many bank notes illustrate this. In recent years we have seen what can happen when this trust is undermined. Currencies and companies come and go, but different cultures down the ages, and different cultures in the modern world, have been drawn to gold. Why? What does this metal’s allure tell us about how people perceive material value? Has it ever gone out of fashion? BEHAVIOUR 22
  25. 25. Mapping social behaviour Many networks exhibit characteristics of selforganising groups. Key individuals are identified by their interactions rather than their actions: by the behaviour of others rather then the behaviour of themselves. BEHAVIOUR 23
  26. 26. What kind of web animal are you? We exhibit distinctive behaviours with reference to three criteria: •Search time. Fast movers flit between many sites, skim content, and rarely visit a web page twice. Slower movers are more methodical: they’re likely to delve deeper and will often double-check their answers. •Sources. Some of us prefer to use our friends and social media as sources of information, while others prefer more traditional, ‘objective’ sources of information such as the BBC or (online) newspapers. •Concentration. Younger people in particular, those who’ve grown up with the web, seem to be happy multi-tasking – talking on the phone, for example, while consuming TV and checking out Facebook at the same time. Other people prefer to focus on one task and see it through to completion. BEHAVIOUR 24
  27. 27. What kind of web animal are you? The BBC and Professors David Nicholas and Ian Rowlands at UCL developed The Web Behaviour Test to get answers to a number of questions, such as: How do we filter the information we find on the web? How much search time do we spend before we’re confident that we have found the ‘right’ answer? How is our concentration affected when we’re using the web? How influential are brands in affecting affect our choices in online world? How do we make decisions about the quality and ‘authority’ of information? They found that three key characteristics search time, sources and concentration gave rise to 8 types of ‘web animal’. (www.ucl.ac.uk/infostudies/research/ciber/GG2.pdf) BEHAVIOUR 25
  28. 28. Behavioural economics Despite what our personal experiences might tell us, human behaviour isn’t simply ‘common sense’. For retail banks and insurance companies insights from the relatively new field of behavioural economics are particularly relevant. Behavioural economics brings together ideas from economics, psychology, sociology and neuroscience to develop insight into people’s financial decision-making. Key concepts include anchoring, base rate neglect, bounded rationality, choice architecture, the endowment effect, framing, heuristics, hindsight bias, hyperbolic discounting, loss aversion, maximizers, mental accounting, multiple selves, satisficers, the status quo bias, the sunk cost fallacy, and the ultimatum game. Why not draw up a spreadsheet/matrix and identify whether the impact of each of these concepts is High, Medium or Low for selected financial services products? www.ted.com/talks/dan_ariely_asks_are_we_in_control_of_our_own_decisions.html BEHAVIOUR 26
  29. 29. Behavioural economics BEHAVIOUR 27
  30. 30. Behavioural economics The diagram on the opposite page illustrates the pattern of thinking that characterises the financial services sector. It focuses on products and it assumes that we’re completely rational and have the time, energy and inclination to think things through. We consumers don’t operate this way. First of all, as demonstrated by behavioural economists, we treat money differently based on how we got it (e.g. salary, bonus, lottery win or tax rebate) and what we plan to use it for (e.g. pay off debt, go on holiday, have a night out, or make a pension contribution). And in a recent project in which we were involved, most consumers said that their highest priority was paying for their children’s education – and that doesn’t appear on this pyramid at all. BEHAVIOUR 28
  31. 31. Behavioural economics Logical Rational Liked by financial services people Misleading BEHAVIOUR 29
  32. 32. BBC Big Money Test In the BBC Big Money Test devised by personal finance guru Martin Lewis, Professor Adrian Furnham of UCL and Professor Fenton-O’Creevy of the Open University the point was made that money means different things to different people: •Money as security. Emotional security is represented by financial security. Money bolsters feelings of safety and self esteem and so is hoarded. •Money as power. Because money can buy goods, services and loyalty, it can be used to acquire importance, domination and control. •Money as love. For some money is given as a substitute for emotion and affection. Those who spoil their children, ostentatiously give to charity or even visit prostitutes are buying love. Others sell it. •Money as freedom. It buys time and frees us from the daily routine and restrictions of a paid job. Money buys escape from orders, commands – everything that restricts autonomy and limits independence. The researchers also noted that we have money-habits and that there are five archetypes: misers fear becoming penniless and have trouble enjoying the benefits of their money; spenders shop in an often uncontrolled manner, particularly when feeling low - and get a short-lived high followed by guilt; tycoons see money as a route to power and approval, and believe wealth will make them happy; bargain hunters feel superior when they get discounts and feel angry if expected to pay full price; gamblers feel exhilarated when taking chances and find it hard to stop - even when losing - as a win brings a sense of power. BEHAVIOUR 30
  33. 33. BBC Big Money Test BEHAVIOUR 31
  34. 34. BBC Big Risk Test Research suggests there are two distinct ways in which humans comprehend risk. The first is referred to as the ‘experiential system’. It is intuitive, fast and often automatic. It relies on images and associations, based on experience, to arrive at a ‘gut feeling’ that something is good or bad. This is the more emotional side to risk, and it is this system we use when we decide not to walk down a dark alley at night. The second can be described as the ‘analytic system’ and involves using logic and our understanding of arithmetic. This system is slower and requires a great deal of effort and concentration. Scientists think that ‘gut feeling’ judgments about risk may be influenced by irrelevant information, such as the way the risk is presented. They predict that presenting an activity in a positive way may cause us to perceive it as less risky, while presenting it in a negative way may make it seem more risky. For example, if we imagine someone scuba diving in a tropical paradise, surrounded by beautiful fish, we might perceive scuba diving as less risky than if we imagine them diving into cold, murky water in winter. The Big Risk Test is also investigating how people perceive the large-scale risks that society faces. These include things like terrorism, natural disasters and climate change. Does everyone perceive these risks in the same way? If not, what factors cause us to view them differently? BEHAVIOUR 32
  35. 35. BBC Big Risk Test BEHAVIOUR 33
  36. 36. Social media – new segmentation? According to a 2008 Ofcom report there are 5 types of social media user: 1. Alpha Socialisers (a minority) used sites in intense short bursts to flirt, meet new people, and be entertained. 2. Attention Seekers crave attention and comments from others, often by posting photos and customising their profiles. 3. Followers join sites to keep up with what their peers were doing. 4. Faithfuls typically used social networking sites to rekindle old friendships, often from school or university. 5. Functionals tend to be single-minded in using sites for a particular purpose. Non-users of social networking sites also fall into distinct groups. Concerned about safety; technically inexperienced; and Intellectual rejecters – people who have no interest in social networking sites and see them as a waste of time. BEHAVIOUR 34
  37. 37. Social media – new segmentation? BEHAVIOUR 35
  38. 38. Social media - new segmentation? In the world of social media it may seem plausible to define users as creators, conversationalists, critics, collectors, joiners, spectators or inactives – but isn’t it more likely that an individual will exhibit two or three types of behaviour depending on circumstances? And how useful are these designations in helping an organisation engage with its customers? Which of these definitions applies to you? BEHAVIOUR 36
  39. 39. Social media - new segmentation? In a 2011 report, Emily Hunt and Richard Bussy looked at how consumers interact with brands via social media. Originators 20% Curators 29% Sharers 24% Participants (updates) 52% Based on their research Hunt and Bussy identified two key types of customer of most interest to those conducting social media campaigns: CURATORS and SHARERS. Participants (comments) 60% Before social media came along Curators were the folks in the office emailing funny links, Spectators 78% games and industry gossip. http://www.brandrepublic.com/research/1078178 http://www.brandrepublic.com/news/1108677/Special-Report-Social-media---battle-brands BEHAVIOUR 37
  40. 40. Social media – generational effects BEHAVIOUR 38
  41. 41. Social media and consumer behaviour BEHAVIOUR 39
  42. 42. Social media – it’s about time BEHAVIOUR 40
  43. 43. Social media and Trust We’re a social species and our default setting is to trust. It saves time and helps us manage complexity. (Trust is complicated. I may trust my bank to clear a cheque and not steal; but I may not trust it to sell me a product that represents value for money.) Research described by Dr Miriam Meckel and her colleagues at the University of St Gallen identified several core drivers of online trust: brand and reputation, customer service, offline presence, reciprocity, (technological) reliability, third party endorsements and user control. BEHAVIOUR 41
  44. 44. Something old, something new http://www.economist.com/node/13914661?fsrc=rss In an article in June 2009, The Economist published an article comparing and contrasting LinkedIn and Freemasonry. The merit of this approach is that it helps us get a handle on how modern technology is affecting an age-old behaviour. Networking isn’t new – so what are the similarities between LinkedIn and Freemasonry; what are the differences; and what are the consequences? BEHAVIOUR 42
  45. 45. Something old, something new NEW TECHNOLOGIES 43
  46. 46. Social media – where to begin? The word cloud opposite illustrates the challenge that a management team has in getting its collective head around the issue of social media and the associated threats and opportunities. In his book, Socialnomics (www.socialnomics.com) Erik Qualman suggests four critical steps: SELL The Company REACT INTERACT LISTEN LISTEN B U Y INTERACT REACT The Customer SELL Listen to customers and conversations about the brand or products; interact – join the conversation; react – adjust your product or service based on feedback; sell – if you do the previous three well this will take less effort. Customers have a similar journey. NEW TECHNOLOGIES 44
  47. 47. Social media – not a clear picture NEW TECHNOLOGIES 45
  48. 48. ‘Social media’ is a BIG topic The image on the opposite page image illustrates just how big a topic Social Media is. The image on the left probably does a better job at communicating how a manager who has to implement social media projects actually feels. Which of the elements opposite are likely to add the most value to your business in general (i.e. What is basic value proposition of your market sector?) and which are most relevant for your differentiation and strategy? Whatever your answers are, how likely is that they will / won’t change in the next one, two or three years? NEW TECHNOLOGIES 46
  49. 49. ‘Social Media’ is a BIG topic http://www.simplyzesty.com/social-media/17482/ NEW TECHNOLOGIES 47
  50. 50. Social media are part of a BIG trend Despite the uncertainties referred to in previous slides there are some developments we can be sure of, and their confluence will shape the world in which we conduct business: 1. The increase in popularity of smart phones will continue with the result that this will be the main way in which people connect with commerce. 2. Tablet PCs complement smart phones and will replace laptops and PCs as the ‘larger format device’ that consumers prefer. Personalising interfaces will become more important. 3. Significantly faster broadband services and 4G will mean that graphic and video information will become as important, maybe more important, than text as the main way in which a business engages with consumers. NEW TECHNOLOGIES 48
  51. 51. Social Media are part of a BIG trend NEW TECHNOLOGIES 49
  52. 52. Social media become mainstream According to Experian (Jan 2011) 56% of all UK online traffic goes to social sites, and the average Facebook user spends just under 2 hours a day on his/her site. Furthermore, users are increasingly accessing their social media sites via their phones and tablet PCs rather than laptops. According to a talk by Google at Imperial College Business School in November 2011, the UK spends more per head online than any other country. For several reasons we seem, as online consumers, to be opting more for self service. And we expect online suppliers to remember/store information from our previous visits and recognise us on our return. NEW TECHNOLOGIES 50
  53. 53. Social media become mainstream NEW TECHNOLOGIES 51
  54. 54. Social media become mainstream Writing for The Economist, Sheryl Sandberg, COO of Facebook, noted that many social media users post photos on their sites so that friends and family, often hundreds or thousands of miles away, can see them. “They share because they care.” On the flip side of this, people are now sharing stories many of which provoke strong feelings and encourage people to act. Campaigns can be started this way,: “They care because they share.” Sandberg also referred to Iceland where the Government, drafting a new constitution, used social media to put the figurative pen in the hands of its citizens; and The Arab Spring where (mainly younger) people used social media to give individual citizens a voice that had to be heard. NEW TECHNOLOGIES 52
  55. 55. Social media become mainstream NEW TECHNOLOGIES 53
  56. 56. Social media become mainstream How do you use social media? How do your children use social media? To what extent would your decision to buy a financial services product online, or not buy one, be influenced by what you encountered via a social media site? Which of these would you be willing (or unwilling) to purchase online (and how do you think your answer might change 2-3 years from now)? 1. 2. 3. 4. 5. Buildings insurance Contents insurance Credit card Critical illness cover Health Insurance NEW TECHNOLOGIES 6. Income Protection 7. ISA 8. Life insurance 9. Loan 10. Motor insurance 54 11. Pension 12. Pet insurance 13. Premium bonds 14. Travel Insurance 15. Shares
  57. 57. Social media become mainstream NEW TECHNOLOGIES 55
  58. 58. Social media – generation matters BUT THE EVIDENCE IS CHANGING It is perhaps not surprising that teenagers and those in their early 20s are more comfortable with new gadgets and social media than there parents are. And yet . . . . There are more ‘silver surfers’ year on year. Business men and women are hooked on their Blackberrys and iPhones, and grandparents are connecting with their grandchildren as never before. NEW TECHNOLOGIES 56
  59. 59. Social media – generation matters NEW TECHNOLOGIES 57
  60. 60. Generations and behaviours Facts do not speak for themselves. Yes, teenagers and adults behave differently: no surprises there. The question is, “As this cohort of teenagers become adults will they revert to behaving as their parents did or will their experiences as teenagers persist as they get older?” NEW TECHNOLOGIES 58
  61. 61. Social media: mobile phone addiction NEW TECHNOLOGIES 59
  62. 62. Social media and gender http://blog.ted.com/2011/02/02/social-media-and-the-end-of-gender-johanna-blakley-on-ted-com/ Media and advertising companies still use the same old demographics to understand audiences, but they’re becoming increasingly harder to track online, says media researcher Johanna Blakley in this thought provoking 2010 TED talk, “Social Media and the End of Gender”. As social media outgrow traditional media, and women users outnumber men, Blakley explains what changes are in store for the future of media. NEW TECHNOLOGIES 60
  63. 63. Social media and gender NEW TECHNOLOGIES 61
  64. 64. Social media habits NEW TECHNOLOGIES 62
  65. 65. Social media habits NEW TECHNOLOGIES 63
  66. 66. What we’ve covered so far So far we’ve focused on (i) behaviour, because there’s a limit to how much our enterprise can benefit from social media if we’re not behavioursavvy and (ii) technology, because in this context it is not simply an enabler: it is having a profound effect on consumers’ habits. We focus next on customers and strategy. As customers we know what matters to us, so why is it that when we turn up for work at the office we leave these insights at reception? How much weight we give to an issue, ‘What we do next’, depends on our strategy. We can’t invest in everything – strategy helps us focus on those issues that help us create value and obtain competitive advantage. 64
  67. 67. The Presentation’s Objectives & Agenda • The Objectives: – To inform and energise • The Agenda  It begins with behaviour  Behavioural economics  Technology is having a BIG IMPACT on consumer behaviour 4. What do you really know about your customers? 5. So what to do next? 65
  68. 68. Consumer behaviour and social media CUSTOMERS 66
  69. 69. Consumer behaviour – some indicators The Web is already a significant distribution channel for financial services. (Google presentation to TISA Oct 2011) 47% of people who acquired credit cards did so online 49% of General Insurance is now bought online 21m 49% people researched at least one financial product in the last year of savings accounts have been set up online 75% of people looking for a mortgage research online first 66% of consumers would consider arranging their mortgage online CUSTOMERS 67
  70. 70. Customer Contact Matters In the middle to late 1980s, when I was studying at INSEAD, the cool companies included Unilever and Procter & Gamble because they were about brands, and because there was a difference in Strategy if you were an international, multinational, global or transnational organisation. Retailers such as Carrefour, Sainsburys or Tesco weren’t cool at all. Market capitalisations reflected this: in the 1980s Unilever and P&G had market caps that were several times greater than that of major retailers. Today that’s changed: it is the Carrefours, Sainsburys, Tescos and Walmarts that have the marketing muscle, realtime customer information, and greater market valuations: and Amazon and eBay can now be added to the list. CUSTOMERS 68
  71. 71. Customer Contact Matters CUSTOMERS 69
  72. 72. Customer service: don’t kid yourself Much like male car drivers, many of whom believe they are excellent drivers, most (nearly seven in 10) firms consider themselves to be “above average” when it comes to customer service, although relatively few (16%) regard themselves as excellent. Some of these, however, appear to be getting slightly ahead of themselves. Just six in 10 have a defined strategy for tracking customer feedback and complaints, while even fewer (55%) have a system for identifying service gaps, and less than four in 10 think they do a good job of addressing customer feedback. (BDO EIU Service 2020) CUSTOMERS 70
  73. 73. Customer service: don’t kid yourself CUSTOMERS 71
  74. 74. Customer Service: don’t kid yourself In March 2011, IBM conducted research in to the dichotomy between customers’ perceptions and those of the business with whom they were interacting. IBM called this The Perception Gap. These findings are consistent with those reported by Bain (where 70% of CXOs thought their businesses delivered superior customer service, and yet only 7% of customers agreed) and the BDO study referred to previously. The IBM report noted: “Many companies have misunderstood their social network audience and have flooded them with inappropriate offers.” To get it right a business needs to know its customers’ habits, biases, followings, preferences and trust circles. CUSTOMERS 72
  75. 75. Customer service: don’t kid yourself CUSTOMERS 73
  76. 76. Customer service: don’t kid yourself If I work for Starbucks I probably think people are more interested coffee than they are. If I work for Dell I probably think people are more interested in computers than they are. If I work for Thomas Cook I probably think people are more interested travel than they are. If I work for Ageas I probably think people are more interested in Protection than they are. If I work for L&G I probably think people are more interested in pensions than they are. If I work for ITN I probably think people are more interested news than they are. This is probably why we over-focus on selling to satisfy our needs and pay insufficient attention to letting customers buy in a manner that helps them satisfy their needs. CUSTOMERS 74
  77. 77. Customer service: don’t kid yourself CUSTOMERS 75
  78. 78. You’re the customer . . . . . 1. What’s the best customer experience you’ve had? What could your company learn from this? 2. What’s the worst customer experience you’ve had? What could your company learn from this? 3. Which brands or organisations do you associate with good service? On what is this perception based? 4. Which brands or organisations do you associate with poor service? On what is this perception based? 5. Which organisations (not just companies – e.g. Your GP’s surgery; or HMRC) do you feel know you well? 6. What does a company need to know about YOU personally, to sell the right things to YOU in the right way? CUSTOMERS 76
  79. 79. Think about your customers . . . . . 1. How many ways do you segment them? 2. If each customer knew how you segmented him/her what is the likelihood that he’d agree or disagree with you? 3. If each customer knew how you segmented him/her what is the likelihood that he’d perceive you as insightful? 4. No doubt you have opinions, but do you KNOW why your customers bought from you rather than a competitor? 5. What is the likelihood that they’ll buy from you again? On what evidence do you base your answer? 6. Are you more likely to be delighted or anxious if a random selection of 30 of your customers were to meet up? CUSTOMERS 77
  80. 80. Think about your company . . . . . 1. 2. Where does customer expertise reside? How well does it score on ‘Customer Intimacy’ 3. 4. Does it know why customers defect? How likely is it that customer expertise is being overlooked or underutilised? How many of your employees are also customers – and how well do you use them as assets? How well do you use existing customers to help you develop new products? 5. 6. 7. 8. How well do you use existing customers to help you develop new services? Who are the customers’ champions? CUSTOMERS 78
  81. 81. Customers, information, management What has CRM ever done for us? CUSTOMERS 79
  82. 82. Context and strategy For every £100 you have available to spend on social media, how much would be spent on: 1. Selling more current products to existing customers 2. 3. 4. Selling new products to existing customers Selling current products to new customers Selling new products to new customers To what extent do these different options call for different (social media) approaches? Where do social-media-based campaigns add most value? 80
  83. 83. THE BIG PICTURE: 4 FACTORS TO CONVERGE IT BEGINS WITH BEHAVIOUR. How well do you and your colleagues really understand human behaviour? NEW TECHNOLOGIES MATTER here. A lot. How technology savvy is your company? How agile is it? Does it experiment? CONTEXT & STRATEGY. Do you have a good basis on which you can assess threats and opportunities? HOW WELL DO YOU KNOW YOUR CUSTOMERS? Why have they bought what they’ve bought: and why from you? 81
  87. 87. CONTEXT & STRATEGY 85
  88. 88. Social media – organisational impact The diagram on the opposite page is based on the business best- seller, Groundswell by Li and Bernoff. Unlike the other books on social media (which opt more for the Wow! and Gee Whiz aspects of social media, there’s a strong corporate element in Groundswell (Li works for Forrester Research), i.e. it aligns its messages with the day to day realities of corporate life – business functions such as Marketing and Ops; strategy; or performance measures; so many managers will find this matrix relevant and useful. CONTEXT & STRATEGY 86
  89. 89. Social media – organisational impact CONTEXT & STRATEGY 87
  90. 90. Summary of key points 1. Learn to listen 2. Think differently about segmentation 3. Learn to listen 4. Adapt to consumers’ habits 5. Learn to listen 6. Become behaviour-savvy 7. Learn to listen 8. Social media: a strategic or an operational one? 88
  92. 92. WHAT TO DO NEXT? CONTACT ME AT agnewman.is@virgin.net COME TO THE NEXT FINANCE IT NETWORK MEETING (www.fitn.co.uk)
  93. 93. Thank you After graduating with a degree in Psychology from UCL, Alan spent 3 years in Kenya on VSO as a science teacher. He worked for DEC as a software services manager in the UK and Middle East and attended the International Advanced Management Programme at INSEAD. He became a freelance consultant in 1992. Clients with whom he’s worked include Aviva, AXA, BT Syntegra, Capita Registrars, Computershare, CSFB, Hannover Life Re, iFapps, L&G, Liverpool Victoria, RSA and Swiss Re. He has also written for FT Finance and The Journal of Brand Management. agnewman.is@virgin.net www.fitn.co.uk ; www.inv8.co.uk