Disrupting the market

Whilst I’m still in a mood about my recent cancellation of what little relationship I had with my old employer it’s probably worthwhile talking about why I have such an interest in this.

Previous readers will know I work in IT. I’m also deeply into new tech and digital (I work for a huge telecommunications company) 
And sat here last night getting over the break up of my relationship with my car insurer I wondered what would happen to the ‘big boys’ of insurance today if their market was disrupted from a new competitor who didn’t do insurance in the way we expect or see it being done now.
Disrupters are part and parcel of the technology sector. You can’t click on a link to a tech news website without seeing the latest start up who is disrupting whatever market they are about to deploy into. Kickstarter is full of start ups promising to change the way we do x or how we use y.
If you look at the recent news about Uber and the impact they are having on the travel sector you can see what real disruption looks like. If you are a customer it’s great. It’s digital, it’s app based, it’s normally far more efficient than what you currently use and the chances are it comes in at a price that undercuts the existing competition. It’s a win win for us as consumers
If you are one of the companies who have just discovered your market is being disrupted than the opposite is true. It’s as scary as hell. Your existing monopoly on consumers can literally disappear before your eyes. 
A further problem for these disrupted companies is that they are normally large, normally operating on legacy systems and processors and normally adverse to rapid and sustainable change to keep pace with disrupters in their sector.
 For the disruptors this is fantastic news as it means not only do they get to take a slice out of existing competitors customer share, but also keep them for months or even years before the competition realises the threat and starts to put together anything resembling the disruptors technology or processes. And nine times out of ten the old players in the market will simply try (and fail) to copy what the disruptors has done, finding along the way that it’s now incredibly difficult to claim back that lost slice of customers.
The response to this realisation is normally threefold
1) the disrupted companies try to introduce a different way of rapidly introducing ‘digital’ changes to their customers. Normally focusing on app style technology. These rapid deliveries tend to be on the most part extremely rushed, buggy and don’t address the key benefits the disruptor offers consumers over the existing legacy companies.

2) the disrupted companies try to compete on their existing platforms using their ‘brand’ or ‘prestige’ to try to hold onto customers. The ‘head in the sand’ approach works for some customers who may be nervous of using smaller start up style companies products but it still doesn’t address the fundamental problem of a disruptor moving the goalposts

3) the disrupted companies throw their toys out the pram and use legal avenues or regulatory bodies to try and ‘lock out’ the disruptor from their market and customers
Don’t believe me?
Take Uber
Disrupts the taxi sector. 
Sees huge demand for its service, rapidly expands across national and international markets, completely changes the way consumers can book travel.
Now taxi companies have a number of options. 
1) they could provide technology that matches the wants and needs of their customers (it still amazes me that the majority of black cabs don’t take card as payment – especially when we are becoming a cashless country) 

2) they could try and out perform and outpace the disruptor (in this case Uber). Which is unlikely where a large, well funded disruptor enters the market

3) they can spit their dummy out and take the disruptor to court
What one do you think happened in Uber’s case?
Number 3
Rather than try and ensure they deliver the evolving wants and needs of their customer base they decide to go after the disrupting influence and throw mud at them in the hope some sticks.
So in the UK we’ve heard how Uber drivers aren’t security checked, don’t have as many background checks as licensed cabbies, overcharge and don’t have as much knowledge as ‘genuine’ taxi drivers.
All complete rubbish. Uber drivers have to go through a number of checks, more so than me and you holding a driving license. They also have technology black cab drivers don’t that ensures the customer and the driver agree the price up front (being transparent) and map technology that ensures the quickest route is always made clear to customer and driver.
Uber have successfully disrupted the taxi business. 
And more importantly the consumers agree. Uber is undergoing rapid expansion across the UK. Customers fell on the side of Uber in recent court action which London Transport soon realised.
So why am I talking about taxi companies when I was thinking about car insurance?
Well, imagine an Uber entering the car insurance market. With cutting edge technology and data supporting it. Fail fast approaches and a genuine effort to make the customer interaction smarter and more cost effective for company and consumer. Just think how quickly the car insurance market would be disrupted?
What if it wasn’t Uber? What if it was Google?
If I was a car insurance company in the UK I’d be worried today. Because it won’t take long for disruption to come, and when it does it’s going to put Uber annoying black cab drivers completely in the shade.


Bad Business

This post kind of sucks.

And the reason for that is because it’s a moan about my old employer who I literally waved goodbye to four months ago. It also sucks because I liked my old employer as a company and I still have a lot of good friends who work there.

So any Aviva friends reading, I’m sorry, genuinely for what follows, I’d also add that it isn’t just Aviva who are terrible at this, but every single insurance provider I’ve ever taken out a policy with. It’s absolutely endemic across the sector. 

What is it?

Insurance renewals…

I had (until tonight) a multicar policy with Aviva for mine and my wife’s cars. A cheap enough policy at just over £300 for the year fully comp. I took this out with Aviva partly through loyalty to my employer and party because it was a decent price.

But the problem with car insurance policies is for the most part in the first 12 months they are a loss leader for the provider. The aim is to get the footfall through the door in order to keep you there beyond the first 12 months when they then start to make a profit from you. They do this through the renewal process where you find that £300 odd yearly premium has now grown to £600 in my case tonight.

Yep, doubled. I’d add I’ve not had any claims in that time, not moved, not done anything to increase my risk to my insurer. So I’ve been rewarded for this loyalty by being asked to cough up double what I paid last year.

I’m not alone in this. Google car insurance renewals and you’ll find thousands of similar tales. The problem is insurers hope and pray you’ll not notice your renewal automatically kicks in at 12 months. At which point if you try to cancel you encounter hefty cancellation fees for your trouble. So for the insurer it’s a win win if they can keep you beyond the first 12 months. For you it’s a lose lose.

So the very first thing I’d urge you to do is never ever accept your renewal notice from an insurer. The chances are you are being screwed.

The second thing to do is to call the insurer and tell them you’ll be cancelling the policy. And this is where my issue is.

If I was running a business I’d want my customers to be repeat customers. I’d want to make a profit but ensure my customer felt like they were getting a decent enough deal as part of the arrangement. If customers left I’d want to do everything in my power to stop them from leaving. That’s just good business sense.

You’ll never stop everyone leaving but if you can even stop 10% that’s profit you keep with you and not with a competitor. 

My issue tonight when calling Aviva to cancel was not the call centre. The chap was polite, we talked about me being an ex Aviva employee. We talked about the weather (he is in Scotland – where storm Abigail is hitting). I explained I wanted to cancel the renewal, he was efficient and polite throughout. He asked the important question of why I was cancelling. So I tell him it’s practically double what I was paying before.

The response is ‘okay Mr Mancini I’ll get that cancelled for you’

No no no no no no no

I want you to fight to keep me as a customer Aviva. I don’t want you to let me walk out the door. This isn’t Pretty Woman, I’m not expecting to be wined and dined and beaten by your short fat friend as he calls me a hooker, but I am expecting you to at least meet me halfway a little bit on this. Where is the discussion to see what you can do to keep me? Where is the chat about maybe doing a new quote as a new customer to get a discount? 

There was none, and it leaves me feeling like Aviva don’t care enough to keep me. This makes me sad, and disappointed, and it makes me feel negative about the other products I still have with Aviva.

Because this is the silly mistake that Aviva as a composite life and pensions provider makes above and beyond your bog standard car insurance provider. They fail to use big data and joined up systems to spot the critical moments of truth with their customers. Moments of truth such as mine this evening with Aviva where if they did use analytics they’d have seen I also have home insurance and a pension with Aviva. Products which I’ll also now be cancelling and moving to someone else who values my entire relationship with them more.

Silly stuff like this sounds insignificant and in the grand scheme of things it probably is. I’m just one customer in a relationship of millions Aviva have. But I can tell you that securing my business would have been far more profitable for them longer term than churning every 12 months like I’ve just done.

It’s a massive diservice to their staff who I can say work bloody hard for sometimes very little reward or thanks. It does a diservice to their shareholders who expect and demand returns on their investment that would be higher if they used technology to secure customers longer term to make larger profit and it does a Hugh diservice to their customers who they hope to sneak up on at renewal in the hope they’ll trap even 25% of them beyond 12 months with policies that provide absolutely zero difference to what they did 12 months ago except for premiums that bear no reflection of the actual risk that customer presents to them.

It’s bad business and it sucks Aviva