When taking a look at most corporate marketing plans, whether from insurance-based financial product providers or not, you will find the usual disciplines: PR plans, technical support plans for sales, corporate standard rules etc, and often usually a large commitment to new product development.
Bearing in mind that for life business in both international and multinational companies there are only three basic forms of life product – whole life assurance, endowment assurance and temporary life insurance – life companies have been innovative indeed in mixing them together and producing a seemingly never ending conveyor belt of different types of product based around the above.
The cost of new product development is high, it impacts almost every part of a business and carries the greatest risk often with an uncertain outcome in terms of contribution to value and market penetration. This risk is usually higher for international life companies because they lack a detailed market research capability.
Large development projects are often started but based on the flimsiest of detailed customer and intermediary research, with outcomes often skewed to an internal view of the market with research sometimes interpolated [conjoined] to support an existing belief. It’s also true that boards and executive teams often put undue pressure in this area, which is not always helpful.
One Nirvana for marketers (and there are many) is to develop innovative ideas to convert push to pull sales – this does not just rely on new product launches. Let’s think about who the primary customers for international brokers and international life companies are; typically its mass affluent mobile expatriates and high-net-worth locals who want internationally based products.
These products are often heavily investment loaded. This means that it’s not just insurance intermediaries who are chasing them but also private banks, investment houses and retail international banks.
All are pedalling the similar investment based products. Insurance intermediaries have some advantages in that they are independent and not usually forced to sell in-house investment products whether they are suitable or not.
But what is it the clients are really looking for? Not products for sure. Higher on their priority list are things including services, performance, and fiscal neutrality as far as is possible. In essence, we are talking about meeting perceived needs. The fact that a product underpins the above has not much relevance in the customer’s eyes.
There is an old adage which insurers often forget. This is that their primary role is to make customers feel safe. A safe customer is a happy customer. Safety is not built around the product in itself; it’s built around what the products do for them in terms of the delivery of a range of services.
Customers around the world want fast, easy access to information and service they can rely on, they want to know that if need be they can talk to an adviser they can trust, they want to feel that as mass affluent and high-net-worth clients their personal needs are being catered for. Electronic communication is no impediment to this; it’s all usually about the delivery of services not products.
Often the service needs of customers are very similar to the service demand of intermediaries. The marketing departments of product and service providers should consider working much closer with their distribution partners as well as customers to more clearly define innovative service strategies and plans. It is in this area that they will persuade customers to stay aligned to their distributors and product providers, not the often unswerving belief in a constant flow of new products.
Innovation practitioners have not always helped in this area as the classic basic platform start for innovation has been around the start point of products and markets, it should of course be products /services and markets.
To summarise, a constant flow of targeted service enhancements is a lot cheaper and often more successful than the development of new products. They also allow true incremental and evolutionary innovation to thrive and be delivered at a more acceptable cost and lower risk profile.
Peter Hobbs is formally the head of Generali International and currently a non-executive director of deVere Group