Classics

on Dec 12 by Barry Rabkin
Tags: experience
Comments: 2 Comments »

The other day I was thinking about some of the ‘classics’ we have had here in the Boston area regarding different types of food. Three came to mind immediately:

1. Blueberry muffins from Jordan Marsh
2. Ice cream sundaes at Baileys
3. Clam chowder at Legal’s Sea Food restaurants.

Fortunately the last classic restaurant and chowder still exists. The other two are gone into the pages of history.

What makes a food – or anything else for that matter – a classic?

I submit that the main attribute is the experience the food (or product or service) provides the customer.

But while all classics are wonderful experiences not all experiences are classics.

A company can build off of their classics. The company can generate a stream of revenue from them and broaden their footprint into other products. The experience customers feel from the classic allows companies to experiment or offer new products. Of course, not all of the company’s new products will be classics. And the company has an obligation to maintain the trust they have engendered with their customers. The new products must enable the same or similar experience the customer associates with the company.

What about insurance companies? Where are the ‘classics?’

I’d submit there are only a handful when we use the prism of considering classics – and in that case, companies known for the wonderful experience they provide their clients:

1. USAA’s customer service
2. Chubb’s exemplary attention to the high net-worth households
3. Northwestern Mutual’s focus on products (and producers which also benefits the insurer’s customers)
4. Progressive’s ability to leverage technology to benefit its policyholders from business acquisition through claim adjudication
5. ?????

Who would you add to number 5 – and beyond? But be honest and demanding before answering.

Razors and Razor Blades

on Dec 08 by Barry Rabkin
Tags: experience, Strategy
Comments: 2 Comments »

One of the most enduring strategies for a company to use is “Razors and Razor Blades.” The strength of this strategy is continually on display from razor companies like Gillette. A consumer pays a basic price for the razor and then continues to generate revenue for Gillette through the life-long purchases of razor blades.

Another example of a company using this strategy is HP with their printers. Buy the printer at a low price and then purchase ink cartridges as they run out. HP added a new twist some years ago by having a message show up on the printer (and the print function on WORD) that states a cartridge is running low.

That got me thinking that my relationship with the car dealership I bought my car from is the same type of relationship. Yes, it is entirely in my control but I always bring my car to the same dealership for service.

An example that is not in my control is my iPhone (I just love this device). I’m always on the lookout for new apps and go to iTunes to purchase (or download free) applications. For Apple, it is a win all around – for them, for their developers and for me. And the constantly growing number of apps (now over 100,000) provides a nice competitive advantage for Apple.

Well, can the “razor and razor blade” strategy work for insurance?

How about property/casualty insurers who offer concierge service after an automobile accident? Hopefully it won’t happen with the same frequency as iPhone app purchases but seen over a vast number of automobile insurance policyholders who use the concierge service, these insurers are hoping that by providing a well-tuned (no pun intended) experience, they can better manage their loss costs than having the rascally claimants go to the body shops of their choice.

Are there other insurance examples? Perhaps in the life or annuity segments? Please let me know.