Brokerage Ops the Jan/Feb 2015 issue

Rethink Beyond Your Own Reality

Perceptual Blindness: If you can’t see it, you can’t address it. Remember, you’re a data company first.
By Chris Gagnon Posted on January 22, 2015

If we are to survive, we need to start thinking differently. As humans, we tend to react to changes in our environment by relying on experiences and tactics. When the environment shifts dramatically, the most stalwart of ideas and beliefs often lose their value. Those with the ability to let go of their ingrained beliefs have the biggest chance of successfully transitioning to a new environment.

There’s an often-repeated story of Christopher Columbus approaching the New World in his tall mast ships. As the story goes, the natives looked out to sea and, because massive sailing ships were so far outside the bounds of their reality, they physically couldn’t see them. Instead they saw strange ripples in the water with no apparent source. As the story continues, a shaman stared at the ripples challenging his own perception of reality until he thought about how a massive canoe might cause such a large ripple. At that point he was able to physically see the ships. He then went through the village explaining the concept until the entire native population was able to actually see the ships.

Whether this story is fact or fantasy is irrelevant. The point is clear. When someone’s view of reality eclipses yours, they possess an undeniable advantage. For companies, perceptual blindness is a death sentence.

Revenue vs. Understanding

As agency leaders, we possess an often unrecognized and untapped advantage. While we are ultimately responsible for selling insurance and risk management services, we are also consumers. From personal televisions, cars and other physical items to business services related to our agencies, we make purchasing decisions and develop loyalties based on a number of motivators. If we stopped to think about why we buy and compared those behaviors to the way we sell, we would quickly understand the fundamental misalignment. Moreover, that misalignment is growing more pronounced over time as entire generations come to expect sellers to provide new ways of interacting.

While we don’t often think about why we make certain choices when buying, there is an entire industry intently focused on understanding you, me and everyone else. The organizations that do this best are more concerned with understanding you than they are with making money from you. This leads to the first rule of the new economy: Impressions are more important than revenue.

But what does that mean? A company that doesn’t focus on revenue is destined to fail, right?  Not in the new economy. Consider what it feels like to be a client of your agency. Better yet, what does it feel like to be a prospect? When you focus on the customer experience, the revenue will follow. The more you understand about the individual buyers in your market, their motivations and individual situations, the more revenue will make its way to your firm.

Using traditional metrics, Amazon is incredibly unprofitable. But Amazon has such an understanding of its customers—their purchasing habits and history—that the company’s data is far more valuable than the volume of stuff it sells.

We would be wise to consider that Amazon is not a retailer at all. It is a data company. And I’ll let you in on a little secret: You’re a data company too.

Understanding Your Market

In such a complex industry as insurance, most brokerages differentiate themselves through increased specialization. Perhaps your firm has the deepest knowledge of risks inherent to the hospitality business. Your brokers stay at the cutting edge of trends and issues related to the industry. They eat and breathe hotels and restaurants. With this deep knowledge, your firm surely knows the customer base better than anyone, right?

The problem is that knowing an industry is completely different from knowing your customer. Knowing what a customer needs (certain terms, limits and coverage enhancements) is entirely different from knowing what and why they will buy. 

Need an example? I need to eat more spinach. It’s loaded with nutrients that will prolong my life.  Any spinach expert knows this and truly understands the value of spinach to me. The problem is I personally feel that it is also loaded with terrible flavor and texture, and therefore I will not purchase spinach under any conceivable circumstance.

Coincidentally, I have a similar opinion of cyber coverage. No matter how many times my broker lectures me on the benefits, I feel the coverage is fundamentally misaligned from the risk, and I won’t buy it. It comes down to this: Buying decisions are not always based on facts. The experiences and motivations of the buyer have an enormous effect on your ability to land and retain business.

So does this mean your agency needs to understand the motivations of each individual buyer among every last one of your tens of thousands of clients? Yes, but it’s actually harder than that. Your agency needs to understand the individual buying motivations of everyone—current clients, prospects and future buyers. Yes, every one. All gazillion of them.

That’s impossible right? It’s certainly impossible in our current way of doing business. But some companies and business models have cracked this code. We would be wise to learn their ways before they decide to enter the insurance industry.

Audience Indicators

A gazillion is a big number, so let’s narrow this down to just your customers and prospects. How can you possibly get to know them on an individual level? As I mentioned earlier, you already live in this world as a consumer, so let’s take a look at a familiar example. Have you ever thought about what is actually happening behind the scenes when you search for something on Google?

In the aggregate, Google processes 1.6 million queries per second. That number alone is staggering, but what does “processes queries” really mean? We all know the results will include some paid advertisements based on our search. Anyone who has used Google AdWords knows you can pay Google to put your website at the top of the page based on certain criteria. For example, if I search for shoes the first entry I see is Zappos. That’s because Zappos has paid for the placement, but it’s not as simple as that.

AdWords is not the same as buying a billboard. When you perform a search, Google applies multiple “audience indicators” to your search. So in the background, while it’s assembling your search results, Google is asking itself some questions about you:

  • Who are you? 
  • How often have you searched for this term? 
  • What websites have you visited today? 
  • When clicking through to a shopping site, how often do you make a purchase? 
  • What have you spent? 
  • What are you talking about on social media? 
  • At what time of day do you normally make purchases?
  • What is your income? 
  • Where do you live? 
  • Are you searching from home? 
  • What is your purchase history related to your current location? 

The list, as you might imagine, goes on and on. And while the list alone is staggering, even more staggering is Google’s ability to answer the questions in the few seconds that pass before your search results appear. These types of indicators and more are processed in the blink of an eye with the resulting insight used to assemble the ads that appear at the top of your search results.

So it doesn’t surprise me to see Zappos appear when I search for shoes. Why? I buy all my shoes from Zappos. In fact, it wouldn’t surprise me if your own searches resulted in other shoe companies showing up as the first result based on your own buying motivations. At a recent presentation I attended, a Google senior executive said if all audience indicators are successfully processed, Google can identify a customer that is 542 times more likely to buy during a given online session. That’s an incredible amount of insight compiled in about one second.

So how do we take advantage of this technology? Be patient. You aren’t there yet. Thinking about insurance buyers in a different way is your first step. Challenging our antiquated notions about what we know and how we sell is a big hurdle to overcome. Think about it for a bit. When the term “antiquated notions” starts to feel comfortable, you’ll be ready to move on. In the coming months, we will explore this in depth. Stay tuned. Before you can build the ship, you need to be able to see the ship. 

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