January 15th, 2010 | 
Author: I’m still waiting on approval for the podcast I mentioned last week. So I can’t link to it just yet, but just as a preview, we spoke about three things:
- Our take on 2009 and 2010 and beyond
- Product Channel Market Alignment
- Freelance project-based workers
I’d like to comment on Product Channel Market Alignment today. As I listened to my guest talk about these concepts, they seemed to elicit an aha-moment. And later, as the concept has been circulating in the back of my mind, it’s kind of grown on me and I think it characterizes the life and health insurance space right now. Further, I think that it is BECAUSE of a huge out-of-alignment situation in the health insurance space that we are in the mess we are in.
So the concept you’ll hear about is that product configurations need to be in alignment with the distribution channel and both of those need to be in alignment with the Market demands and preferences. Envision an isosceles triangle (equal sides, right?) with Product, Channel, and Market at the three angles. The company that does the best job of keeping these three dynamics in balance with each other will likely see the best results. Example: as the distribution channel changes, how does the product need to change? As market preferences change, how does the distribution channel and/or the product need to change? When one is out of balance with the other, what happens?
Great example from health care today: In the last several years, consumers have come to expect the ability to self-teach, make decisions, choose, and control – the DIY mentality (in this case buying insurance PRODUCTS, especially via online CHANNELS). At the same time, with all the C-level and board-room scandals, they’ve also lost a lot of faith in corporate America and as a result, the MARKET can come to demand transparency and authenticity from the companies they do business with. Meanwhile, insurance companies have not moved far and fast enough to adapt to these changes, causing an out-of-alignment scenario that has been exacerbated through out the last several years. Thus, when a presidential candidate comes along and speaks about solving that problem (the how is another post), the market jumps at it. And now we’re all fighting over it, etc. etc.
So in fact, in my humble opinion, insurance companies (really the whole health insurance industry) are sort of now being penalized in a very public and dramatic way because they failed to adust their products (and services), they failed to adapt to the shifting channel preferences (and specifically technologies), and thus got hammered by a huge shift in market demands.
What do you think? Am I out in left field? Can the health insurance industry salvage itself in 2010 and beyond by making long-overdue changes and get things back in alignment? Take a sec and comment.
****************************
One thing I’m very excited about: Businesses I’ve been speaking to in the last couple weeks are suddenly starting to see the incredible ROI associated with a good corporate Blog strategy. Having been blogging for 5 years now, I’m SO excited to be telling the story and helping business partners and clients adapt Blogs to their environment, culture, and markets. Very very cool. Did you see the movie Julie and Julia? Did you notice that Julie’s blog was a huge part of the story??? (Here’s her new blog, btw.) It’s fricking amazing the potential with these things…
Any stories of yours? Do share..
********
Speaking of cooking, one picture to share… I taught my son to cook a favorite meal over the holidays. I call it Inga’s Chicken TWO! Long story behind the name, but it’s simple, cheap, and oh so good. Great job, Zach Wise! Do it up at Houghton!!! (And there’s another story about the blue kitchen cupboards that brings a smile…)
Oh yeah – 30 minutes to write this post, 30 min to edit. Some people have been asking me that question. Worth the time? Good use of one hour a week?
Posted in Insurance-Technologies
Mike, I like your triangle alignment metaphor. Extending that concept, why do companies like Apple, Harley Davidson, and Progressive enjoy much higher consumer satisfaction rates than health insurers? Though there’s piles of research that tell us exactly why, it’s because their brand PROMISE perfectly aligns with the customers’ brand EXPECTATIONS, which perfectly align with their customers’ brand EXPERIENCE. In short, words, all about alignment.
Apple’s products work. Harley’s work (though I do remember a time when they didn’t and the company almost disappeared). Progressive Insurance’s products work.
Health insurance rarely performs as expected. Millions of reasons why it doesn’t, and NONE of which the customer care about (nor should they). Their perspective is, “If FedEx can deliver a box of cookies to the other side of the planet by 8:30 a.m. the next morning, then why the hell can’t my insurance company properly process my claim for a routine office visit?” When they flip that light switch, they expect the lights to come on. When they turn on the tap, they expect clean water to come pouring out.
Alignment is key and it’s what’s missing in health insurance. You nailed it, Mike.
The insurance industry is no different from any other industry. It will fail if it fails to innovate. But it is a very competitive market. Except for the fact that the government imposes massive mandates, and shifts costs from Medicare/Medicaid.
I do not blame the insurance industry for the 100 year dream of liberals to control our healthcare
Health reform will bring will be a lot of rethinking and reengineering across the health insurance landscape—in 2010 and beyond. This is especially true under a marketplace guided by tight mandated minimum Medical Loss Ratio requirements. There will be incredible pressure on health plans to reduce operating and distribution costs as well as pursue aggressive medical management to address the 5% of insureds that contribute to 60% of the cost.
It’s also means that consumers, from young invincibles to seniors, will have to embrace the long awaited movement of “health care ownership” characterized by customer engagement, shared decision-making, and patient compliance (e.g., wellness, prevention, chronic care, prescription adherence). Similar to the growth witnessed over the last several years in Consumer Directed Healthcare, individuals that are expected to buy their health plans through an exchange, albeit national or state-run, will be forced to insert themselves in the center of personal financial, benefit and medical decision-making.
On a good day health insurance is a bureaucratic nightmare. Under a newly reformed marketplace expect it to get worse before it gets better. However, don’t sell consumers short about managing a healthcare budget and comparison shopping…particularly when it means money out of their own pocket. Smart health plans will make user-friendly product information readily available to facilitate confident decisions: easy-to-read benefit guides, real-time tracking, credible provider price and quality comparisons, and vast libraries of shared decision-making content. The watchwords going forward are consumer education, behavior modification and product ROI. By removing the intimidation and confusion that usually greets health insurance consumers, we can achieve educated buy-in and boost consumer confidence in their product selections.
“Creativity is thinking up new things, innovation is doing new things.”
The two greatest hurdles any insurer (or broker for that matter) have today are a) their lack of current and relevant technologies and b) a negative customer experience.
a) I wish I could recall where I read this quote, but it goes something like this – “when it comes to our industry, we are the Amish of technology”. Kudos to Progressive for being… progressive. Their approach to technology has been far more end user centric and less broker centric.
b) Using Progressive again as an example, they have removed as many barriers to entry as possible. I am still stunned at how many insurers use their web presence as a funnel for the agent channel. If someone is shopping for insurance on-line, chances are, they do NOT want to talk to an agent. Adding the “agent filter/roadblock” is like putting a velvet rope in front of a Dunkin Donuts. “sorry sir – you can’t look at the doughnut case until you give me your name, address, etc”. No info – no cruller. Ugh….
I hope Republicans show up for the Health Summit. The audience is the Independent Voters who really want to compare and contrast the Senate Health Bill (which was passed late last year with super-majority) and the ideas of the Opposition.