Culture: how to create a competitive advantage that lasts

Startups have lots of things going for them, such as flexible value chains and low technical debt. But perhaps the thing that established FS firms should covet most is a startup's customer-centric culture. Here's a reminder why your organisation's culture matters, and one staggeringly simple thing you can do to help improve it.

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I recently heard insurance described as an essential service. It certainly seems an important one, because most of us repeatedly buy it wilfully, if begrudgingly. But it doesn’t work well for everyone, especially for people whose risk is deemed atypical and who can struggle to find affordable policies.

Insurtech scaleup Bought by Many originally launched a community platform that helped such marginalised consumers find others with similar requirements, join forces to find products, and collectively negotiate terms. 

Its members used the platform to share their unmet needs and the issues they had with the industry as a whole, providing Bought by Many with rich insights that they used to design their own products. After initially offering travel insurance for people with medical conditions, they successfully homed in on pet insurance – a space where many cat and dog owners struggle because of their animal's pre-existing conditions. 

It’s a smart way to find a niche and build traction. Their story also interests me because it embodies some of the five customer-centric trends that in 2018 we thought were re-shaping the sector.

But it's the way they’ve built their brand reputation that fascinates me most.

They secured a market foothold by helping their customers to explicitly pool risk. Like other challengers, they’re tapping into the insurance industry’s appealingly collectivist but mostly forgotten origin stories. (Aside for the geeks: it goes back a surprisingly long way before ship owners started underwriting each others's losses in Edward Lloyd's 17th century coffee house – have a look!)

This allows them to play to the growing dissatisfaction with mainstream insurers and position themselves as a valid alternative.

But most startups fail in the first three years, and Bought by Many would have too if their service didn’t match their brand promise. Their continued existence then is testament to the hard work they’ve done to earn their customers’ trust and build a great reputation. Their impressive Feefo rating is pretty telling too.

I caught up with their Senior Product Manager, Steven O’Callahan, to find out more about their journey so far, and how he thinks they’ll maintain their trajectory.

“Everyone expects the Amazon service now”, begins Steven. Most incumbent insurers have raised their digital game, so slick acquisition journeys and 'easy to buy' products are no longer a big differentiator for challengers. 

In financial services, a ‘good outcome’ reflects more than a product’s purchase experience – it embraces the experience of product ownership too. That’s vital for retail insurers hoping to wean their customers off the annual compare & switch routine and build loyalty.

Promises aren’t enough. Steven knows that what ultimately matters is service quality.

So how can they maintain that quality, their Feefo rating, their customers, and their competitive advantage?

We used to see organisational politics rendered in the IA of client websites. We called it showing your organisational underpants, although it doesn't happen as much now. Progress!

But there's a related, enduring problem. In business, culture is the way an organisation enacts what it values. It's more likely to manifest itself in your service than your website navigation, but try as you might you just can't hide it.

“Culture always seeps through into the customer experience – it might be challengers’ lasting advantage” says Steven.

We're talking about customer-centric culture: where people across an organisation put solving customer problems before internal rivalries. That's how you build trust and loyalty.

He thinks that while brand identities, user journeys and call centre scripts are relatively easy to copy, culture is not.

We've seen it too. Customer-centricity is much easier to say than to achieve in established organisations because culture change takes time. But it can be done. And it's worth doing.

There's a carrot: as Bought by Many's success shows, your customers will reward you.

Then there's the stick: culture is mentioned nine times in the FCA's finalised Guidance for firms on the fair treatment of vulnerable customers alone. Here's an example:

To deliver on your brand promise, you need to understand the customer view at the trickiest moments of your relationship with them.

It’s not enough to seek customer feedback only on the buying experience. It’s crucial to get that right of course, but confidence is easily misplaced – historical ABI data on failed claims suggests that a lot of us are blissfully unaware that we’re buying the wrong thing. 

You can have a great experience making a bad decision.

The real moment of truth between a customer and an insurer is claims time. 

Steven’s team tracks Feefo closely and are confident enough in their service to invite customers to tell the world what they think of them during a claim. The world being imperfect, not all feedback is glowing, but having the courage to resolve issues in public helps to build trust and loyalty. More importantly, it shows Bought by Many where to focus their efforts.

That transparency is the sign of a healthy culture.

Not all firms are so keen to shine a light on their potential weak spots. In my experience that's due to structure and politics (eg. acquisition and retention working to different agendas) rather than the dedication of employees working with best intentions.

It’s just harder to address systemic challenges when you work in silos. There would be too many awkward conversations to have. As anyone working in claims will tell you, the root cause of claims woe is often poor comprehension at point of purchase. That stone is easier left unturned.

The other unfortunate tendency we still see in larger FS firms is rushing to solutions. It’s inconvenient because the solutions are usually handed freely down, yet culture and hierarchy limit the flow of useful feedback in the opposite direction.

You can see how it happens. As people rise through the ranks in big companies, they have less time, if any, to meet and listen to their customers. Proxy metrics like conveniently-sampled NPS tell them little about customers' thoughts or behaviour. And without an effective feedback loop, strategic decisions get made using flawed data. 

So it’s no surprise that inaccurate assumptions about what customers need, want and value take root when asserted by senior executives. And no surprise when the wrong thing is delivered bang on time.

Focusing on customers is a proven way to unite a business around a shared sense of purpose.

There is one staggeringly simple thing you can do to kick start the change: get as many people as possible – particularly senior stakeholders – to observe user research.

You might think that this would lead to people getting negative about the state of play. But the opposite is true. 

By watching people interact with your services and hearing their stories something magical happens: you empathise with them, you begin to understand why what you are doing is broken (challenging pre-existing assumptions), and it galvanises teams (often from across silos) to work together to solve the problems observed. And it generates real stories that people in the organisation immediately start sharing.

It’s a surprisingly powerful way to stimulate culture change.

We've been running Remote Labs to help Bought by Many increase their 'exposure hours' – a metric that Jared Spool thinks is a fast path to a great UX: 

“...teams with members who spent the minimum of two hours every six weeks saw far greater improvements to their design’s user experience than teams who didn’t meet the minimum. And teams with more frequent exposure, say two-hours every three weeks, saw even better results."

Remote Labs are intensive workshops that condense user research, analysis and solutions cycle into one day. While no substitute for meaningful depth research, they’re a useful tool that can help you resolve specific knotty problems, or remind your leadership team what the world looks like through your customers’ eyes. 

They’re focused, and action oriented. They create impetus and alignment. 

In a recent single-day lab we changed Bought by Many’s strategy towards a key customer segment. “By the end of the session, people from different parts of the business left the session with a shared view about things we could to do improve”, said Steven.

It gave them first-hand knowledge of what customers are thinking and doing when they visit their website. They could see for themselves which problems mattered, and which features weren’t working. They were assisted by guides with the research expertise and grounding in user psychology to ask questions without bias, and interpret the responses.

Most of all, Steven says, it's a way of injecting fresh energy and insight into the work that they do, feeding their sense of purpose and keeping their culture strong.