2013 12 25 social media and the (uk) insurance sector

Social Media Threat or Opportunity for the 21C

Insurance Company ?

Alan Newman [email protected] and uk.linkedin.com/in/alangnewman/

December 2013

www.fitn.co.uk

We’d like to acknowledge the insights and contributions we’ve

had from a number of sources in preparing this presentation:

• Anthony Burke at WSI

• BDO and their EIU Report on Customer Service Trends

• Dr Will Reader at Sheffield Hallam University

• John Bancroft at Incognate

• Martin Hill-Wilson at Brainfood Consulting

• Neil Sharp formerly Insight Now; currently The Pen Partnership

• Reachfurther.com (Leeds based)

The audience for this presentation

• The busy-but-curious who are supposed to know what’s going on the market (but are too busy with Solvency II, RDR, MiFID, MMR, TCF etc to find out).

• Those of you who have a job spec or performance measurement that means you have to think about “What to do next (and why)?”

• Those of you who will have to implement a poorly informed and badly thought-out ‘plan’ once your company decides, “we have to do something.”

1

The Presentation’s Objectives & Agenda

• The Objectives:

– To inform and energise

• The Agenda

1. It begins with behaviour and . . . .

2. Behavioural economics

3. Technology is having a BIG IMPACT on consumer behaviour

4. What do you really know about your customers?

5. So what to do next?

2

THE BIG PICTURE: 4 FACTORS CONVERGE

3

IT BEGINS WITH BEHAVIOUR. How well do you and your

colleagues really understand human behaviour?

NEW TECHNOLOGIES MATTER here. A lot. How technology savvy is your company? How agile is it? Does it experiment?

CONTEXT & STRATEGY. Do you have a good basis on which you can assess threats

and opportunities?

HOW WELL DO YOU KNOW YOUR CUSTOMERS? Why have they bought what they’ve bought: and why from you?

It begins with behaviour . . . .

4

Despite what our personal experiences might tell us, human behaviour isn’t

simply common sense. We have Stone Age brains in 21C Skulls. For the purposes

of this document there are three important consequences:

1. Our brains don’t do ‘Money’. The architecture of the modern human brain is

about 180,000 years old. Money is about 8,000 years old. We’ve evolved

special areas for speech, vision, or music , for example, but not money.

2. We have two different processes for making judgements about risk and

reward: the first is fast, subconscious and emotion driven (the basis of the

brain as a ‘habit machine’). The second is slow, conscious and logic driven.

The former is our default. The latter takes up a lot of time and energy.

3. We’re a social species. One consequence of this is that judgements can be

strongly influenced by other people and by social context.

BEHAVIOUR

It begins with behaviour . . . .

5 BEHAVIOUR

It begins with behaviour . . . .

6

You’ve not met the young woman whose face is shown on the opposite

page. You’ve not spoken to her. But can you interpret her expression?

What do you think she’s going to do next?

Now look at the arithmetic question.

Think about what you’re brain is doing as you process the information to

answer these questions. From an information processing point of view

the first task is much more of a challenge but most of us find it easy.

Regarding the arithmetic, most of us will know, quickly, that the answer is

less than 400 and more than 250 but it’s time-consuming and energy-

consuming to work out the exact figure in our heads.

Why is this so? What can we conclude from this?

BEHAVIOUR

It begins with behaviour . . . .

7

17 x 23

BEHAVIOUR

It begins with behaviour . . . .

8

BRAINS ARE HABIT MACHINES.

From an evolutionary point of view, the brain’s natural priorities are

food (we need to survive) and sex (we’ve a subconscious drive to

produce offspring) and it has developed shortcuts, habits, to satisfy

them.

A business has much more chance of succeeding if it can build on or

utilise consumers’ existing habits. It is unlikely that a proposition

will be readily accepted or acted upon if people have to change

their habits to do so.

BEHAVIOUR

It begins with behaviour . . . .

9

FOOD & SEX

BEHAVIOUR

It begins with (social) behaviour . . . .

10

ONE BRAIN IS ONLY HALF A BRAIN.

We’re a social species. Brains are at their most powerful when

they connect with other brains. We create problems

collectively and we solve them collectively.

By definition, language, one of the most important aspects of

human behaviour, is a social phenomenon and stories from

family, friends, and our culture affect how we perceive risk

and reward.

BEHAVIOUR

It begins with (social) behaviour . . . .

11 BEHAVIOUR

It begins with (social) behaviour . . . .

12

Stockmarket bubbles and the tendency for an

index such as the FTSE 100 to overshoot or

undershoot illustrate how social factors affect

judgement.

And if the vast majority of UK adults believe

that in the long run ‘you can’t go wrong with

property’ and that rent is money down the

drain, the perception can be self-

perpetuating.

Two books, The Madness of Crowds and The

Wisdom of Crowds both have merit even

though they appear to contradict each other.

BEHAVIOUR

It begins with (social) behaviour . . . .

13 BEHAVIOUR

Social behaviour: The Dunbar Number

14

www.guardian.co.uk/technology/2010/mar/14/my-bright-idea-robin-dunbar

Within primates there is a general relationship between the size of the brain and the

size of the social group. We fit a pattern. Our ‘natural tribe size’ is about 150. This is the

number of people we can have a relationship with involving trust and obligation: there's

some personal history, not just names and faces. Typically this is the size of an average

village; the size of a company of soldiers in most armies, past and present, and the

average number of friends via LinkedIn or Facebook. There’s recent evidence

(http://arxiv.org/abs/1105.5170) that it applies to Twitter as well. Intimacy groups are

smaller – typically 5 or 6 people – and close friends typically number about a dozen. It

seems as if our brains organise social information as quantum steps rather than as a

continuum.

BEHAVIOUR

Social behaviour: The Dunbar Number

15 BEHAVIOUR

Social behaviour: Hole-in-the-Wall

16

www.hole-in-the-wall.com

www.ted.com/talks/sugata_mitra_shows_how_kids_teach_themselves.html

The hole-in-the-wall experiments that were pioneered by Sugata Mitra, now a

professor at Newcastle University, inspired the book and film, Slumdog Millionaire.

For the purposes of this presentation/document, there are three important lessons

from the work of Professor Mitra and his colleagues. First, we should not

underestimate the power of self-organising behaviours. Second, it was children

who were unable to attend school who were the project’s early adopters and they

worked collectively rather than individually to solve specific problems. Third, when

looking at new media, we need to think in terms of ‘Internet Speed’ where focused

web-users, working together, can accomplish in days what would normally take

weeks or months in circumstances that have been the norm hitherto.

BEHAVIOUR

17

Social behaviour: Hole-in-the-Wall

BEHAVIOUR

Information foraging

18 BEHAVIOUR

Information foraging theory which was developed at the Palo Alto

Research Center by Peter Pirolli and Stuart Card. They wondered whether

the mathematical models that biologists use to study how animals forage

for food could be applied to how web users ‘forage’ for information.

In the wild animals benefit if they know how nutritious a food is; how easy

it is to obtain; how far away an alternative supply is; and how much time

and energy can be afforded to obtain it. Substitute ‘information’ for ‘food’

and we see that web visitors (who ‘feed’ on information) face the same

challenges as food-foraging animals and we respond with similar strategies.

19

Information foraging

BEHAVIOUR

Evolution & social behaviour

20 BEHAVIOUR

Three illustrations to help our thinking:

From the perspective of a biologist parental investment is a trade off between energy

spent reproducing and energy spent investing; energy spent investing cannot be used

for reproduction and energy spent reproducing cannot be invested. It does not take a

great leap of imagination to see how this applies to financial behaviour too.

Genealogy is one of the most popular uses of the Web. Families matter. Always have

done, always will. But who is in your family and how might that change? Consider

how divorce affects ideas of who’s entitled to inherit what from whom.

Mathematicians and biologists like to use Game Theory, of which the Prisoner’s

Dilemma is a well-known example, to model how we perceive risk and reward. The

‘best’ strategy in a one-off game is different to the ’best’ strategy if you’re likely to

encounter the same person (or his friends and family) on several future occasions.

21

Evolution & social behaviour

BEHAVIOUR

Evolution, social behaviour and trust

22 BEHAVIOUR

Insurers are selling us a promise, so trust matters. Indeed,

much if not all financial services rely on trust – and many

bank notes illustrate this. In recent years we have seen

what can happen when this trust is undermined.

Currencies and companies come and go, but different

cultures down the ages, and different cultures in the

modern world, have been drawn to gold. Why? What

does this metal’s allure tell us about how people perceive

material value? Has it ever gone out of fashion?

Mapping social behaviour

23

Many networks exhibit

characteristics of self-

organising groups. Key

individuals are identified

by their interactions

rather than their actions:

by the behaviour of

others rather then the

behaviour of themselves.

BEHAVIOUR

What kind of web animal are you?

24 BEHAVIOUR

We exhibit distinctive behaviours with reference to three criteria: •Search time. Fast movers flit between many sites, skim content, and rarely visit a web page twice. Slower movers are more methodical: they’re likely to delve deeper and will often double-check their answers.

•Sources. Some of us prefer to use our friends and social media as sources of information, while others prefer more traditional, ‘objective’ sources of information such as the BBC or (online) newspapers.

•Concentration. Younger people in particular, those who’ve grown up with the web, seem to be happy multi-tasking – talking on the phone, for example, while consuming TV and checking out Facebook at the same time. Other people prefer to focus on one task and see it through to completion.

What kind of web animal are you?

25 BEHAVIOUR

The BBC and Professors David Nicholas and Ian Rowlands at UCL developed The Web Behaviour Test to get answers to a number of questions, such as: How do we filter the information we find on the web? How much search time do we spend before we’re confident that we have found the ‘right’ answer? How is our concentration affected when we’re using the web? How influential are brands in affecting affect our choices in online world? How do we make decisions about the quality and ‘authority’ of information? They found that three key characteristics search time, sources and concentration gave rise to 8 types of ‘web animal’. (www.ucl.ac.uk/infostudies/research/ciber/GG2.pdf)

Behavioural economics

26

Despite what our personal experiences might tell us, human behaviour isn’t simply

‘common sense’. For retail banks and insurance companies insights from the relatively

new field of behavioural economics are particularly relevant.

Behavioural economics brings together ideas from economics, psychology, sociology

and neuroscience to develop insight into people’s financial decision-making. Key

concepts include anchoring, base rate neglect, bounded rationality, choice architecture,

the endowment effect, framing, heuristics, hindsight bias, hyperbolic discounting, loss

aversion, maximizers, mental accounting, multiple selves, satisficers, the status quo bias,

the sunk cost fallacy, and the ultimatum game.

Why not draw up a spreadsheet/matrix and identify whether the impact of each of

these concepts is High, Medium or Low for selected financial services products?

www.ted.com/talks/dan_ariely_asks_are_we_in_control_of_our_own_decisions.html

BEHAVIOUR

Behavioural economics

27 BEHAVIOUR

Behavioural economics

28 BEHAVIOUR

The diagram on the opposite page illustrates the pattern of thinking that

characterises the financial services sector. It focuses on products and it assumes

that we’re completely rational and have the time, energy and inclination to think

things through.

We consumers don’t operate this way. First of all, as demonstrated by

behavioural economists, we treat money differently based on how we got it (e.g.

salary, bonus, lottery win or tax rebate) and what we plan to use it for (e.g. pay

off debt, go on holiday, have a night out, or make a pension contribution).

And in a recent project in which we were involved, most consumers said that

their highest priority was paying for their children’s education – and that doesn’t

appear on this pyramid at all.

29

Behavioural economics

Logical

Rational

Liked by financial services people

Misleading

BEHAVIOUR

BBC Big Money Test

30

In the BBC Big Money Test devised by personal finance guru Martin Lewis, Professor Adrian Furnham of UCL and Professor Fenton-O’Creevy of the Open University the point was made that money means different things to different people:

•Money as security. Emotional security is represented by financial security. Money bolsters feelings of safety and self esteem and so is hoarded.

•Money as power. Because money can buy goods, services and loyalty, it can be used to acquire importance, domination and control.

•Money as love. For some money is given as a substitute for emotion and affection. Those who spoil their children, ostentatiously give to charity or even visit prostitutes are buying love. Others sell it.

•Money as freedom. It buys time and frees us from the daily routine and restrictions of a paid job. Money buys escape from orders, commands – everything that restricts autonomy and limits independence.

The researchers also noted that we have money-habits and that there are five archetypes: misers fear becoming penniless and have trouble enjoying the benefits of their money; spenders shop in an often uncontrolled manner, particularly when feeling low - and get a short-lived high followed by guilt; tycoons see money as a route to power and approval, and believe wealth will make them happy; bargain hunters feel superior when they get discounts and feel angry if expected to pay full price; gamblers feel exhilarated when taking chances and find it hard to stop - even when losing - as a win brings a sense of power.

BEHAVIOUR

BBC Big Money Test

31 BEHAVIOUR

BBC Big Risk Test

32

Research suggests there are two distinct ways in which humans comprehend risk. The first is referred to as the ‘experiential system’. It is intuitive, fast and often automatic. It relies on images and associations, based on experience, to arrive at a ‘gut feeling’ that something is good or bad. This is the more emotional side to risk, and it is this system we use when we decide not to walk down a dark alley at night. The second can be described as the ‘analytic system’ and involves using logic and our understanding of arithmetic. This system is slower and requires a great deal of effort and concentration. Scientists think that ‘gut feeling’ judgments about risk may be influenced by irrelevant information, such as the way the risk is presented. They predict that presenting an activity in a positive way may cause us to perceive it as less risky, while presenting it in a negative way may make it seem more risky. For example, if we imagine someone scuba diving in a tropical paradise, surrounded by beautiful fish, we might perceive scuba diving as less risky than if we imagine them diving into cold, murky water in winter. The Big Risk Test is also investigating how people perceive the large-scale risks that society faces. These include things like terrorism, natural disasters and climate change. Does everyone perceive these risks in the same way? If not, what factors cause us to view them differently?

BEHAVIOUR

BBC Big Risk Test

33 BEHAVIOUR

Social media – new segmentation?

34 BEHAVIOUR

According to a 2008 Ofcom report there are 5 types of social media user:

1. Alpha Socialisers (a minority) used sites in intense short bursts to flirt, meet new people, and be entertained.

2. Attention Seekers crave attention and comments from others, often by posting photos and customising their profiles.

3. Followers join sites to keep up with what their peers were doing.

4. Faithfuls typically used social networking sites to rekindle old friendships, often from school or university.

5. Functionals tend to be single-minded in using sites for a particular purpose.

Non-users of social networking sites also fall into distinct groups. Concerned about safety; technically inexperienced; and Intellectual rejecters – people who have no interest in social networking sites and see them as a waste of time.

Social media – new segmentation?

35 BEHAVIOUR

Social media - new segmentation?

36 BEHAVIOUR

In the world of social media it may

seem plausible to define users as

creators, conversationalists, critics,

collectors, joiners, spectators or

inactives – but isn’t it more likely that

an individual will exhibit two or three

types of behaviour depending on

circumstances?

And how useful are these designations

in helping an organisation engage with

its customers?

Which of these definitions applies to

you?

Social media - new segmentation?

37 BEHAVIOUR

Originators 20%

Curators 29%

Sharers 24%

Participants (updates) 52%

Participants (comments) 60%

Spectators 78%

http://www.brandrepublic.com/research/1078178

http://www.brandrepublic.com/news/1108677/Special-Report-Social-media---battle-brands

In a 2011 report, Emily Hunt and Richard

Bussy looked at how consumers interact with

brands via social media.

Based on their research Hunt and Bussy

identified two key types of customer of most

interest to those conducting social media

campaigns: CURATORS and SHARERS.

Before social media came along Curators were

the folks in the office emailing funny links,

games and industry gossip.

Social media – generational effects

38 BEHAVIOUR

Social media and consumer behaviour

39 BEHAVIOUR

Social media – it’s about time

40 BEHAVIOUR

Social media and Trust

41 BEHAVIOUR

We’re a social species and our default

setting is to trust. It saves time and helps us

manage complexity.

(Trust is complicated. I may trust my bank

to clear a cheque and not steal; but I may

not trust it to sell me a product that

represents value for money.)

Research described by Dr Miriam Meckel

and her colleagues at the University of St

Gallen identified several core drivers of

online trust: brand and reputation,

customer service, offline presence,

reciprocity, (technological) reliability, third

party endorsements and user control.

Something old, something new

42 BEHAVIOUR

http://www.economist.com/node/13914661?fsrc=rss

In an article in June 2009, The Economist published an article comparing

and contrasting LinkedIn and Freemasonry. The merit of this approach

is that it helps us get a handle on how modern technology is affecting an

age-old behaviour. Networking isn’t new – so what are the similarities

between LinkedIn and Freemasonry; what are the differences; and what

are the consequences?

Something old, something new

43 NEW TECHNOLOGIES

Social media – where to begin?

44 NEW TECHNOLOGIES

The word cloud opposite illustrates the challenge that a management team has in getting its collective head around the issue of social media and the associated threats and opportunities. In his book, Socialnomics (www.socialnomics.com) Erik Qualman suggests four critical steps:

The Company

The Customer LISTEN

INTERACT

REACT

SELL

SELL

REACT

INTERACT

LISTEN

B U Y

Listen to customers and conversations about the brand or products; interact – join the conversation; react – adjust your product or service based on feedback; sell – if you do the previous three well this will take less effort. Customers have a similar journey.

Social media – not a clear picture

45 NEW TECHNOLOGIES

‘Social media’ is a BIG topic

46 NEW TECHNOLOGIES

The image on the opposite page image illustrates just

how big a topic Social Media is. The image on the left

probably does a better job at communicating how a

manager who has to implement social media projects

actually feels.

Which of the elements opposite are likely to add the most value to your business in general (i.e. What is basic value proposition of your market sector?) and which are most relevant for your differentiation and strategy? Whatever your answers are, how likely is that they will / won’t change in the next one, two or three years?

‘Social Media’ is a BIG topic

47 NEW TECHNOLOGIES

http://www.simplyzesty.com/social-media/17482/

Social media are part of a BIG trend

48 NEW TECHNOLOGIES

Despite the uncertainties referred to in previous slides there are some

developments we can be sure of, and their confluence will shape the world in

which we conduct business:

1. The increase in popularity of smart phones will continue with the result that

this will be the main way in which people connect with commerce.

2. Tablet PCs complement smart phones and will replace laptops and PCs as the

‘larger format device’ that consumers prefer. Personalising interfaces will

become more important.

3. Significantly faster broadband services and 4G will mean that graphic and

video information will become as important, maybe more important, than

text as the main way in which a business engages with consumers.

Social Media are part of a BIG trend

49 NEW TECHNOLOGIES

Social media become mainstream

50

According to Experian (Jan 2011) 56% of all UK online traffic goes to social sites, and the average Facebook user spends just under 2 hours a day on his/her site. Furthermore, users are increasingly accessing their social media sites via their phones and tablet PCs rather than laptops.

According to a talk by Google at Imperial College Business School in November 2011, the UK spends more per head online than any other country.

For several reasons we seem, as online consumers, to be opting more for self service. And we expect online suppliers to remember/store information from our previous visits and recognise us on our return.

NEW TECHNOLOGIES

Social media become mainstream

51 NEW TECHNOLOGIES

Social media become mainstream

52 NEW TECHNOLOGIES

Writing for The Economist, Sheryl Sandberg, COO of Facebook,

noted that many social media users post photos on their sites so

that friends and family, often hundreds or thousands of miles away,

can see them. “They share because they care.”

On the flip side of this, people are now sharing stories many of which provoke

strong feelings and encourage people to act. Campaigns can be started this way,:

“They care because they share.”

Sandberg also referred to Iceland where the Government, drafting a new

constitution, used social media to put the figurative pen in the hands of its citizens;

and The Arab Spring where (mainly younger) people used social media to give

individual citizens a voice that had to be heard.

Social media become mainstream

53 NEW TECHNOLOGIES

Social media become mainstream

54 NEW TECHNOLOGIES

How do you use social media?

How do your children use social media?

To what extent would your decision to buy a financial services product online, or

not buy one, be influenced by what you encountered via a social media site?

Which of these would you be willing (or unwilling) to purchase online (and how

do you think your answer might change 2-3 years from now)?

1. Buildings insurance

2. Contents insurance

3. Credit card

4. Critical illness cover

5. Health Insurance

6. Income Protection

7. ISA

8. Life insurance

9. Loan

10. Motor insurance

11. Pension

12. Pet insurance

13. Premium bonds

14. Travel Insurance

15. Shares

Social media become mainstream

55 NEW TECHNOLOGIES

Social media – generation matters

56

BUT THE EVIDENCE IS CHANGING

It is perhaps not surprising that teenagers and those in their

early 20s are more comfortable with new gadgets and social

media than there parents are. And yet . . . .

There are more ‘silver surfers’ year on year. Business men and

women are hooked on their Blackberrys and iPhones, and

grandparents are connecting with their grandchildren as never

before.

NEW TECHNOLOGIES

Social media – generation matters

57 NEW TECHNOLOGIES

Generations and behaviours

58 NEW TECHNOLOGIES

Facts do not speak for

themselves. Yes, teenagers

and adults behave differently:

no surprises there.

The question is, “As this

cohort of teenagers become

adults will they revert to

behaving as their parents did

or will their experiences as

teenagers persist as they get

older?”

Social media: mobile phone addiction

59 NEW TECHNOLOGIES

Social media and gender

60 NEW TECHNOLOGIES

http://blog.ted.com/2011/02/02/social-media-and-the-end-of-gender-johanna-blakley-on-ted-com/

Media and advertising companies still use the same old demographics to

understand audiences, but they’re becoming increasingly harder to track

online, says media researcher Johanna Blakley in this thought provoking

2010 TED talk, “Social Media and the End of Gender”.

As social media outgrow traditional media, and women users outnumber

men, Blakley explains what changes are in store for the future of media.

Social media and gender

61 NEW TECHNOLOGIES

Social media habits

62 NEW TECHNOLOGIES

Social media habits

63 NEW TECHNOLOGIES

What we’ve covered so far

64

So far we’ve focused on (i) behaviour, because there’s a limit to how

much our enterprise can benefit from social media if we’re not behaviour-

savvy and (ii) technology, because in this context it is not simply an

enabler: it is having a profound effect on consumers’ habits.

We focus next on customers and strategy. As customers we know what

matters to us, so why is it that when we turn up for work at the office we

leave these insights at reception?

How much weight we give to an issue, ‘What we do next’, depends on our

strategy. We can’t invest in everything – strategy helps us focus on those

issues that help us create value and obtain competitive advantage.

The Presentation’s Objectives & Agenda

• The Objectives:

– To inform and energise

• The Agenda

It begins with behaviour

Behavioural economics

Technology is having a BIG IMPACT on consumer behaviour

4. What do you really know about your customers?

5. So what to do next?

65

Consumer behaviour and social media

66 CUSTOMERS

Consumer behaviour – some indicators

67

The Web is already a significant distribution channel for financial services. (Google presentation to TISA Oct 2011)

47% of people who acquired credit cards did so online

49% of General Insurance is now bought online

21m people researched at least one financial product in the last year

49% of savings accounts have been set up online

75% of people looking for a mortgage research online first

66% of consumers would consider arranging their mortgage online

CUSTOMERS

Customer Contact Matters

68

In the middle to late 1980s, when I was studying at INSEAD, the cool

companies included Unilever and Procter & Gamble because they were

about brands, and because there was a difference in Strategy if you were an

international, multinational, global or transnational organisation. Retailers

such as Carrefour, Sainsburys or Tesco weren’t cool at all. Market

capitalisations reflected this: in the 1980s Unilever and P&G had market

caps that were several times greater than that of major retailers. Today

that’s changed: it is the Carrefours, Sainsburys, Tescos and Walmarts that

have the marketing muscle, realtime customer information, and greater

market valuations: and Amazon and eBay can now be added to the list.

CUSTOMERS

Customer Contact Matters

69 CUSTOMERS

Customer service: don’t kid yourself

70

Much like male car drivers, many of whom believe they are excellent drivers,

most (nearly seven in 10) firms consider themselves to be “above average”

when it comes to customer service, although relatively few (16%) regard

themselves as excellent. Some of these, however, appear to be getting

slightly ahead of themselves. Just six in 10 have a defined strategy for

tracking customer feedback and complaints, while even fewer (55%) have a

system for identifying service gaps, and less than four in 10 think they do a

good job of addressing customer feedback. (BDO EIU Service 2020)

CUSTOMERS

Customer service: don’t kid yourself

71 CUSTOMERS

Customer Service: don’t kid yourself

72 CUSTOMERS

In March 2011, IBM conducted research in to the dichotomy between

customers’ perceptions and those of the business with whom they were

interacting. IBM called this The Perception Gap. These findings are consistent

with those reported by Bain (where 70% of CXOs thought their businesses

delivered superior customer service, and yet only 7% of customers agreed) and

the BDO study referred to previously.

The IBM report noted: “Many companies have misunderstood their social

network audience and have flooded them with inappropriate offers.” To get it

right a business needs to know its customers’ habits, biases, followings,

preferences and trust circles.

73 CUSTOMERS

Customer service: don’t kid yourself

Customer service: don’t kid yourself

74 CUSTOMERS

If I work for Starbucks I probably think people are more interested coffee than they are.

If I work for Dell I probably think people are more interested in computers than they are.

If I work for Thomas Cook I probably think people are more interested travel than they are.

If I work for Ageas I probably think people are more interested in Protection than they are.

If I work for L&G I probably think people are more interested in pensions than they are.

If I work for ITN I probably think people are more interested news than they are.

This is probably why we over-focus on selling to satisfy our needs and pay insufficient

attention to letting customers buy in a manner that helps them satisfy their needs.

Customer service: don’t kid yourself

75 CUSTOMERS

You’re the customer . . . . .

76 CUSTOMERS

1. What’s the best customer experience you’ve had? What could your

company learn from this?

2. What’s the worst customer experience you’ve had? What could your

company learn from this?

3. Which brands or organisations do you associate with good service? On

what is this perception based?

4. Which brands or organisations do you associate with poor service? On

what is this perception based?

5. Which organisations (not just companies – e.g. Your GP’s surgery; or

HMRC) do you feel know you well?

6. What does a company need to know about YOU personally, to sell the

right things to YOU in the right way?

Think about your customers . . . . .

77 CUSTOMERS

1. How many ways do you segment them?

2. If each customer knew how you segmented him/her what is the

likelihood that he’d agree or disagree with you?

3. If each customer knew how you segmented him/her what is the

likelihood that he’d perceive you as insightful?

4. No doubt you have opinions, but do you KNOW why your customers

bought from you rather than a competitor?

5. What is the likelihood that they’ll buy from you again? On what

evidence do you base your answer?

6. Are you more likely to be delighted or anxious if a random selection of

30 of your customers were to meet up?

Think about your company . . . . .

78 CUSTOMERS

1. Where does customer expertise reside?

2. How well does it score on ‘Customer Intimacy’

3. Does it know why customers defect?

4. How likely is it that customer expertise is being overlooked or under-utilised?

5. How many of your employees are also customers – and how well do you use them as assets?

6. How well do you use existing customers to help you develop new products?

7. How well do you use existing customers to help you develop new services?

8. Who are the customers’ champions?

Customers, information, management

79 CUSTOMERS

What has

CRM

ever

done

for us?

Context and strategy

80

For every £100 you have available to spend on social media, how much

would be spent on:

1. Selling more current products to existing customers

2. Selling new products to existing customers

3. Selling current products to new customers

4. Selling new products to new customers

To what extent do these different options call for different (social media) approaches? Where do social-media-based campaigns add most value?

CONTEXT & STRATEGY. Do you have a good basis on which you can assess

threats and opportunities?

THE BIG PICTURE: 4 FACTORS TO CONVERGE

81

IT BEGINS WITH BEHAVIOUR. How well do you and your

colleagues really understand human behaviour?

NEW TECHNOLOGIES MATTER here. A lot. How technology savvy is your company? How agile is it? Does it experiment?

HOW WELL DO YOU KNOW YOUR CUSTOMERS? Why have they bought what they’ve bought: and why from you?

Social media: strategic impact 1

82 CONTEXT & STRATEGY

ARE SOCIAL MEDIA

SO DISRUPTIVE

THAT THEY FORCE YOU TO

RETHINK YOUR STRATEGY?

Social media: strategic impact 2

83 CONTEXT & STRATEGY

DOES YOUR STRATEGY

EASILY ACCOMODATE

THE IMPACT OF

SOCIAL MEDIA?

Social media: strategic impact 3

84 CONTEXT & STRATEGY

HOW EASY WOULD IT BE

FOR A COMPETITOR TO GAIN

AN ADVANTAGE OVER YOU

BY USING SOCIAL MEDIA WELL?

85 CONTEXT & STRATEGY

Social media – organisational impact

86 CONTEXT & STRATEGY

The diagram on the opposite page is based on the business best-

seller, Groundswell by Li and Bernoff. Unlike the other books on

social media (which opt more for the Wow! and Gee Whiz aspects

of social media, there’s a strong corporate element in Groundswell

(Li works for Forrester Research), i.e. it aligns its messages with the

day to day realities of corporate life – business functions such as

Marketing and Ops; strategy; or performance measures; so many

managers will find this matrix relevant and useful.

Social media – organisational impact

87 CONTEXT & STRATEGY

Summary of key points

88

1. Learn to listen

2. Think differently about segmentation

3. Learn to listen

4. Adapt to consumers’ habits

5. Learn to listen

6. Become behaviour-savvy

7. Learn to listen

8. Social media: a strategic or an operational one?

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WHAT TO DO NEXT?

CONTACT ME AT

[email protected]

COME TO THE NEXT

FINANCE IT NETWORK

MEETING (www.fitn.co.uk)

Thank you

[email protected]

www.fitn.co.uk ; www.inv8.co.uk

After graduating with a degree in Psychology from UCL, Alan spent 3 years

in Kenya on VSO as a science teacher. He worked for DEC as a software

services manager in the UK and Middle East and attended the

International Advanced Management Programme at INSEAD. He became

a freelance consultant in 1992. Clients with whom he’s worked include

Aviva, AXA, BT Syntegra, Capita Registrars, Computershare, CSFB,

Hannover Life Re, iFapps, L&G, Liverpool Victoria, RSA and Swiss Re. He

has also written for FT Finance and The Journal of Brand Management.