How can you transform customer experience if you don’t understand it? And how can you possibly bring innovations to improve their lives if you have little concept of their daily reality? Consumer market research expert Dr. Christina Sami is emphatic that the only way to understand customers is to get up close and personal with them.
Earlier this year, Sami, founder of UK-based Spice Insight, shared with MiN members, insights pulled from nearly three decades of running innovative consumer market research. Drawing on parallels from the FMCG sector, she reinforced the need to invest in ongoing consumer research as an essential ingredient to reaching scale – an investment that multinational companies in the consumer goods space are happy to keep making thanks to the returns it brings them.
“Consumers don’t really care about a product or service, they care about the benefit it can deliver,” she added. “They don’t wake up in the morning thinking about insurance. It’s about how it fits into their lives and what benefit it gives them.”
Insurance companies – particularly those in emerging markets – do not typically make full use of the consumer market research arsenal. Perhaps they’re discouraged by a perceived hefty price tag, or perhaps they conflate consumer market research with socio-demographic demand-side studies that more closely resemble household expenditure surveys (possibly because they are most often designed by economists ....).
It’s true that full-on consumer market research can be costly, especially relative to the purely financial returns on many inclusive insurance products that struggle to reach scale. (Is this starting to sound like the proverbial chicken-and-egg dilemma?). One option to square the circle would be to pool resources. For example, Colombian insurance association Fasecolda put together a consortium of funders to undertake an innovative large-scale survey of 11.5 million households, based on a randomised sample of 6,200 respondents. Each member of the public-private partnership — Fasecolda, the Banca De Las Oportunidades, and the Superintendencia Financiera de Colombia (SFC) — benefited from access to the results.
It’s also true that the cost of research is coming down, thanks to advances in technology. These, combined with necessities driven by COVID-19, are enhancing traditional qualitative and quantitative demand-side research, for example through remote interaction such as Zoom. “But that only works if your target audience have access to a laptop or cell phone,” points out Cenfri’s Kate Rinehart-Smit.
The push for a more customer-centric approach by insurance providers is not a new agenda item. The ‘Know Your Customer’ (KYC) mantra has been around for many years, while more recent developments in behavioral change and nudge theory, empathy building, design thinking, and lived experiences are increasingly informing product innovation, design, and distribution. Yet it seems that many insurers are still reluctant to invest in old-fashioned consumer market research that could, among other positive outcomes, help prevent microinsurance product failures.
“In a lot of emerging markets, the insurers are quite small, so paying a lot for consumer market research might not be very attractive for them,” says Katharine Pulvermacher, Executive Director of the MiN. “If we, as the MiN, could pull together an interested consortium that would pay into the study and then share the results, the insights could be used in different ways. And beyond sharing the costs of consumer market research, the MiN could also look at developing a common methodology, because there are similarities in the inclusive insurance market segments from country to country.”
The urgent need for improving customer insights in emerging markets was underlined at the recent conference on Inclusive Insurance in the Central and Eastern Europe and the Transcaucasian (CEET) region, co-hosted by the MiN. The CEET region currently has extremely low rates of insurance penetration – but lack of consumer insights means it is challenging to know why that is. As Rossitza Wartonick, Public Communications Advisor at the Association of Bulgarian Insurers, told participants, “We need to look through the eyes of consumers, we need to see what motivates them, what are the factors that contribute to their use of insurance.” Not surprisingly, she said, a 2020 customer insight survey in Bulgaria showed a clear correlation between levels of insurance literacy, levels of trust in insurance products, and use of insurance products, with a lack of understanding and a fear of complex products being the main barriers.
Moreover, regulators in only eight out of the 24 countries in the CEET region surveyed by Access to Insurance Initiative (A2ii) were “aware of research on the microinsurance or inclusive insurance market conducted by public and private sector stakeholders or international organisations” – further indicating the need for demand-side research.
Insurers moving away from a product-centric to a customer-centric approach and embracing innovation would go a long way towards improving microinsurance penetration in emerging markets.
However, simply finding the money to fund more demand-side research is only one part of the solution – the other is what insurers, regulators, and donors actually do with the resulting insights. “One of the greatest challenges for the industry is how to read these studies and how to take action,” said Miguel Solana, an inclusive insurance specialist at UNDP. “It’s not just about producing demand-side studies – how do we use them to move the industry to action?”
It seems the insurance industry still has much to learn from FMCG companies. “Being consumer centric is about more than a process, it’s a principle,” said Christina Sami. “It’s about the values that you hold. Consumer-centric companies really work on their ‘understand and design’ perspective – they focus on understanding what consumers need and then they produce it. You should be working as an advocate for consumers, looking to develop products that delight them.”