When Amazon first dreamt of an algorithm that would understand reader habits and recommend new books, authors and – of course – potential purchases by consumers, were they thinking of ‘how can we increase sales’ or ‘how can we help customers to find books they might like’? Of course, the two options are not mutually exclusive but I would hazard a pretty good guess as to what was the primary motivation.
Equally, when James Dyson of vacuum cleaner fame invented and patented his new technology for the ubiquitous ‘hoover’ I wonder where his motivation lay. Was it to make the floor cleaning experience so much better or was it to carve a niche for his business that would result in better market positioning and increased sales? Once again, the two options are not necessarily mutually exclusive but, like most entrepreneurs, he more than likely dreamt of the day when his inventions would come to dominate the market and generate millions in revenue and profits.
I ask these questions because one of my clients in the field of insurance claims (which is where I specialise) has approached me to design and deliver a project that has as its ultimate aim to ‘make the claims function customer-centric’. As I ponder my response it occurs to me that being ‘customer-centric’ is perhaps the last thing that a claims department or, indeed, any business should have as an aspiration. If, that is, by ‘customer centric’ we mean a business that is designed around meeting customer needs and desires, providing a great end-to-end customer experience, and consciously seeking customer loyalty and advocacy
Now, I know that this flies in the face of conventional wisdom (which has actually only been ‘conventional’ for a very short period of time in the annals of corporate history) but I dare to challenge this so-called truth for the simple reason that being customer-centric is surely one of the quickest ways to business failure that I can think of. It’s not just the no-doubt apocryphal tale of Henry Ford who, when pondering what his customers might have asked for in the early days of motor cars is reported to have replied ‘faster horses’, that has made me think again about this whole customer-centric argument.
It also concerns me that the customer-centric positioning facilitates a wholesale abdication of responsible planning and management on the basis that any given process, product feature, pricing strategy or customer service can be justified on the grounds of it being ‘good for the customer experience’.
This lazy approach to forward planning and design then spills over into the supply chain who are equally adept at massaging their positioning to one of being ‘customer-centric’ instead of an approach based on competitive supply, innovation, and helping to generate the real goal of an insurer claims department or any commercial business – to make a profit.
We know, of course, that profit generation is not the only goal of business – but you can be absolutely sure that without it then any other objective is a meaningless platitude of management consultancy-speak and so-called corporate governance that serves merely to hide underlying failures of analysis and accountability. Nor must profit be generated without the moral, regulatory and fair competition parameters that society should establish. Nevertheless, being customer-centric is a poor substitute and simply doesn’t hack it in my view.
A much better driver of positive change, competitive innovation, product development and better customer service is the seemingly old-fashioned profit motive and competition, which has been the bedrock of capitalism for generations and looks set to rule as the premier method of wealth generation for decades to come, if not forever.
How does this all relate to the apparently simple task of capturing and managing insurance claims?
I argued in my previous blog (Stop Obsessing About Customer Service) that an obsession with customer satisfaction is bad for the claims department. The same is true for the concept of customer-centricity as a whole. Please don’t get the impression that I hate customers – quite the opposite. Insurance is only a valuable product for the simple reason that customers can make a claim when the necessity occurs. We need to do everything we can – within reason – to validate and meet the legitimate claims that come across our desks.
However, we need to understand that at this so-called Moment of Truth when the claim is made (don’t get me started on the absolute nonsense inspired by this truly dreadful concept) the claimant understandably becomes focused on one person only – themselves.
Whether it be the provision of 24/7 services, easy and generous settlement, reduced admin hassle, speed of resolution, restoration of value, or a host of other demands, we can expect that the customer will seek to secure the most for the least – even to the extent of exaggerating the value of any given claim where up to 20% of household claimants surveyed have freely admitted claiming for more than they were actually entitled to.
We cannot afford to be self-indulgent.
Our customer-centricity credentials cannot be allowed to bend and stretch just to the demands of individual claimants. The job of the claims department is to manage the interests of a wide range of stakeholders including, of course, the non-claimant majority who are funding both the legitimate demands and the whims of the claimant minority.
So, I would urge the claims community in particular, and business in general, to stand back from the customer-centricity argument and not necessarily provide that which is driven by self-centred customer desires but instead to consider what is right for business as a whole.