Recently, the expression “doubling down” has become part of the tech world’s nomenclature.
“I think you’ll be pleased where we’re taking Siri. We’re doubling down on it.”
– Tim Cook, Apple CEO, speaking at the D10 conference in May 2012.
He also remarked that they are going to “doubling down on secrecy” too, indicating that there might be loose lips at work at Apple or, just the result of a public trial over patents. Later during the same conference, Skype’s CEO Tony Bates stated:
“I’m not going to talk about future products, but I’ll steal a line from Tim Cook. We’re going to double-down on integration with Windows 8, and we’re going to double-down on secrecy.”
And there is our esteemed President, Mr. Barak Obama, who has obviously been rubbing shoulders with Al Gore and the nerd-do-wells of Silicon Valley, in his third State of The Union speech also used the expression, twice:
“It’s time to end the taxpayer giveaways to an industry that rarely has been more profitable, and double-down on a clean energy industry that never has been more promising.”
Then he said this about education:
“At a time when other countries are doubling down on education, tight budgets have forced states to lay off thousands of teachers.”
In addition to a great name for a KFC breadless chicken sandwich (shown above), I think the expression is an excellent metaphor for strategic planning. It definitely works in the context of “doubling down on differentiation”. Apple has demonstrated that differentiation is a growth strategy and it enables them to charge a premium for innovative products that consistently deliver a superior customer experience. Along the same lines, in their research report, The Customer Decision Journey, Forrester developed Experience-Based Differentiation, which they define as:
A systematic approach to interacting with customers that consistently builds loyalty.
By consistently delivering a superior customer experience Apple is being rewarded by ever-increasing customer loyalty.
In the book, Dealing with Darwin, Geoffrey Moore eloquently stated:
“the antidote to commoditization is differentiation that leads to customer preference. Innovation that creates that kind of differentiation is the goal.”
How Can an Insurance Company or Insurance Broker Differentiate?
One way to differentiate is by taking a page out of the Apple playbook by “doubling down” on the customer experience. For most of my career I have been working with or for companies (insurance companies and broker/TPAs) competing in one of the most tightly contested industry categories: insurance. With few exceptions (i.e. USAA), research by Accenture indicates that not a lot of progress has been made by insurance industry players towards delivering a “differentiated and exceptional customer experience” despite the fact that 62% of insurance executives view this as critical in creating differentiation and growth.
The findings of a recent Accenture consumer survey neatly sum up the growth challenge faced by most insurers:
- 26 percent of customers say they have no loyalty to their insurance providers.
- Up to 32 percent say they are likely to stop doing business with at least one of their insurance providers “in the next 12 months”.
- 26 percent would definitely shop around for better deals.
- 75 percent believe there is no significant difference in the products and services offered by insurance companies.
I think it is fair to say that most insurance industry players do whatever it takes to at least match the competition, achieving a state of neutralization as opposed to a state of differentiation. More or less, the common approach is to “sense” (know what your competitors are up to) and “respond” (or react by at least matching them in kind). Over many years this leads to an industry creating a whole host of “me too” players, at all levels of the industry food chain. Few insurance industry players actually create a sustainable competitive advantage. Cloning products is the norm. The result is: rampant commoditization across most lines of business, products and services. In this context, there is less and less brand loyalty. According to a J.D. Powers April 2012 survey, while only one-fourth of auto insurance customers shopped for a new policy, 43 percent of those shoppers switched insurance providers–the highest rate since the study first began measuring retention in 2008, and an increase of 3 percentage points from 2011.
Why is that? The short answer is: it is difficult to complete an appropriate job of differentiation in such a highly transparent, regulated industry. The fact is, the insurance industry is so regulated that almost anything an insurance company tries to do needs to be actuarially justified and vetted (by up to 50 State Departments of Insurance). Then, once a product is approved, competitors can have their actuaries reverse engineer and create a similar variation of your product (if not develop a clone of the same product) and begin the filing process to get their version of your product approved. There are also internal difficulties and struggles to foster innovation across product, service and distribution silos that exist in most insurance companies. Innovation requires constant collaboration and tight coordination across multiple business units which is difficult to do within a large insurance company. A true commitment towards differentiation requires investment in capabilities such as: research and development, product development, new, multichannel development, a marketing team to properly communicate and a sales force to sell it to the right target buyer.
The longer answer is: staying on top of a product or service category requires constant innovation as well as a continuous, unrelenting, Steve Jobs-like obsessiveness around creating a sustainable competitive advantage through differentiation.
Words like “sizzle”, “bells and whistles”, “added features” and “points of differentiation” are frequently used in many of these companies to describe the “difference” that an insurer can create around a product or service. Typically, these efforts do not create sustainable differentiation. Instead, these efforts usually amount to augmentation which has a limited shelf life.
As a case in point, when Drew Houston, one of the founders of the online storage service Drop Box (that lets the user sync their files to the cloud) finally met Steve Jobs he was taken aback when Mr. Jobs called his service a “feature, not a product”. With all of the cloud-based storage solutions on the rise, Mr. Jobs encouraged Drop Box to ramp up their efforts at creating a more multi-functional file syncing service offering.
In her exceptionally well written book, Different, Young Me Moon explains the dynamics that are indicative of the auto insurance industry’s competitive landscape:
“The more tightly contested the category, the more clustered the competition, which means:
(1) the more hyper-vigilant companies are going to be to the movements of those around them and
(2) the more poised they will be to respond in kind.
It really doesn’t take much to see how this kind of ongoing jockeying can quickly become all-consuming; when companies are fighting tooth and nail for every market share point, the relentlessness of this kind of competitive engagement can easily take on a life of its own.” 
The constant drum beat of hyper-competitive, “sense and respond” in kind action, has resulted in a tendency to do what she calls “meaningless differentiation” through product enhancement multiplication and/or augmentation. Just take a trip to the local pharmacy and have a look at the toothpaste aisle for a perfect example of meaningless differentiation. Instead of meaningless differentiation or focusing on treating your vulnerabilities, Young Me Moon suggests that you double down on your strengths.
Doubling Down on Your Strengths
In addition to performing the usual SWOT analysis, developing a strategic plan that leverages your strengths, addresses your weaknesses and vulnerabilities, minimizes threats and exploits opportunities, you should circle back and “double down” on your strengths. In the insurance business, doubling down on strengths usually includes an emphasis on critical areas such as: new product and capabilities development, people, processes and technology.
As an example, for a life insurer or third party administrator, the following could be 6 areas of strength where you might focus your doubling down efforts:
- People – training and developing your sales people even more intensely to gain a high level of knowledge, skills and expertise about the insurance products and services that you offer. Use coaching, rewards and incentives along with a scorecard to measure and manage these performance improvement efforts.
- Process optimization – achieving operational excellence through streamlined work flows, zero defects-based quality assurance initiatives and optimization of critical process cycle times.
- Customer Experience enhancement – an independent survey by ClearAction, among business-to-business firms, found that 50% of top executives believe customer experience management is a competitive differentiator and influences major decision-making. Take a look at Wisemuv’s digital cross sell and upsell platform that includes a customize-able survey to help customers in the decision making process. The whole area of telematics to support “pay as you drive” (i.e. Progressive’s Snapshot) and “pay how you drive” is a new, emerging area of both rating and gamification (a driver score). This effort in experience improvement must include post purchase customer service advocacy protocols and service reps. showing compassion – for customers in problem situations and their beneficiaries at claims time. Another shining example is ACE – UK who just introduced an enhancement to their D&O program that provides legal advice to their policyholders. (Source: August 9th 2012 Wall Street Journal).
- IT movement towards Cloud-based and “Everything as a Service” technologies – to reduce costs and keep pace with the changing tech landscape. See this article about expected productivity from cloud computing.
- Adoption of interactive technologies – intelligent adoption of new, interactive technologies to connect and interact with mobile customers anywhere, anytime. 76% of life insurance executives said it was important or critical to develop mobile capabilities over the next 3 years.
- Improve and expand data and analytics capabilities. Thirty-two percent of life insurance executives believe it is critical that their organization improve its analytics capability in the next three years. They have, on average, invested less than $30 million over the past three years—although 65 percent say this figure needs to be increased.
With a focus on whatever you identify as your strengths, it is important to then develop a series of proximate objectives around each of your strengths to “double down” on them.
What a World of Difference a Difference Really Makes in Business
In summary, doubling down on differentiation can provide the following strategic advantages:
- Barriers against imitation so there is a lack of viable alternatives;
- Stakes in the ground – objectives, leadership direction, focus and resources (i.e. Apple’s focus on Siri);
- Experienced-based differentiation that leads to customer and brand loyalty;
- The best defense against commoditization; and
- True Sustainability.
And one final note, the author of Good Strategy/Bad Strategy, Richard Rumelt makes a great point about the use of a wave of change to create a competitive advantage:
“Of course, an organization can shoot ahead of competitors by successful innovation or by re-inventing a whole industry. But, the most common path to success is not raw innovation, but skillfully riding a wave of change. Changes in technology, law, costs, and buyer tastes are normally beyond the control of any competitor, but they can be harnessed. Just as a good sailboat and a skillful captain can harness the wind to advantage, so can a leader use a wave of change to work ahead of competitors.”
In the strategic planning process a lot of attention is paid towards process of exploiting opportunities, addressing weaknesses, vulnerabilities and minimizing threats but in the final analysis, “doubling down” on strengths might actually provide the most impact and help you skillfully ride the wave of change.
For more ideas to differentiate an insurance offering or benefit program, see the various innovative solutions at my business development site Afficiency.com
About the Author:
Bill Tyson, Chief Executive Officer, Strategic Marketing Plus, LLC. – is an independent strategy and marketing consultancy firm based in Southern California. Before starting out on his own, Bill was the EVP and COO of AMPAC Insurance Marketing of WNC First, one of the leading marketing and program administrator organizations selling and administering a range of insurance programs on behalf of financial institutions. Bill has a 28-year track record of building multichannel marketing insurance businesses, domestically and internationally. He has held executive leadership in 2 of the Fortune Global 100 companies and another Fortune 500 company. His strengths are in developing and executing strategic initiatives, marketing, distribution and sales strategies; change leadership, business development, product and service innovations, benefits, risk management and leveraging Internet-based technologies. He is a versatile leader having served as CEO (current), EVP, CMO, COO and more than 22 years in Sales Executive leadership roles. He has particular subject matter expertise in Association Group, Voluntary Benefits, Commercial P&C, Professional Liability, Personal Lines, Affinity Group Marketing, Direct Marketing, High Limit Life Insurance, Accident and Health Underwriting and a variety of employer-based Group Insurance programs. He has a strong direct marketing background, business development, distribution, sales and multi-line insurance product familiarity. See his business development site at http://www.afficiency.com.
Bill earned his Bachelor of Business Administration (BBA) in Insurance and Risk and Business Law from Temple University. Contact him for a free consultation by visiting his business web site at: http://www.strategicmarketingplus.com
 The Customer Experience Journey – Customer-Centric DNA Propels Firms Through Five Levels Of Maturity, by Bruce D. Temkin with Steven Geller, Forrester Research, September 17, 2008.
 Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution, by Geoffrey A. Moore, Penguin Books, New York, NY, published December 2005.
 USAA Receives Top Honors for Customer Service, Loyalty, May 01, 2012. For the 4th year in a row, USAA receives the 3rd highest Net Promoter Score among insurers, 39% higher than the industry average.
 Accenture’s Research Report: “Customer-centricity—the key to differentiation and growth in the life insurance industry”, 2011. Chart, p7.
 Accenture’s Research Report: “Customer-centricity—the key to differentiation and growth in the life insurance industry”, Accenture’s Research Report: “Customer-centricity—the key to differentiation and growth in the life insurance industry”, 2011. p 2.
 J.D. Power and Associates Reports: A Growing Number of Shoppers Are Switching Auto Insurance Providers. April 29, 2012.
 Youngme Moon (2010-03-31). Different (p. 37). Random House, Inc. Kindle Edition.
 1st Annual ClearAction Business-to-Business Customer Experience Management Benchmarking Study, ClearAction, 2010.
 A proximate objective – names an accomplishment that an organization can reasonably be expected to achieve. From Good Strategy/Bad Strategy by Richard Rumelt. Chapter 7. Crown Publishing Group. Publication date: 7/19/2011.
 Good Strategy/Bad Strategy by Richard Rumelt. Crown Publishing Group. Publication date: 7/19/2011.
Books on Competitive Strategy and Differentiation:
Different – Escaping the Competitive Herd by Young Me Moon
Dealing with Darwin by Geoffrey Moore
Also, here is an excellent May 2012 HBR article on Innovation by Bansi Nagi and Geoff Tuff of the Monitor Group: