1. Have a value proposition
When Colin Brown helped launch Canadian Direct Insurance (CDI), the automotive-insurance industry was set up to subsidize younger drivers. It was a nice idea, Brown says, but it left experienced drivers paying higher premiums. He saw an opportunity to offer an alternative, one based on a simple concept: “better insurance, less money,” he says.
But he knew from the beginning that quality customer service would need to be a part of his vision, too. “We knew from dealing with Crown Corporation, a government-style bureaucracy that provided most automotive insurance at the time, that in addition to offering a good product at a good price, customer service would be a big selling feature,” Brown says. “It’s always nice to save people money, but a purely cost-based rationale is not a long-term success model because someone can always undercut you.”
2. Start with your employees
“I subscribe to an idea I’ve seen in a number of textbooks: that the customer-service profit chain starts with your employees,” says Brown, who also teaches the concept in an evening management class at a local technical college. “You have to fill their needs, and they in turn pass that along to the customer, who returns it to you in the form of loyalty.”
To this end, CDI has a structured talent-management process that begins with recruitment. The company has determined the key characteristics that make up a successful staff member, and it ensures that it hires to that standard. Then, once employees are aboard, they’re trained in-house, and throughout their tenure they are given clear direction regarding what’s expected of them, what tools are at their disposal, and how their performance is being measured. “We’re not exactly what I would call a bleeding-edge company,” Brown says, “but we hire for fit, give clarity of purpose, and offer training and support.”
How are you growing?
“Regulations and an increased potential for losses means we’ve had to rewrite policies to reflect the modern age. That’s what customer service is about—going out there, finding what people need, and changing in response.”
3. Use word-of-mouth advertising
With its employees now treating customers the way they’ve been treated in-house, CDI is seeing a great deal of loyalty, including a 96 percent renewal rate, which is high for the insurance industry, especially in areas where there’s significant competition. As a result, Brown says, “Our customers become advocates for us.”
When customers are asked what drove them to CDI, 70 percent say they received a referral from a current customer, and this, in turn, helps the company’s bottom line. “Because a lot of our marketing is being done by our own customers, advertising costs are kept to a minimum,” Brown says.
CDI’s overall growth (2012–2013)
Industry average: 3.2%
CDI’s growth in written premiums over the past 10 years
Industry average: 50%
CDI’s average annual revenue growth
CDI’s 10-year claims customer-satisfaction rate
4. Offer cutting-edge technology
CDI launched at a time when most insurance companies had old-school technology—IBM mainframes and such. But it was the dawning of the Microsoft era, and Brown and his cofounders recognized that employees would need more nimble technology to quickly access the data that their customers would require. So CDI began using PC- and server-based systems that are quicker and more malleable.
5. Measure your performance
Customer service became more and more important as CDI grew, in part because of the regulatory environment. “We came to see it as our flagship value proposition because rate regulations restricted us from competing on the basis of cost,” Brown says. So, to ensure its continued performance at the highest level, the company began measuring both employee satisfaction and customer satisfaction.
Every two years, for example, the company has hired an outside firm to conduct employee-engagement surveys, and the results have been impressive. In the most recent survey, in the category of “communicating expectations,” CDI scored 27 percent over the benchmark; in “organizational vision,” it scored 21 percent; and in “understanding what needs to be done to succeed,” 24 percent. The company also sends random monthly surveys to customers who have made contact over the course of the month, and on the claims side, it has consistently received a 98 percent approval rating.