NB Financial Health
Why Focus Groups Aren’t Enough: A Surprising Lesson in Marketing Insurance in Africa
Not surprisingly, building a customer-centric company is rooted in engagement with end users and letting them shape the product experience. That’s why, before we enter any market to roll out new digital insurance offerings for emerging consumers, Inclusivity Solutions and its partners spend a great deal of time in potential customers’ homes and businesses trying to understand the essence of what drives their lives, their families and their priorities.
We conduct product co-creation workshops up front, and we revisit customers in focus groups after our digital insurance products are live to ensure improvements are constantly being fed into the pipeline. But sometimes just speaking to customers is not enough.
Oftentimes, what is shared around the table of a focus group sounds correct and complete. Customers prefer this product feature to that one. They would be willing to pay X price for Y product or are keen to buy through the latest digital channels. But whether customers will actually respond positively to the design of a product is usually evident only once it is out there in the market. That’s why truly customer-centric companies combine qualitative feedback with more quantitative data – an approach that’s supported by our own experience.
Customer Focus Groups vs. Hard Data
In a recent round of focus groups in East Africa, we were excited to get feedback on some of the marketing messaging we had been sending to customers via SMS. Since the launch of our hospital cash insurance products, we had been testing variations on SMS wordings. Although limited in what we could communicate in 160 characters, some blasts were framed around urgency (i.e. “Don’t Miss Out”) and others around highlighting loss (i.e. “Protect Your Family”) or speed of claims (i.e. “Cash back in 72 hours”).
We were intrigued to discover that SMS messages highlighting the number of customers already registered (“80,000 signed up so far”) and the value of claims already made (“Over 3 million in claims paid”) were consistently rated most effective across eight focus groups, representing a variety of segments and geographies. It made complete sense, we thought: Of course, customers needed to hear that their peers trusted the product and had a positive claim experience.
The only issue was that one week later we reviewed the delivery statistics and uptake rates of a number of SMS blasts that had taken place over the previous months. Surprisingly, not only were those messages highlighting customer and claims figures at the bottom of the list in terms of effectiveness, but our best performing message was one with somewhat unassuming wording that no one in the focus groups particularly cared for: “You have not yet registered for hospital cash insurance. Sign up now.”
The transactional tone of this message, although devoid of marketing-speak, led to 65 percent more product registrations over a three-month period as compared with the wording preferred by customers in the focus groups. In the end, data had “out-perceived” the customers’ own perceptions of their preferences.
This is just one example of how A/B testing and data analysis are helping technology companies like ours capture learnings and adjust future messaging rapidly. At the same time, they are identifying key customer segments and better ways of framing our value proposition.
Positioning the ‘Freemium’ Model
One of our core beliefs is that customers in markets with limited insurance penetration often need to experience products at no cost first, to build an understanding, appreciation and willingness to pay in the future. Likewise, the strong brands of mobile operators can provide consumers greater trust in new products. Thus, we typically employ a freemium model, rewarding customer usage on our mobile partners’ networks with free insurance. But we’ve also learned through data that this approach requires a lot of nuance when engaging with the customer.
While customers undoubtedly appreciate receiving a level of insurance coverage at no cost in return for their mobile usage, they might not want to call it what it is. Marketing messaging explaining that the mobile operator is “covering the cost of your premium” consistently outperformed those messages framed around receiving “free” insurance. Focus groups confirmed what the data was showing: “Free” sounds too good to be true while hearing that the mobile operator is footing the premium bill lends both trust and brand appreciation. “Free,” on its own, isn’t enough.
In another East African market, we found that the higher the value and number of monthly transactions conducted with a mobile operator, the more likely a customer is to respond to wording highlighting free insurance as a reward for being a “loyal customer.” When mentioning the individual reasons why a mobile customer is viewed as loyal (i.e. airtime spend or mobile money usage or length of customer relationship), the positive response rates climbed even higher. But with lower-spend mobile customers, highlighting the need to register to avoid missing out was more effective than mentioning loyalty. This segmentation now allows us to more effectively reach customers based on their monthly usage profiles with mobile operators, thereby keeping marketing costs down.
All this goes to show that not only do we as companies often not fully understand our customers at the outset but many times, our customers are not completely conscious of their own tendencies. By combining behavioural economics concepts, quick data analytics and on-the-ground customer engagements, fintech players in emerging markets can start tapping into the intangibles. Whether to improve marketing or to reshape products, embedding customer-centric processes that learn and evolve over time can undoubtedly unlock new potential for valuable products and services.