Finding Opportunity, Starting From Zero
Insurance – we all need it, but it’s something we would prefer not to deal with. When you ask Kiwis what the ideal insurance experience is, it’s essentially no experience at all.
In 2017, my brother Rob and I had just moved back from Germany where we had been working at a new tech-enabled insurer (WeFox). We weren’t sure what to do next or if that experience was relevant, and met up with our mate Brett to talk about what was happening in the market here. In that space, it seemed like not a lot.
The industry was dominated by two large Australian companies, which in-turn own most of the brands we know. There was talk of innovation, but very little making its way to market. That seemed to us like a rough deal for New Zealanders and an opportunity.
We decided New Zealand needed a digital-first insurance option which lets you do it all quickly on your smartphone when it suits you, and without having to call in and wait in the queue. If we could get it right, it would give back a lot of wasted time and save people money – insurance with less hassle seemed like a credible proposition.
Finding opportunity
Finding a gap in the market begins with understanding the established player’s weaknesses and customer frustration. In the insurance industry, the weaknesses and frustrations were numerous; a poor reputation from previous failings in customer service, and inability to explore new ideas due to corporate red tape, and most importantly for us, was the slow adoption of new technology due to a whole raft of legacy IT systems.
Kiwis are used to slick online experiences with their banking these days, and the bar in terms of digital experience has been raised significantly by the likes of Netflix, Spotify and Uber. But insurance had been left behind in adopting user-friendly technology.
We reckon companies who embrace this shift in expectations can take market share from traditional providers who are unwilling or unable to provide this type of service. This alone screamed opportunity to us and knew it would be a key pillar of what we were to build.
Focus on the customer
Being a startup, we faced the things all new businesses face: lack of brand recognition and word-of-mouth sales, and no multi-million dollar marketing budget.
Given we couldn’t compete on these, we steered to our strengths: customer satisfaction and product development. If a brand can nail these, then marketing pivots from a hard-sell persuasion approach, to simply introducing people to the brand and then encouraging customers to become advocates.
Playing on this, we built the industry’s first refer-a-friend feature into our product and reward existing customers for telling friends and family about Cove. We all liked the idea of giving money to our customers rather than Facebook & Google and this simple nudge encourages word-of-mouth and bypasses the need for a massive marketing budget.
It also keeps the team focused on building a product that makes customers want to become advocates. No one is going to refer a brand they aren’t 100% happy with, so asking for and paying attention to customer reviews & feedback is critical to this type of growth.
Every industry has opportunities for new players but every new business has to start from zero. Identifying these weaknesses and having an in-depth understanding of how they can become your opportunities will set you off on the right foot for success.
University of Auckland graduate Andy Coon began his career in insurance at Sovereign. He also worked for a number of years in investment banking across the UK, US, and NZ before returning to insurance and working on various startups in Europe. Andy has long been a tech enthusiast and is loving applying cutting edge technology to the insurance industry. Andy is Strategy & Actuarial at Cove Insurance.