Schemes pitfall #1: Failure to understand the market
After 20 years of delivering literally thousands of successful schemes we’ve had a few casualties; we all want to maximise our success and add value to our businesses right? Schemes can act as a catalyst to add value and increase revenue so we’ve put our heads together to bring you the top 5 pitfalls to avoid.
A thorough grasp of the market is essential when planning a new scheme. Understanding the demands of your target customer, what’s driving buying behaviour and the positioning of competing schemes will enable you to optimise yours.
Steve Jobs, the late Apple founder and CEO, was famous for relying on intuition rather than consumer research because “customers don’t know what they want”. Few of us can claim to be so talented that we can afford to do the same. It may be that you’re already active in the market and you have a wealth of data to tap in to, in which case you don’t need an elaborate research plan. But if the market is new to you don’t just guess or assume you know your market based on insight from loyal friends; get out there and ask prospective consumers who meet your target profile.
Developing a product without conducting market research is high risk. It may save you some time and get you to market more quickly but it’s not a shortcut worth taking. What is more, the FCA’s focus on Know Your Customer (KYC) means insurers have an increasing responsibility to demonstrate that all schemes have been designed with the consumer in mind. When pitching to an insurer you’ll find you’re quickly dismissed if your proposal doesn’t cover the basics or there are gaps in your understanding of your target customers. Don’t forget you might only get one chance at pitching your scheme!
Learn the difference between ‘qualifiers’, the basic requirements your consumers look for when selecting a product, and ‘winners’, the thing that makes a consumer buy your product rather than a competitor’s product. Consumers may shortlist products based on cover but they’re likely to make the buying decision based on just one or two factors such as price, brand or convenience. Knowing what factor is driving buying behaviour can have fundamental implications for your scheme design. Don’t just assume that price is the driver! Research published in the Harvard Business Review suggests that convenience is now the principle requirement in lower value purchases for some consumers.
Look at the wider business environment as well. Are there social, political or technological changes coming which will impact your scheme? How will you prepare for them?