7 principles for creating killer apps that cut through the clutter
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JOHANNESBURG - Naked, the artificial intelligence-driven insurance platform, recently won the best financial solution and the overall best app in the MTN Business App of the Year Awards for 2019.
Co-founder, Ernest North, discusses seven principles that organisations can apply to create break-through digital products that connect with customers’ needs.
People around the world run their lives on their mobile devices, so it’s no surprise that startups and established companies alike are focusing heavily on smartphones as a sales and service channel. Yet there are millions of apps available for iPhones and Android phones, and a would-be innovator needs to deliver something truly special to grab the user’s attention.
To that end, the journey of building Naked Insurance started with a clear goal and vision for transforming car insurance from a grudge purchase into a transparent, convenient and simple customer experience. Here are some of the lessons we learned and the principles we applied as we developed the Naked Insurance offering.
1. The app is just the front-end of the customer experience
Many companies fail to integrate their apps and websites with the back-end processes in their organisation. Most insurance companies, for example, offer slick-looking apps, but clients still need to speak to a call centre agent to claim or to complete the process of signing up for a policy.
Despite the shiny, modern app, the company carries out the work using the same manual processes as it always has. An app is meaningless unless it hooks into automated back-end systems and processes, so that people can, for example, buy or cancel insurance without speaking to an agent.
Automation in the back-office not only removes friction from the customer experience, it also leads to massive cost savings, which can be passed on to customers. This is easier said than done for companies with legacy systems and processes, but it is the foundation of a great app.
Our product design processes followed the Google Ventures sprint methodology. In contrast to the one-way sequence of “design, build and market” used in conventional corporate product design, this approach enabled us to rapidly prototype all elements of our customer experience. Putting live prototypes in front of clients allowed us to iterate and optimise our customer experience to meet the needs of the user.
3. Whatever you build, avoid legacy systems
Many startups are tempted to take a shortcut by using existing systems and processes from established providers for parts of their service. This can be useful for prototyping, but using it for the live app usually ends in failure. If you start integrating your new app with old systems and processes, you will probably find your freedom to innovate constrained by your legacy environment. The reason our system is instant is because it is 100% built in modern digital tech, with no legacy integrations.
4. Look at how people actually live
Legacy thinking can be even harder to escape than legacy systems. Many apps do things the same old way as they were done in the past simply because that is how they always were done in an industry. And many of these processes were built for the profitability and convenience of suppliers and service providers rather than for the good of customers.
For example, we recognised that there are long periods that people pay full car insurance premiums, even though they are not driving most days of the month. So, we developed the CoverPause feature to allow people to pause or resume accident cover with a few taps on the Naked App, only paying half-price on the days that they are not driving.
5. Balance experience and youthful enthusiasm
Building an app sounds like something a couple of smart twenty-somethings should be doing in their parents’ garage. However, it’s important to back up youthful tech savvy and ambition with industry expertise and business experience. Our team includes many bright young people in areas such as development, design and data science. But my co-founders and I are consulting actuaries who have worked with leading insurers in South Africa – so we know what the drawbacks and pain points are in the insurance business model. Everyone in the business shares one vision, which is to transform insurance into a more customer-friendly product.
6. Incentives drive behaviour
The people working at traditional insurance companies are not evil, but they are invested in a simple and old-fashioned formula: they make more profit if they don’t pay your claim. So, if they can find a way to pay less, it’s a no-brainer. We realised we needed to change our incentives if we were serious about changing the industry.
We decided to set ourselves free from the temptation to make claiming difficult by paying ourselves in a different way. We earn a fixed percentage of the premium – unlike traditional insurers, we have no incentive to go out of our way to find ways to reject claims. In turn, that meant we could build an AI system that focuses on making users as happy as possible.
Our algorithms are geared towards making sure customers have the right cover and that their valid claims are paid as quickly as possible. We do this because users who are happy, stay longer, refer their friends and help establish Naked as a completely new category of insurance.
7. Word of mouth is still the best form of marketing
No ad campaign will convince people that there is a new, better version of insurance. The best way to do that is to have thousands of happy customers telling other people about it. To date, word of mouth has been our best marketing tool and the source of most of our new policyholders. Big mass media campaigns simply do not cut through as effectively as an endorsement from your friend or a member of your family. And that’s why the customer experience is the basis of an app’s success.