Why Shrink Wrap is a Metaphor for Insurance Differentiation

Imagine: Microsoft, a challenger brand. No? Think back … to a time when there was no MS Office. It was a time, in the late 1980s and early ’90s, when software applications were sold from retail shelves and shipped in colorful shrink-wrapped boxes.

It was a time before even one of Microsoft’s now-dominant desktop applications was No. 1 in its category. I was a marketing and merchandising executive for the largest software reseller in the country, Egghead Discount Software, and I saw giants fall. Not to superior technology. Not to innovative features and benefits. They fell to well-conceived and administered merchandising tactics and a healthy dose of FUD — fear, uncertainty and doubt.

Back then, Lotus 123 was the dominant spreadsheet. WordPerfect topped all word processors. Harvard Graphics made the pre-eminent presentation tool. And Ashton Tate, makers of dBase, sold the world’s best-selling database.

What tactics did Microsoft deploy to climb on top? Surprisingly, low-tech plastic wrap was one of them. Without changing the application code or the wares inside its boxes, Microsoft kick-started a suite of applications by discounting them slightly, bundling them together with something that looked like Saran Wrap, and renaming the package “Office.”

MS Office was a hit that made headlines in the trade press and distracted the software kingpins. A new category was born, and an industry fretted. FUD festered everywhere.

Merchandising and FUD brought each of those dominant world-class products to their knees. Without the aid of an Internet, FUD rippled along traditional paths and at speeds that couldn’t begin to approach today’s standards. FUD was distributed by paid media, trade press, and word of mouth – primarily in the voice of a brand with fear on its side. Microsoft used FUD to shake the foundations of conventional thinking. Microsoft’s change agents shared their stories and made promises that ultimately took decades to deliver. They disrupted the purchase patterns of corporations, governments, teachers, and of course, consumers.

Therein lies the lesson.

[Previously from Brooks: 4 Ways PEMCO Uses Insights from Online Reviews]

Our industry is filled with challenger brands. Many Davids swarm the battlefield, engaged in fatiguing hand-to-hand combat with a handful of massive Goliaths. Today’s challenger brands must change – disrupt the status quo – to survive and thrive. Doing the same old thing in the same old way is like setting the table and serving ourselves up to become the other guy’s lunch.

More than ever, we’re now deep into an era where relationships are greatly defined, shaped, and influenced by social engagement and digital delivery. Forward-thinking carriers should ramp up their use of popular social communities and find unique, effective ways to provide new, differentiating value for consumers and partners.

By giving priority and focus to online services and communication, we’ll increase opportunities for customers who prefer to serve themselves. It’s like adding a massive volunteer workforce to the labor pool. These important self-service transactions also will augment channels that serve consumers by phone or face to face.

For instance, by focusing on digital sales and delivery, carriers will reduce questions required for underwriting, automate the application process, and enable pre-filled forms containing required consumer information. Simultaneously, digital delivery will decrease paper documents we currently create and mail to customers. At the end of the day, these advances will improve the customer experience, reduce operating costs, and permit more competitive prices.

We must look beyond the obvious to reposition the products and services we’ve traditionally provided, so that a “bundle” has more value than its component parts. This requires a better marriage between front-line marketing professionals, product managers, and technologists. Like Microsoft of the ’80s, we must look outside the box and discover the value of our “shrink wrap.” And, unlike the market-leading software giants, we must avoid getting mired in FUD.

About the author: Rod Brooks is VP and CMO of PEMCO, a regional P&C insurer in the Pacific Northwest.