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Maker's Mark's Lessons for Insurers and Vendors

Attention to customer expectations can result in companies ending up in a better place than they were before they ran into trouble, as Insurity’s experience shows.

News arrived over the weekend that the producer of Maker’s Mark bourbon had changed its plan to reduce the strength of its product from 90 proof to 84. While the distiller seems to have genuinely seen the move as a viable way to address a supply problem in a manner mutually beneficial to the company and its customers, the public seems to have interpreted the move as “watering down” the whiskey. The way the distiller handled this PR debacle may provide lessons to insurers and their vendors.

As the Guardian reported on Sunday:

The brand known for its square bottles sealed in red wax has struggled to keep up with demand. Distribution has been squeezed, and the brand had to curtail shipments to some overseas markets… The change in recipe started with a shortage of the bourbon amid an ongoing expansion of the company's operations that cost tens of millions of dollars. Maker's Mark President Bill Samuels, the founder's son, said the company focused almost exclusively on not altering the taste of the bourbon while stretching the available product and didn't consider the emotional attachment that customers have to the brand and its composition.

Considering that most premium Scotch whisky is only 80 proof, one could see how Bill Samuels could find the solution acceptable. Customers didn’t, though I think their reaction was more about the idea that the product would be diluted than because of any specific attachment to the liquor’s “composition” as such.

[To see the role Maker's Mark plays in the industry, see a picture of a distinguished insurance CIO next to a bottle of the iconic product in How Insurance & Technology's Elite 8 Balance Work and Life .]

Whatever the case, Maker’s Mark responded rapidly to customers’ objections, cancelling the plan to change the strength of the whiskey. As a result, the company is now in a better situation than it was before the debacle: First, Maker’s Mark has shown customers that the company is attentive and committed to its customers and the quality of its product. Secondly, when people drink Maker’s Mark, they are likely to think, at least for a time, that what they are drinking is superior to what they might otherwise be drinking. Thus, customers are not only focused on the superior quality of the brand, but it’s taken as a given as they contemplate a world in which it would have been otherwise. One could almost believe it were a deliberate publicity stunt. Almost.

We’ve seen successful responses by insurers to public opinion in the past, for example with Aflac’s firing of comedian Gilbert Gottfried from his role as voice of the infamous Aflac duck. While Gottfried’s over-the-top humor was well matched to the insurer’s humorous mascot, the comedian went too far in making insensitive jokes in the wake of the 2011 Tōhoku earthquake and tsunami, which struck Japan. Aflac, which does 75% of its business in Japan, released a statement saying,

"Gilbert's recent comments about the crisis in Japan were lacking in humor and certainly do not represent the thoughts and feelings of anyone at Aflac…There is no place for anything but compassion and concern during these difficult times."

The difference between Aflac and Maker’s Mark is that the insurer’s PR crisis management was merely damage control: it fixed the problem but gained nothing.

A closer analogy might be insurance core system vendor Insurity’s recovery in the wake of an ill-starred acquisition by LexisNexis. Without going into a thorough diagnosis, suffice it to say that the acquiring company’s involvement didn’t result in an optimal correspondence of strategic objectives of the two worthy companies. However, in the wake of LexisNexis’ divestiture of Insurity, the core system vendor rebounded tremendously in its customers’ esteem.

While still under the aegis of LexisNexis in 2011, Insurity scored 74 out of a possible 100 in Novarica’s ACE Ranking for customer service with regard to the vendor’s Policy Decisions policy administration system. In 2012, Policy Decisions earned a score of 90 for overall customer satisfaction. Insurity’s Claim Decisions also achieved a 90 or more for technology staff and functionality. These scores put the vendor within a point of the top ranking vendors in the relevant functional areas.

Al Scharer of Estes Park, Colo.-based Filigree Consulting, who performs independent surveys of Insurity’s clients, told Insurance & Technology that Insurity had undertaken a series of improvements to their relationships, processes and product quality. Of the 28% improvement represented in the changed ACE Ranking, he notes:

In the 20 years that I have been measuring customer experience and satisfaction I have never seen that radical an improvement. It was stunning, and it is a credit to the management team and also to the customers because they had to allow such an improvement in the relationship.

Novarica's ACE Rankings are a direct reflection of client experience with insurance technology solution providers, commented Matthew Josefowicz, partner and managing director of the New York-based research and consulting firm, when the scores were initially announced. “Insurity’s scores and comments show the company is meeting and exceeding the ongoing demands of its clients.”

Among the comments of Insurity clients were the following:

• “Much better quality. There appears to be more early testing than before & emergency fixes are no longer an issue.”

• “Insurity has come a long way with improvements in the last 12-months.”

• “Insurity has improved their service level drastically & are now putting our needs first.”

• “Is very impressed with the attention the Insurity team has placed on quality & project management.”

• “Very pleased with functionality of the products. Critical issues surrounding industry compliance have improved.”

• “Senior executive involvement from Insurity has made a significant difference in how the we view Insurity.”

Now, Insurity didn’t face a sudden PR crisis, but it responded aggressively to a perception of diminished service and is arguably in a significantly stronger position today because of its recovery. It’s important to note that even though the relationship with LexisNexis was found wanting in the end, it actually has much to do with Insurity’s improved reputation, according to Insurity VP Bruce Broussard:

“The overwhelming improvement in Insurity’s Customer Experience follows the company’s replatforming of all of our products, increasing the configurability and flexibility of our offerings,” Broussard reports. “LexisNexis invested in those product improvements, and our latest ACE Rankings reflect the impact that both the product and customer focus improvements have delivered.”

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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