Lemonade Insurance: Powering rapid growth through radical transparency and technology
A new way of doing business
The most admired companies are reversing the trend on business practices that have defined their industries. Through leadership guidance and company actions, they are establishing more balanced relationships in which both sides win. Customer and company alike are better off because they are in each other’s lives. These companies achieve this balance by blending how they operate with how they embed “human-oriented technology” to maximize customer satisfaction.
Several behaviors are common among these companies that blend high tech with high touch to deliver value to customers. First, leaders are clear about how they will and will not grow. Leaders diligently take actions to point out exactly what the high road is, creating a path for the company to follow.
Second, these companies choose to be transparent in explaining the “why” behind their actions, such as pricing or how and why they build products the way that they do. By sharing information about their products and pricing, and by openly transferring knowledge to customers, these organizations prove they want to do what’s best for customers.
I learned a term that describes this approach to fearlessly sharing to build bonds with customers: “radical transparency.” In fact, a 2016 study by Label Insight proves the power that radical transparency can have on a business: 56 percent of those surveyed said they would be loyal to a company for life if it provided complete transparency.[1]
Third, these companies use the most modern and innovative technology to enable radical transparency. Some are using blockchain to show you every step in your food’s supply chain, from farm to store. Others use artificial intelligence and machine learning to create more transparent interactions with customers. The key, no matter which technology path is taken, is that its development is guided and directed by the intent to earn a balanced and healthy customer and company relationship. This is how technology becomes what I call “human oriented” – contributing to how a company differentiates itself in not only its behavior but its delivery of goods and services.
Lemonade Insurance practices all three of these behaviors. And they have used radical transparency, supported by innovative technology, to disrupt the insurance market and grow exponentially over a short time period. Let’s look more closely at how this company has succeeded.
How Lemonade Insurance creates trust through technology and service
Lemonade Insurance is on a mission to build and grow its business based on complete and radical transparency. Lemonade’s blend of high-tech (with its AI Bot “Jim”) and high-touch – in how it built and framed its company and policies – serves as an example for how to start with customer needs and expediently meet these needs through technology.
Trust is hard in the insurance industry because of all of the fine print and the rules and the process around filing a claim. Grounded from its inception in mutual trust, Lemonade’s claim experience involves a personal video and an honesty pledge by customers – all done via its mobile app and through “AI Bot Jim” – promising to the company and fellow members that, as a customer, you are telling the truth. This customer’s oath of honesty, recorded on video, is all Lemonade often needs to get a claim moving, and sometimes closed within minutes.
Decision intent: When you trust people, they trust you back
Lemonade’s mission was to figure out how to square the imbalance of the insurance relationship with the emotional toll that it takes on trust. This begins with how Lemonade gets paid. For the renter and homeowner policies that Lemonade currently offers, you pay a flat rate calculated based on your address, valuables, etc. To keep its doors open, Lemonade takes 20 percent off the top. When signing up, customers pick a charity of their choice. This is because of Lemonade’s “giveback” program where – wait for – the funds remaining after covering the 20 percent and paying claims is divided up amongst each customer’s charity of choice. With this policy, Lemonade has embedded the sharing and trusting economy into what they do.
This type of decision-making and intent for how Lemonade will and will not run its company is crucial to how Lemonade could then bravely lead the development of its technology to establish a trust-based system for how it fulfills claims. What sets up companies for success is that they have this backbone of trust in their regular operating decisions, which allows them to transfer that thinking across the operation as they operationalize and deliver with technology.
A claim experience fueled by trust
Lemonade’s commitment to trust as the fuel for growth, and its innovative use of AI, guides its approach to claims. For example, let’s say your dog ran into a table and broke a beautiful vase that was your grandma’s. On Lemonade’s mobile application the bot “AI Jim” – powered by artificial intelligence and available 24 hours a day, seven days a week – asks what happened, and why you are putting in the claim. Next he asks you to sign this “Honesty Pledge” – vowing to Lemonade, the other members, and the charities who benefit from fairness in reporting that you will do the right thing:
“I understand that I’m part of a community of people who trust each other to be honest. I promise to only claim what I truly deserve. I SWEAR I’LL BE HONEST.”
Finally, this oh-so-smart and mom-like company asks you to look it in the eye and record a video giving the reason for your claim. (Mom always wanted to hear our side of the story. I have a hunch that’s a bit in play here too.) From there, sometimes within minutes, your claim is reviewed and paid.
Trusting customers pays off (#MakeMomProud)
“When you trust people, they trust you back” illustrates how Lemonade treats its customers, and how the customers treat the company in return. For example, a customer put in a claim for a lost laptop and received payment instantly. When in a surprise turn of events the laptop was returned to him, the customer contacted Lemonade to return the previously paid claim.[2] That is not normal in insurance – and is testament to the power of Lemonade’s trust-based model.
Lemonade’s innovative, customer- and technology-focused transparency model has resulted in rapid growth. In its first two years in business, Lemonade has grown from 96 customers to 250,000. And these customers are happy: 98 percent would recommend Lemonade to a friend, and Lemonade is currently ranked number one out of 270 renter’s insurance companies in customer satisfaction.[3]
See how Citibank is also innovating to deliver exceptional customer experiences.
Does two-way trust define our actions?
Do we earn customer trust by trusting them back?
Lemonade Insurance wanted to remove the imbalance that sometimes defines the insurance experience. The company makes mom proud because it has built processes that have trust as their foundation. For example, Lemonade’s claims process includes an honesty pledge, where it chooses to believe customers’ words. Prosperity follows, as customers gravitate to the company for this foundation of trust.
Does your organization practice radical customer trust transparency? Ask yourself:
- Do we practice two-way trust with customers?
- Have we created a customer relationship where both sides win?
- Do customers feel that we trust them through the language in our forms, our fine print, and as they work through our paperwork and contracts?
Jeanne Bliss is not an IBM employee and her views are her own. This blog is adapted from Jeanne’s recent book Would You Do That to Your Mother?
[1] Source: Label Insight Transparency ROI Study. URL: https://www.labelinsight.com/Transparency-ROI-Study
[2]Source: “Lemonade Proves Trust Pays Off, Big Time”. URL: https://www.lemonade.com/blog/lemonade-proves-trust-pays-off-big-time/.
[3] Source: “Two Years of Lemonade: A Super Transparency Chronicle.” URL: https://www.lemonade.com/blog/two-years-transparency/
The post Lemonade Insurance: Powering rapid growth through radical transparency and technology appeared first on IBM IT Infrastructure Blog.