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Delivery not distribution: The risk of unintended consequence

March 4, 2012

Distribution and delivery are virtually used as synonyms, in our industry. As a matter of fact, distribution dominates in terms of usage and application. Does it represent some form of diversity or diversion? Sorry for this digression!

Delivery equals indispensability

The quiet agent or the insurance man who could get almost anything done – would even pay your premiums when the policy became due and for some reason you were likely to miss out renewing your cover. He would be out there ahead of your beck and call, God forbid, if you had a claim trigger under any of your policies. He could also get all your other avenues like tax-saving addressed, at your door-step. A seamless intermediation, an epitome of delivery rather than distribution. Far diverse in offerings rather than a mere transactional one-off relationship. Maturing with time like a good quality wine. In other words, near indispensable part of your financial risk management value chain. And what made it difficult to dispense was the value proposition – ‘always there for you’.

For anyone today who tends to take the virtual anytime communication for granted, forever – the age and woes of landline phones would be far and wide out of bounds of their imagination. Particularly in places where it was a luxury and not commodity. All the gaps and snags were taken care of by this one man institution. It was certainly not terminated by advances either in telephony or internet.

Distribution is not equal to delivery

Distribution is but a small part of delivery and more fixated with the Point of Sale (POS). We trade in the business of trouble. The woes of our trade commence only after a sale. POS is only the first major milestone. Thereafter come the several test cases – sometimes unique to each individual every time – thereby very special Moments of Truth (MOT). It is actually going beyond realm of sale into the world of individual experience that makes our business uniquely diverse.

Yes, it has its own downsides because we then impose Standard Operating Procedures (SOP) which do not allow the individual customer to be treated as special. Our call centres – whether onshore, off-shore or outsourced – further complicate it in their ‘diverse’ ways. Generally, cultural in nuances.

Sighting the POS – MOT gulf

Having sold you a policy or any financial product for that matter, the focus of a financial services entity is on the next kill (sale). The ‘back office’ is faceless, notoriously prone to staffing churn, diverse in unacceptable ways and the customer is a king or queen of no consequence. A deviously divergent diversity of today. The customer is confused and anxious, because distribution only drives sales. It wants to sell what it wants to sell. Neither what the end user desires or deserves, nor a solution. This can never lead to a true fulfillment.
Distribution is about sales hence short-term. It is full of discontinuity thereby makes it harder to retain a customer. We all know it is more expensive to acquire a new customer than retaining one. It makes the entire arithmetic unsustainable.
Delivery on the other hand is service driven. It is about managing and sustaining the continuum of relationship. Thereby comes in bottom line value. Unfortunately and increasingly the insurance business is configured as a sales organization. The behavior and personality mutate into something inherently contradictory. Not just that, some of them also tend to pose as role models for the bottom of the pyramid entities who owe their existence to pure service. In emerging economies this is embedding a bad DNA into the evolutionary cycle of the financial services architecture.

In conclusion

The insurance business need to really think hard and deep as to where must it head. It cannot afford to be naïve in interchanging distribution for delivery. Having done so, it calls for a course correction. It must not allow itself to be conditioned as a sales industry. The POS mind-set needs to be reconfigured as MOT. Both are diverse in their own ways. Let us not forget that having chosen the current way; we have already invited upon ourselves the risk of unintended consequence. Before this risk becomes perilous enough to threaten our raison d’être let us bring back the indispensability of service that we all seem to be missing in the world of financial super-markets or the one-stop shops. Let us not digress from our kind of desirable diverse ways.

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