By Jani de Kock, Founder, First Person, Centurion, South Africa, www.firstpersonresearch.com
Insurance policies have the potential for immense growth in the Sub-Sahara African market. Why should the rest of the world care? Because the African market is an extreme user’s market (users positioned on the fringe due to their underuse of the service), with pronounced needs that are underarticulated by other customer segments. If we can solve the marketing of long-term insurance policies for this extreme user, chances are it can provide a roadmap for disrupting a global market.
A Lucky Discovery
I was driving through inner-city Pretoria, South Africa, one day when I noticed a peculiar service being offered. Posted on a tree, a Dr. Hassan promises same-day assistance with broken romantic relationships and then a throw-away offer for “quick pension pay out.”
I drove all the way around the block twice to get a picture of it. It blew my mind! I have spent months researching consumer perceptions of insurance products for three different clients. Hours in translated consumer interviews in different markets. We looked at cultural beliefs around risk. We looked at socio-cultural coping mechanisms. We looked at the history of exposure to the category, brand perceptions of different players in the market, explorations of higher-level consumer life goals, and design thinking workshops unpacking consumer journeys. None of it gave me this crucial piece of information.
To a certain customer, the likelihood of getting a pension fund to pay out is so far removed from reality that it seems impossible. Like lost romantic partners, it is beyond the scope of personal intervention. The outcome is so unclear that it seems fantastical. One would be out of one’s mind to spend money on such nonsense, right?
This brings me to the elusive question my clients and the industry have pondered. Why is the uptake in the purchase of insurance policies in Africa so low, and how might we unlock Africa’s insurance potential?
Africa only has a 2.8 percent insurance penetration, compared to a 6.8 percent global average. This penetration is not at all evenly distributed among markets. The current immaturity of the market means it has immense potential. Estimates are showing the second-largest growth potential in the world and that this growth will likely come mostly from pension and individual life insurance (McKinsey and Co., 2021), which are generally considered the most beneficial for the low-income stratum of the population, and therefore, the most important for driving social and economic development (Policy Centre for the New South, 2020).
This growth is influenced by several factors, one of which is Africa’s rising middle class, who benefits from greater household stability with life insurance (ODI, 2015). Another factor I have observed is changing consumer sentiment. New consumer segments are crossing long-held Rubicons that kept them from these categories in the past.
Africa as Extreme Users
Extreme users represent user groups on the fringes of a market with the most taxing demands on the design process. Their demands are unusual based on their unique context. They usually encounter challenges that the bulk of the market won’t. Within human-centered design, they offer us very useful inspiration for innovation because they challenge taken-for-granted knowledge. Canada-based researcher Kathy Cheng remarked to me one day that Africa can be seen as an extreme user for the rest of the world. I think she is right. Look, for instance, at the mobile money case study. In 2007, mobile money solution M-Pesa launched very effectively in Kenya because consumers were already used to buying airtime in this way—it just made sense to extend it into a fiat currency sending service. Today, there are mobile money solutions all over the world.
African financial services challenge longstanding conventions from mature markets. The convention, for instance, is to build homes on a strictly cash basis. Building material is purchased over an extended period whenever money becomes available and building loans are not the norm. What value can a bank offer a cash builder when she is fundamentally against making debt? What value can a pension fund offer the owner of three microbusinesses who has no concept of retirement? If we solve these questions, what new value can be created for other market segments?
Taking a problem out of context and increasing the scope of exploration increases the opportunity to turn an insight into a meaningful innovation. So, let’s deconstruct this poster on the tree and see if it can take us anywhere.
What Does the Poster Tell Us about the Customer’s Problem?
Researching different African markets over the years, I have observed several problems related to insurance:
- Customers have no trust in the insurance provider, because in their minds, the likelihood that there will even be a payout on an insurable event is extremely low.
- The customer doesn’t see the insurer as a partner/ally, nor do they believe the insurer wants to help him or her.
- Power-relations—the company has all the power, and the customer has no agency and, therefore, doesn’t feel personally able to impact the process of when the pension will be paid out.
- The payout date is the moment of truth in a pension customer’s journey—it’s the only one that matters. Still, the customers have no visibility into the time it takes to process a payout, and open-ended waiting feels longer.
- The customers make less informed decisions when acquiring the insurance because the messages about how it works, how to activate the policy, as well as the touchpoints available to them are likely not communicated successfully.
- Insurance customer journeys span multiple years, even decades—and often information such as the claims lodging process gets lost during that time.
Yet, this poster highlights all the above in a new light, and it’s where we get a glimpse of the power of over-articulation of extreme users:
The customer experiences insurance as an abstract offering, so abstract that it borders on the fantastical, and believes there could be other “magical” things doing the same job for them.
What Can We Learn?
Of all the possible problem articulations, we are now guided to focus on “the abstractness of the offer.”
What is the implication if your offering is so abstract that it borders on the fantastical? Abstract categories must work harder to demonstrate customer value when the relationship spans so many years. When you don’t sell a product, you need to supplement your service with an ongoing experience to demonstrate value and build a relationship that feels substantial and has longevity.
When offering a physical product that can be bought from a shelf, value is often immediately apparent. Value perception comes from a variety of tangible cues:
- The product can be held, touched, worn, used, and experienced through the senses. The product is real. You buy a real thing.
- Good value can be judged almost immediately based on:
- The quality of materials used to produce the product
- The country of origin and the implied quality of the ingredients and craftsmanship that went into producing it
- The utility of the product—how well it fits with the intended use
- The packaging as a valuable artifact in its own right or as a compelling signal of what to expect
- Using, engaging, or having this product gives the customer an immersive, sensory experience
How can the insurance industry offer similar cues for an abstract offering that are as compelling and open to scrutiny to the average person on the street? How can the industry make it real?
This question makes for a wonderfully generous starting point for a human-centered design workshop.
While such a question can lead to an array of creative solutions, I want to tell you of one already on the ground—the small broker business. In the same culture/area where the poster hangs on the tree, we find the pictured financial advisor I interviewed once.
His financial advisory business is situated in a small town surrounded by farmland. His briefcases are pictured. His staff packs customer files according to area/small town, and then he makes the rounds. He visits with his customers. He knows their homes, their businesses, their families, and they know his. He is a loved member of the community, and everyone knows where to find him. His nickname in town is “Oom Polis” (directly translates to Uncle Policy), and his business is exceptionally successful.
Is it scalable? Probably not. But could it be that a tangible presence with ongoing daily relevance is a way to reposition long-term insurance as a worthwhile investment? For example:
- Using network marketing that marries the proof of concept to a trusted key informant, i.e., a near-peer in whom I can see myself.
- Even in an increasingly digital industry, having physical offices creates a container for face-to-face verbal communication, a sensory experience, and a presence that give “hard on the ground” tangibility to the promise of longevity.
- The place also acts as a heuristic for all touchpoints, i.e., I do not need to understand the processes if I know where to go to find this information when I need it.
- The relationship cannot be initiated and then forgotten. Imagining new relevant moments of contact throughout the life of the contract will maintain relevance and meaning as the relationship matures.
Instead of an Epilogue
This will sound like I made it up, it’s so perfect; but, while I was writing this article, a perplexing billboard appeared on a major highway in Johannesburg:
The billboard offers magical protection for your home at a cost of R2 (about twelve U.S. cents). Billboards like that do not come cheap, so I called the number. It connects to a call center, and a friendly lady answers my call.
“Hello, are you calling about the magical protection for your home?”
“Yes, I am.”
“Well, you know, R2 is not enough for that and there is no professor with magical powers, but there are 150 NPOs (nonprofit organizations) that feed hungry children on a daily basis with every R2 that you add to your KFC meal.”
Wow! It’s KFC’s #addhope campaign! The message is memorable because it requires some genuine sleuthing to figure out. The mystery works because it is entirely believable that someone would try to sell magical insurance.
The moral of this story from Africa is this: if you can demonstrate beyond a shadow of a doubt that what you are offering is real and valuable, your harvests will be plentiful.