What to do when your value proposition is broken


If you are operating in utilities, health insurance, or financial service categories (with the odd exception) it is likely that you that you have gotten used to depressingly low NPS score, a rising churn rate and appearing on ‘60 Minutes’. The old propositions are collapsing because people simply don’t place the same value on the dependable provision of services like electricity, health cover, or home lending these days, and that is still the core promise in return for the price paid.

Health Insurance is at a particularly acute point given the issue of rising premiums is causing overall category decline. Recently BUPA was in the firing line because their response to the issue was seen to be cutting the value out of policies. This from the company that had the stirring ad line: “You are amazing, we want to keep you that way”. That may be old and the company has moved away from an unaffordable promise, but consumers haven’t. The emotional value people feel in BUPA (and the category) is that they make us feel looked after. It is difficult to process that proposition of a nice warm protective blanket with the exclusion of my knees and hips.

If the reality is that the established longstanding promises in energy, healthcare, Insurance and the rest can’t be real anymore then ‘ok’… that is reality and so move the proposition on as well as the policy details.

Redefining your value proposition for today’s world

What is the nature of the relationship your brand has with its customers?

Historically people were dependent on a few companies for services like electricity, healthcare or banking. It led to a paternalistic relationship between business and customer. The company had all the power and people were dependent on them.

In the digital interactive world people feel very differently. They feel independent. Loaded up with information and choice, and so able to pick and choose what they want. The pendulum has swung across to the other side leaving a void between companies still reliant on to the dependence of their customers and people enjoying the liberation of walking away. And whilst it is healthy that people have this freedom there is as risk that if they branch out too far they can come unstuck and it becomes self-defeating for all - Is it really good that less and less Australians are covered by private medical insurance?

What we should be aiming for is a sustainable interdependent relationship. We need each other. We appreciate each other. We understand each other. We are good for each other. And of course that should actually be true!

Interdependence is within reach

A brilliant example of a brand living like this is Waze.

Sat Nav used to be about maps and not getting lost, but overtime it became a bad experience as traffic volumes grew out of control and the system seemed to direct you right into the middle of every jam in town. 


In contrast Waze recognises that the issue is about traffic as much as directions, and have co-opted their customers into the problem. GPS tracks every ‘Wazer’ and produces real time traffic data using the speed of the cars to judge how traffic is flowing on each road. That collective data overlays onto the directional system meaning they find you the best unblocked routes through the real time help of other drivers or “Out smarting traffic together” as they would say. It really works and you can volunteer extra data too - What is causing a jam or where the cops are. I have never met another Wazer who doesn’t love the system and Google liked it enough to buy it for a lazy $1B.

Waze can only work effectively when lots of people volunteer their data, in return they get a valuable experience. That is interdependence in action. Its proposition creates value by company and customer working together and in doing so they have transformed the Sat Nav category.

Applying the principle of interdependent value creation to our struggling categories

Take your last electricity bill.

It’s likely that it wasn’t a great moment because (for most of us) the amount owed will have been higher than ever for that quarter. Whilst it’s easy to blame the electricity companies the truth is that your bill was driven by two factors – cost of supply and usage.

It’s well known that supply prices in electricity have increased horrendously. It’s a huge and complex set of problems which Industry and Governments are trying to deal with. So what about the usage side of the equation? How would you rate the efficiency of your household over that period?

1.  Perfect

2.  Maybe it was Very Good

3.  Maybe a few levels down from that

Most of us would tick number 3.

And now it’s too late. The damage is done and the debt yours.

This isn’t about criticism it’s about recognising that as it stands today getting ‘good value’ in energy requires a two-way partnership between company and customer. There is no point trying to address the problem of energy bills in 2018 without understanding the causational impact of consumer behaviour. Just like traffic jams and Satellite Navigation the two are interrelated and whether you are at data security level 1, 2 or even 3 the solution somehow needs to be too.

Now apply the interdependent principle

On that electricity bill you probably glanced at the cost and perhaps the usage graph…but not much more. But actually that bill is teaming with unread information that could help. Pages of it. It is a factual record of the actual (both good and bad) energy behaviours of your family over those three months. The data was used to calculate what the cost was, but it could also have been used to figure out why.

Imagine if we turned that data into actionable intelligence for your family. It’s entirely personal, relevant with a clear benefit. What if we used it to empower you to work interactively with the energy companies to help manage demand and reduce your bill. The point is that the existing data can power a more interdependent experience exists today. You can see it on your bill, but unlike Waze nobody is doing anything useful with it.

And the kicker is that people want that help. They increasingly expect it from the companies they trust - in research they say things like “but you have my data, why didn’t you tell me?”

People's expectations of the relationship they will have with your brand has changed. They want a partnership. Isn’t it time we gave them that?

People and the Machine work with businesses to reframe their value proposition and approach to take advantage of the data and technology opportunities available right now. Contact us for more information.

Nick AndrewsComment