If you have watched any amount of TV in the last few months you have probably seen those commercials for Progressive Insurance, specifically the commercials about their SnapShot device. The devices collects information about your driving habits such as when you drive, how fast, how hard you hit the brakes, etc. The device will even beep when you hit your breaks too hard, giving you instant feedback. Progressive then analyzes your driving habits and you may get a discount. From a marketing and business stand point this device is pretty ingenious and can save the company (and you) a ton of money. But how?
What costs insurance companies a ton of money are claims. Accidents are not cheap, so if progressive can reduce the amount of accidents and claims, in theory insurance rates should go down. When you pay your insurance each month, your payment not only goes towards your claims but everyone’s claims. That is why sometimes our rates change after major disasters like hurricanes, even though we don’t live any where close to the ocean. The insurance company needs to make up the money lost from all those claims somehow.
What makes the SnapShot device so ingenious is by signing up for it, you as a consumer are making a conscience effort to be a safe driver, thinking it will save you money (which it might). You might drive slower. You might drive 2-3 car lengths behind the car in front of you instead of tailgating. You might break sooner. Short of having a police officer following you around all the time, Progressive, like any insurance company has a very hard time making sure you are a safe driver. The most they can go on is your driving record. But that isn’t an accurate profile of your driving habits. You might never have been in an accident but you might be one of those terrible, ticking time bomb drivers who narrowly misses accidents because you are texting while driving, mashing on the accelerator all the time and then slamming on the breaks, fussing with the radio, not paying attention, etc. With the SnapShot angel on your shoulder, those bad habits might go away because you want to save some money. That is the ingenious part of SnapShot. Progressive can’t control your driving habits, only you can. So they created a device that gives you control but they have the master key.
By doing this, it can save you money if you are a safe driver but since Progressive holds the master key and is the deciding factor on how much of a discount you will receive, Progressive is still in control. However, your now safe driving saves Progressive even more because in theory if you are a safe driver, you are less likely to get into an accident. Even it if is short term.
Let’s take a lesson from Progressive. By giving customers control, while you hold the master key can save you money and even make you money. It doesn’t have to be something as sophisticated as a device you plugin to your car. Ikea does in their cafeteria. They make it very clear that you are to bus your own table. That is why their food is much cheaper. A bus boy would add an extra $1 per plate. Aldi grocery store does it with their shopping carts. It costs a quarter to get a cart but when you return the cart, you get that quarter back. It doesn’t sound like much but their parking lot rarely has any carts in it. If someone does leave a cart, the next person will grab it; free quarter. In the end they don’t have to pay someone to deal with carts and can pass the savings on.
Is there something in your business that you can give control to the customer but you hold the master key?