Navi: Leveraging Customer Insights to Build Customer-Centric Products
First Principle thinking is what leads to innovations in an otherwise traditional industry. Finance is as traditional as one can get. To innovate in the BFSI space requires a strategy with a strong focus on the challenges and barriers to financial inclusivity.
The economic consequences of the pandemic accelerated the prevalent need for new and quick solutions and products in the lending and health insurance space. A preliminary study to understand the potential of different products revealed a huge gap in the personal loans market and a rapid demand for health insurance. Armed with this information began the quest of the strategy and market research team to validate the findings of the study.
Qualitative Analysis: Laying a Solid Foundation
The success of any new product depends on how well it fills a need in the marketplace, and importantly, whether or not your target audience chooses to adopt it. The latter is the real clincher.
While market research vis-a-vis historical data, anecdotal information, and statistics around similar products in global and national markets help form a hypothesis, understanding the market’s pulse via customer research helps seal the deal.
Everything we create at Navi is always data-driven. Not just our marketing strategy, but product ideation, exploration, design, and channel of delivery too. Our new idea explorations always begin with qualitative analysis, and our hypothesis is founded on insights after hundreds of hours of potential customer conversations.
For our personal loans and health insurance, for example, we asked many open-ended questions like the barriers and enablers to accessing financial assistance along with key problems that they would need solutions for. We also derived indicators of price-value preferences, what features they most preferred in health insurance, their expected experiences when it came to claims, etc.
Most said the documentation required for a loan and the time it took to process was the biggest disadvantage in the personal and home loans sector. Secondly, health insurance was largely driven by insurance agents or online aggregators. This increased the consumers’ dependence on agents, not only for purchasing insurance but also for the claim disbursement process.
The qualitative assessment for mutual funds, which is still considered a complex product, was tricky as it is a highly governed and regulated space. Although people are not too bothered to say they need a lower expense ratio — through analyzing their unclaimed needs it was understood that the lowest we can go can be a key differentiator for communication in a situation where everything else is as per market standards. The next best feature was to provide the lowest expense ratio in the market!
Thus, formed the foundations for our revolutionary paperless and instantaneous Navi Loan Management System, a self-serve Navi Health App, and Navi Mutual Funds.
Quantitative Analysis: The Building Blocks
Once we had a hypothesis to back our product idea, it had to be validated too. While there definitely was an opportunity, what was its size and how to best address those?
We employed quantitative assessment methods like targeted surveys and trade-off analysis, mainly choice-based conjoint analysis, to determine the optimal feature combinations and price for all our products.
Choice-based conjoint analysis or CBC analysis is a popular and proven method of product and pricing research by breaking a product down into its features or attributes and then testing different combinations of these at a specific range of price to identify consumer preferences.
Software tools like Sawtooth, for example, are used to develop thousands of possible combinations of features at a predefined range of prices, and then presented to an optimum sample size that are representative of the target market to map their preferences, simulating real-world buying behaviours. This information is useful to establish product features, assess price sensitivity, and project the plausible adoption of new products.
Playing the Devil’s Advocate
While market research is crucial to gain unique insights into the thoughts and perceptions of the target market and gauge sentiment surrounding the business and products, the integrity of the market research is maintained only when the researcher approaches it with an impartial mindset.
You do not marry the product you are researching! A seasoned researcher will always play the devil’s advocate and not project their beliefs about the product onto the target market surveyed. The data has to be completely unbiased, that’s one cardinal rule of market research.
Bias can also come from the target customer if the reality of the customer is unaccounted for in the simulation of the buying behavior. Some participants in the survey could say one thing but act very differently in a real-world scenario. Identifying that thin line between what’s said, and how they would possibly behave is essential to validate data accurately.
Conclusion
Market research as a function will work only if there is a buy-in from the top leadership. From its very inception, the founders have established a culture of customer research and data-driven action. Thus, for everyone at Navi, from the top down, data is THE absolute. And it has to be since the company is built on innovation, fuelled by data-driven, customer-centric and fail-proof market research that enabled us to cause massive disruptions with trend-setting products in the BFSI space.
