How Lemonade is taking over insurance, one 3-second-claim at a time

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Image credit: Lemonade

Lemonade has made quite a splash in the insurance biz, taking an old fashioned industry like insurance and completely re-imagining it by putting the customer in the center. So we were very happy to meet Gil Sadis, head of product at Lemonade, and talk about how they created an insurance product people love. Gil also threw in important tips for product makers.

It all starts with the business model

Daniel Schreiber and Shay Wininger, Lemonade’s founders, identified a conflict of interests between customers and insurance companies. An insurance company loses money on each claim it pays, and thus will do a lot to avoid it. Lemonade’s business model is different. It takes a fixed 20% commission from insurance premiums, and takes itself out of the conflict. They use the rest of the money to pay claims, and if there is money left, they donate it. This makes them not only trustworthy, it makes them philanthropic. And that’s what makes them really stand out from the crowd.

Gil admits, Lemonade’s story is different than the classic garage-based startup. They raised 13M with only a deck, giving them some breathing room to build the product. They chose not to MVP but to MWP- create a minimal wow-able product. And worked on the product for a year before launching it.

Gil: we invested time and money to do a lot of user testing. And launched a product customers actually wanted to try out. In return we learned a ton.

 Everything Under Product

Lemonade’s organizational structure is pretty unique: everything is under product. How did it happen?

Gil: This structure came to be unintentionally. It was the type of product people that built Lemonade that made it. Good product people have a “T”-quality: they work cross-department and understand a bit of everything, but they can also go very deep into marketing or build a support organization when they need to.

In addition to the website and app, we built the marketing strategy, growth-hacked and developed the famous claims process, which is one of the product’s magic moments. (Setting a handling time world record of 3 seconds). Everything the users touch: the ads, the posts, the emails, are all part of the product.

Lemonade’s support team is called Customer Experience since they believe support representatives are actually user experience agents and are responsible for much more than technical support.

Why don’t everyone use this model?

Gil: Product managers are involved in many things as is, so the extra responsibilities create a huge workload. But the trade-off between workload and a better user experience is worth it. 
Product managers that are up for the challenge are often entrepreneurs themselves. Having to deal with many different aspects of building a company, they become experts in doing it.

What kind of work methods enable this structure?

Gil: First of all, all product managers handle support tickets. We’re active in getting customer feedback, not waiting for it to get to us.

It’s important to create a good two-way communication with the other teams. Despite any cultural and time differences. We also use Slack with designated channels, and weekly update meetings. All teams are looking for customer insights — that’s why both the product and the CX team are using Mixpanel.

Many speakers, one Maya

Image credit: Lemonade 

How do you maintain your customer experience, having many people talking to customers?

Gil: From research we conducted early on, we learned that in the insurance field customers are used to speaking to agents. So we created Maya. Maya is with the customers from the moment they join Lemonade, and throughout all customer communications. We put a lot of effort in maintaining Maya’s tone of voice by constantly having review sessions.

Micro-copy is something that gets a lot of attention at Lemonade. And it’s not reserved only for native speakers. First of all it requires understanding the users, the grammar comes second.
When a product manager works on a feature, she is the only person that knows how the user feels at that point and what’s the right thing to say. 

Products lately try to be funny. But Micro-copy is not about being funny. Good Micro-copy can be very polite and deliver the message effectively.

No layers between decision makers and users

Where should a startup, that aspires to be customer-centered, start?

Gil: One of the biggest problems is that companies are not tuned-in to their customers. There are too many layers between decision makers and users. If founders sit with 20 customers and discuss the pain points they have with the product, they will rethink the race after more features.

Also, your target audience can’t be everyone. Focus on a small niche. It can be scary and feel like you’re missing out on market share, but if you target everyone, you’re actually targeting no one.

If you know that something is not working and the startup is not going in the right direction, it’s stressful. And then the race after more features accelerates. But maybe that’s not the problem at all, what you have might be good enough! Talk to your customers to understand the problem. Understand who they are and what are they trying to achieve, it’s the only way to grow.

When you launch something you feel “embarrassed” about, you could be missing out on learning. Launch something that will allow you to learn.

Last question, did you learn something that surprised you about your customers?

Gil: Yes. Our customers sometimes return the money they receive from us. Insurance experts with many years of experience in the field never heard of anything like it. So it’s possible we actually encourage behavioral change.

Lemonade’s story is really inspiring, and we want to thank Gil for taking the time and sharing it, and for his great tips. Being customer-centered is a mind set and a culture, and adopting it can produce amazing things.