Geico has not effectively closed all of the provider gaps. Geico has not fully closed the listening gap. The company has good communication with its customers and it uses market research adequately. However, Geico does not always have adequate service recovery mechanisms when service failures occur. There also is not always sufficient communication between contact employees and managers. Plus, employees are not always knowledgeable or perform proficiently in their roles.
First, the company can improve its service recovery mechanisms with several approaches. When a service failure occurs, Geico can win back its customers by using an approach called MAMA. MAMA stands for make time to listen, acknowledge and apologize, (have a) meeting of minds, and act and follow up. When a customer complains, the manager or supervisor should put on hold whatever he/she is doing and listen carefully to the customer. The manager or supervisor should not interrupt the customer and ask him/her questions. After actively listening to the customer, then the manager or supervisor should find out more about the situation by asking the customer questions.
Next, the manager or supervisor should acknowledge the customer’s dilemma and apologize if it is appropriate. The manager or supervisor should also show remorse for what the customer has experienced. Even if the manager or supervisor thinks it is not his/her fault that the situation occurred, he/she should still apologize if it will help the customer to feel acknowledged. When delivering the apology, it should be sincere and legitimate. The manager or supervisor should not say something like, “I’m sorry you feel that way.” This comes off as a phony apology.
Then, the manager or supervisor should understand and consider the customer’s expectations when coming up with a solution. The manager/supervisor and the customer should work together to agree on a feasible solution that will satisfy the customer. Once the solution is set in place, the manager/supervisor should let the customer know when the solution will be acted on and the problem will be solved (Solomon).
It is better if the problem is acted on in a timely fashion instead of waiting for an extended period of time to fix the problem. For example, it is better to fix the customer’s problem and get back to him/her in 10 minutes instead of three hours (Bikash et al.). Last, the manager/supervisor should fix the problem as promised and check in with the customer. The manager/supervisor should also determine what went wrong and pinpoint negative patterns and systemic issues. The manager/supervisor should learn from the error and use it to adjust future company operations and training (Solomon).
Geico can also satisfy customers when service failures occur by providing a full refund to dissatisfied customers instead of a 50% refund. The company should inform customers that the refund will be credited back to their accounts (Bikash et al.). Plus, the service company can hand out free merchandise to dissatisfied customers. In April of this year, a Geico agent (Alyssa Palermo) in Frederick, Maryland offered 100 gift bags consisting of 2 rolls of toilet paper, 4 bottles of hand sanitizer, and 1 gecko plush toy to the local community. This event took place in the parking lot of the Geico office. One gift bag was placed in each vehicle that was in the parking lot (“GEICO Frederick Agent”). If Geico takes this approach, then customers will appreciate it, especially during the pandemic.
Second, Geico can take measures to ensure that there is sufficient communication between contact employees and managers. One way in which the company can do this is by actively listening to employees. The managers and supervisors should ask employees about their opinions, ideas, and feedback. They should ask additional questions, encourage them to elaborate, and take notes. It is also necessary that managers eliminate all interruptions while speaking with employees, including cell phone pings and checking email.
Managers and supervisors should not only listen to employees’ feedback and opinions, but they should also implement them. If the managers do not make any changes, then the employees will not trust their leadership abilities. If the managers and supervisors let the employees know they were heard and let them know of any progress they make, then they will have more confidence in their leadership abilities.
Another way in which Geico can make sure there is sufficient communication between contact employees and managers is by focusing on body language and not just communication. If the managers and supervisors have warm body language then they will avoid sending the wrong message to their employees. For example, if a manager or supervisor is trying to motivate an employee, then he/she should smile and make eye contact instead of clenching his/her fists or furrowing his/her brows (Landry).
Also, Geico managers and supervisors should make themselves available to their employees by instituting an open-door policy and should communicate with them consistently (i.e. providing updates to employees every other day instead of one day a week). Additionally, Geico should provide technological forms of communication, including videoconferencing. This is especially necessary during the pandemic since a lot of employees work from home (“7 Strategies All Managers”).
Third, there are certain strategies the company can establish to make certain employees are knowledgeable and perform proficiently in their roles. One way in which managers and supervisors can do this is by identifying the business’ needs and their long term goals. This will enable the managers and supervisors to figure out which skills are necessary for employees to develop to support business growth. Some factors the managers and supervisors should take into consideration are which skills are in demand in the job market, how to outperform competitors, and what position they want the company to be in in one year.
Another way to ensure that employees become more knowledgeable in their roles is by encouraging underperforming employees to meet the performance of top level employees. These top level employees can be role models and a source of inspiration for the underperforming employees. They can support and guide underperforming employees by providing tips and tricks to how they accomplish their tasks more quickly and efficiently. Also, employees should be assessed on their skills to identify their skills gaps. This can be done through polls, tests, and quizzes. However, the company should apply real world examples that are important to the business instead of theoretical examples (Jacobs).
Geico has closed both the service design and standards gap and the service performance gap. One way in which Geico has closed provider gap 2 is through its use of physical evidence. The company uses appropriate signage, equipment, and facilities. Other ways in which the company has closed provider gap 2 is through its use of technology and its use of operations standards that correspond to customer expectations and priorities rather than company concerns such as productivity or efficiency. Customer expectations have been effectively translated into service quality specifications that employees can understand and execute.
The company has closed provider gap 3 through selecting qualified employees and empowering them. The employees are appropriately recognized and compensated for their work and they fully understand the role they are supposed to play in the company. Plus, the service provider has closed this gap because it has effectively synchronized demand with capacity. Geico has delivered to its service standards.
Geico has also not fully closed the communication gap. While the company has coordinated actual service delivery with external communications, its prices are not tied to customer perceptions of value. The company should rethink its pricing strategy. There are different pricing methods Geico can use to retain their customers. Some of the factors that Geico can take into account when deciding which appropriate pricing methods to use are mobility data, macroeconomic indicators, business activities, and consumer behavior. Mobility data refers to the movement of people in terms of vehicle usage. Macroeconomic indicators refer to forecasts that are tracked by insurers.
Insurers can use these forecasts to predict how insurance premiums are going to behave in future years. Business activities are economically impacted by the coronavirus pandemic. This can lead to a direct impact on the volume of exports and imports which will also affect the auto insurance industry. Consumer behavior is tracked by using indexes including the Consumer Confidence Index (CCI) and the Consumer Price Index (CPI). These indexes determine how optimistic consumers are about the country’s economy.
Some other factors that Geico can take into account when adjusting their pricing strategies are unstructured data and the rate of employment. A low rate of employment has a direct affect on the risk and buying behavior of customers. Customers who are unemployed tend to be more risk-averse. Household savings are expected to increase while consumer spending will decrease. Also, unstructured data such as call and chat data from customer interactions can be used to examine the changes of consumer behavior during the COVID-19 pandemic.
Geico can also determine the best pricing strategies to use by segmenting their customers. These customer segments include increased mobility, quick return to normal, slow recovery, and work from home. Increased mobility customers are frontline workers such as health care workers, home care workers, emergency service workers, postal, transport, and utility workers who have worked through the pandemic and have the highest driving rate. Quick return to normal customers are workers with outdoor occupations such as construction, manufacturing, real estate, and wholesale trade. These workers have started returning to work and they have returned to their normal driving activity prior to the pandemic.
Slow recovery customers are workers in the travel and hospitality industry. They will have the longest lay off time from their jobs and their driving rates will decline for a short period of time. Work from home customers are workers in the information technology, financial services, insurance, scientific and technical advisory industries. These workers may not drive at all and will continue to work from home in the long term.
It is necessary to assign the correct pricing strategies to each of these segments. For example, employees in the travel industry are very price sensitive and may only need an auto insurance policy to follow regulations with the lowest priced premiums. On the other hand, the best pricing strategy for IT professionals would be a usage-based premium instead of a constant premium. For those who work in the manufacturing industry, a fixed premium insurance policy is the most affordable policy for this segment.
In addition, there will be an expected shift toward a bundle approach instead of requiring customers to buy individual insurance policies. This approach allows customers to buy different policies from just one insurer (“How to Acquire”). This is an effective way to reduce the probability of Geico losing customers because of complaints of being overcharged from other insurance providers. Through the implementation of these strategies, Geico will be able to close all of the provider gaps.