Value Creators - Insurance

Customers will pay for products that minimise their risk of loss. This includes financial loss, loss of reputation and loss of market share. I describe this as insurance because the concept is the same as paying a premium to insure against the loss or damage to our cars, houses and precious electronic devices.

The more a company is worth, the longer it has been in business, the higher the company profile, the bigger the consequences are of a tragic event. And so it makes sense that these companies will pay more in order to protect their current positions.

In the context of software products, I am not talking about traditional insurance , but features and functionality that are designed to predict, monitor or minimise loss-making events.

For example, cybersecurity software aims to detect, prevent and mitigate risks associated with cyberattacks. Anti-virus software aims to detect and eliminate computer viruses. Trade surveillance software aims to detect potential market abuse and insider trading. In all cases, the consequences of a negative event are high in terms of regulatory fines, reputational damage and destruction of company assets.

Even if the product is not directly positioned as a "protection and surveillance" product, protection features can still be added and be used to generate increased value or offer differentiation from competitors. For example, virus checking uploaded attachments to ensure viruses are not propagated across the product platform or providing resilient hosting to ensure access to the product can continue if the primary data centre fails or becomes unavailable.

The level of protection should be positioned in accordance with the risk of various events occurring and the perceived level of loss in the worst case scenarios. Clearly, customers who have already experienced loss will be highly receptive to enabling these features, customers who have not must be thoughtfully educated so that they understand their value.

When designing protection features it is important to communicate the level of ongoing protection to users. Be clear about the number of events that have been prevented or the reduction of risk if it can be calculated. For example, consider the safari browser that blocks unauthorised downloads or profiling activities. The product makes a point of communicating how many attempts have been blocked each period to underline the continuous value that is being added.

Protection features are even more important in "hard to reach" areas of the organisation. The remote office, the home office or the infrequently used software platform. Software can monitor and protect such areas 24/7 and provide confidence and peace of mind to the roles responsible for them. Consulting and out-sourced services can provide a further "belt and braces" approach for higher risk activities.

Consider the most business critical aspects of your application. How can they be further secured? What would be the impact to your users and your own business if they became unavailable? How can you protect these further and would your customers value (and pay for) additional peace of mind? There is nothing wrong with having different tiers of service for say availability or security if you have different market segments with different perceptions and requirements.

On paper, insurance features are not the most exciting features to develop and promote, but they can be highly valued by customers - protecting both their reputations and businesses and your own product's reputation and business.