The Technology - Adoption Curve, or Why Early Adopters Get the Worm
Katey Walker

The Technology - Adoption Curve, or Why Early Adopters Get the Worm

Katey Walker August 07, 2015 Posted in: Blog Posts, Telematics / UBI
Our partnership with Driveway Software continues to evolve as we jointly work to find effective and innovative UBI solutions for insurers. I’m sharing a post from our friends at Driveway, written by Jake Diner, Co-founder and Senior Advisor. Jake’s post looks at innovation and how it spreads.

Pinnacle and Driveway will both be exhibiting at the upcoming Insurance Telematics conference in Chicago on September 2-3, 2015 . Enjoy Jake’s thoughts and be sure to look for us at the conference.

Guest Blogger, Jake Diner (original post June 18, 2015)
Early adoption brings competitive advantages – and there’s a bell curve to prove it.

We’re referring to a graph that Everett Rogers in 1962 in his book, “Diffusion of Innovations.” As Rogers pointed out, innovation spreads. It’s a little bit contagious. And it follows a predictable pattern.

How does innovation spread?
  1. It shows up first among innovators, those who are willing to invest significant personal effort in using (and preaching) some little-known technology. They’re the visionaries of the curve: the first to perceive its potential and try to make it real. They’re educated, prosperous and risk-oriented.
  2. Next come the early adopters, those who catch onto a technology’s value before it’s obvious and position themselves at the front of the line, almost before there’s any line at all. They’re younger, educated and influential.
  3. The early majority soon follow after. These are thought leaders who can see which way the wind is blowing and are ready to take advantage of it. Conservative but open to new ideas, they’re socially active and influential.
  4. The late majority is slower, not adopting the technology until it’s already become mainstream. This group tends to be older, less educated and less socially active.
  5. Last to follow are the laggards. This is the most conservative, oldest and least educated bunch in the group.
Admittedly, each of the categories above gets its own personal bouquet of benefits and drawbacks – even laggards, who enjoy little risk with canned options for out-of-the-box deployment. But if you look at the entire spectrum, it’s clear that the biggest gains and smallest drawbacks are to be found among those on the upside of the adoption curve.

In other words, early adopters get the worm.

For example, take Doug MacIver Jr. He’s the inventory and Internet manager at RideTime, an auto dealership in Manitoba. According to Auto Remarketing, MacIver “says that as an early adopter of digital marketing and related tools, his dealership has seen a much higher return on investment than late adopters.”

It’s easy to see why. Early adoption gives businesses the edge by helping them ace several key competitive categories. Let’s look at how usage based insurance does that for auto insurers:
  • Control losses to improve profitability. UBI incentivizes safe driving. This means it has the potential to turn an otherwise adequate driver into a great driver, by making them more aware of their behavior and rewarding them when they get it right. Better driving across your customer base adds up to fewer claims and a better margin.
  • Engage and retain customers. It’s a fact of human psychology: people like to be noticed and rewarded for their positive effort. UBI creates opportunities to touch base frequently with your customers, making road safety fun by gamifying it and bringing value-added benefits that strengthen the glue.
  • Avoid adverse selection. Usage based insurance rewards drivers who practice superior road safety – and by rewarding them, it attracts them. What happens to insurers who don’t offer UBI until it’s too late? They end up with the demographics that don’t choose UBI, because it doesn’t benefit them, because they don’t drive as safely. Translation: claims.
  • Attract new audiences. We’ve mentioned before that teen drivers, senior drivers and unbanked drivers aren’t being adequately served by the traditional insurance model. By offering them a package that really meets their needs, you can expand your customer base with drivers whose good behavior pays off, both for them and you.
Want to be part of the early majority? Learn more about smartphone UBI by downloading our free report, here.

kwalker@pinnacleactuaries.com

For more information on Katey, visit our People page.

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