Who’da thunk that a NYC cab ride to Buddakahn, a morning at Massage Envy and a bottle of Pouilly-Fuisse could inspire such a revolutionary idea. (OK, wipe that expression off of your face and keep reading.)

My friend Christi and I are both insurance geeks, and we are too young to retire.

So instead of lamenting about the janky* model of distribution that we are so familiar with, we dreamed up something else last Friday night.

What if the consumer was the one to determine how much an insurance producer ultimately got paid? (Said under your breath, “yeah right,… but hmmm.”)

Zowie.

One school of thought would be that the producer would starve to death because the consumer hates when they make money “off of them.”

Another school of thought might lean into the idea that today’s consumer likes to make his/her own choices. Oftentimes, they are making decisions based on social reasons, not just whether or not they like someone, or thought they did an excellent job, but also based on social norms.

How many times have you gone into a restaurant and tipped someone who you thought just gave you average service? Maybe even below average? Why do you do that? Because it is the “norm.”

If you don’t believe me, look at a few examples that have only gotten stronger with technology.

Today’s NYC cab ride is probably as scary as it has ever been. Honestly, I feel I am sometimes putting my life into the hands of someone who is talking constantly but not to me. But let’s leave that for a different day…. Suffice it to say that a few Maalox are a necessity if you are going to go yellow.

Yet, I would bet that tips are better than they ever have been. Why? Because they are thrust into your face at the end of the ride in a manner that forces you to choose one option--usually the middle one. (Check out “Predictably Irrational" by Dan Ariely.)

15%? 20%? 25%? That’s how it started. Now it is 20%, 25% and 30%. 

The drivers got a raise just by adjusting a line or two of code.  

And zero is an option, but not really, if you know what I mean. People do not like to deviate from the social norm unless the circumstances are extenuating. For example I was in a very unusual situation with a limo service recently. The car was pulled over by the police and the chauffer was given a ticket for reckless driving. I was in the back seat, not only inconvenienced, but somewhat concerned for my well-being. Despite her tears and plea for forgiveness, I did not tip. But it took an authority figure to validate the fact that my service was really bad. Had it not been for that, I probably would have left something.

Taking this example further. Have you ever been to a Massage Envy? It's a great business model that gives members steep discounts for having at least one massage per month on a subscription basis.

One of the most marvelous strategies they use leverages that social norm. Their employees can get paid better by pushing the cost onto the consumer. How? Because customers want to do the right thing, and they can’t really do math that well. So they put up signs that tell the members to pay their tips based on the nonmember rate, so that tip is about 40 percent. And they actually calculate it out so that the most convenient and “normal” tip is $20. Who doesn’t have a $20 bill in their wallet these days? Anyone who uses an ATM is more likely to have a $20 bill than a $5 or $10 bill. And in the event you have no Jackson, there is always plastic. After you are treated with respect, cleanliness, timeliness and a glass of water, what are you supposed to do? Cheap out? If someone is being of service to you, it feels very different than when they are selling you a product.

This is my point. The mentality is to do what is socially correct. We all know that people who are treated right in the insurance sales process are satisfied. Do you think that they would stiff someone who did the right thing for them?

If the insurance industry worked on tips, would we be able to price products differently? Would we be able to change pay structures of agents to smooth out the lumpiness of their income? Would we be able to attract a wider group of individuals to the job?

After we had this thought in our heads, we went to dinner in the theatre district. Those waiters are very attractive, personable and convincing people who need some kind of predictable income as they feed their dreams. Tips, you may say, are unpredictable, but not if you have a steady flow of people you are serving. In fact, quite the opposite. Could there be a whole new crop of people who are wired to do this already?

Hmmmmm.

* Janky--(adjective) inferior quality; held in low social regard; old and dilapidated; refers almost exclusively to inanimate material objects, not to people (The Urban Dictionary, translated by Meghan Russell, Maddock Douglas). Hey, we are all about making language more current in the insurance industry, right? After all, it’s kind of janky, too. Maybe downright wonky in some cases. For more on that, visit http://language.soldnotbought.com

Maria Umbach, MBA, CLU, is managing principal, insurance and financial services, for Maddock Douglas in Norwalk, Conn. She specializes in helping large brands innovate new products, services and business models. Maria has spent 25-plus years as a marketing executive in the life insurance space and is now focused on “what’s next” for the industry. She is a frequent speaker and the author of the upcoming book series “Flirting with the Uninterested: Innovation in a Sold Not Bought Category.” For more, visit her blog at www.soldnotbought.com, or email her at maria.u@maddockdouglas.com.

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