Simply Business uses the methods to create more bespoke insurance products for customers.
The CEO of a small business insurer, which has just undergone a management buyout, claims its agile approach to developing products is the key to landing a larger wedge of the market in years to come.
Private equity firm AnaCap backed the rumoured eight-figure MBO of Simply Business, separating it from Brit Group to target more opportunities for growth and innovation in the industry.
Simply Business has a client base of 225,000 customers, and has grown from revenues of £4.2m in 2006 to hit £22.9m last year.
CEO Jason Stockwood puts its success down to its business being conducted predominantly online and underwriting its own products, and is confident the agile approach will help its expansion in an industry worth an estimated £3bn.
Stockwood, who joined in 2010 as the former MD of dating site Match.com and travel website Travelocity.com, admitted his experiences have come to bear on Simply’s attitude to providing insurance, by letting customers lead the way.
He told CBR: "My background was travel and dating, huge markets that have used technology to disrupt offline competitors. I could see this [possibility] in commercial insurance as well.
"Exactly the same way as travel 15 years ago, everyone had to go to an intermediary offline to get a quote. That’s fine if you’re a large business with a procurement division, but most people who start up businesses just need to make sure the product is right for them and then get on with growing.
"The whole balance of power needs to be with the consumer, not the intermediary, and online is a great way of remedying that."
By conducting its transactions mainly through its website and running operations in-house, Simply Business has managed to undercut the "ridiculously high" margins demanded by its offline competitors.
And asked if the internet is shifting the way small businesses look for insurance, Stockwood says that it already has.
"That’s a debate that’s over," he said. "The shift has happened. It’s really about how we can simplify complex products."
And to that end, Stockwood relies on the agile software development philosophy to get ahead.
The theory, established back in 2001, focuses on producing working software during the development process rather than at the end, and places importance on developers working together to find solutions.
Stockwood said: "We use agile as an approach to test the idea. If it works, great, if it doesn’t we move on. You fail on small projects and you learn every time you do a test.
"It’s a technology-led view of how customers can be served better."
Another key concept behind agile is continuous customer collaboration to produce the best possible product, and Simply Business staff rely on big data to tell them what their customers want.
"All our products are built around customer insight," Stockwood explained. "You’re not going on gut feeling. We’re a data-driven organisation – we can’t imagine how offline companies create hypotheses for their products.
"We’re collecting huge amounts of data on a daily basis and that gives us a lot of information. We can tell where we’re successful in quoting and where we’re not successful in quoting."
Stockwood hopes the approach will lead to Simply Business, which has a current a market share of 5%, cutting a larger slice of the industry for itself in the next few years.
"We want the lion’s share of that as a starting point," he said. "We want to expand our customer base, we think we can quote for about half of small businesses at the moment."
That expansion could be a key move in the future as more and more businesses adopt new and improved technology as the norm for B2B commercial activities – 30% of businesses looking for quotes contact Simply Business via smartphones or tablets now, and technology will only make it easier for more companies to get an online quote.
And Stockwood is aware of how technology affects customers’ communications with other businesses – he predicts voice recognition software will become more popular, an idea which certainly makes sense when considered in the context of the rising trend of mobile computing, where hands and eyes may be otherwise occupied.
But however developments change the way customers communicate, his faith in big data remains firm, believing that analysing their needs remains the key to success.
"The user experience is changing day to day," he said. "But the way the risks are being underwritten reflect the fact our companies all have idiosyncratic ways of working, so for us it’s about responding to customer feedback."