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Building Customer Loyalty in the Insurance Industry

Insurance companies are facing a growing challenge in retaining their customers. This is due to the fact that insurance products are, in most cases, becoming commoditized. Customers often cannot differentiate between insurers, which forces many providers to compete on price. Strategic decisions based on price competition eventually impact profitability and increase focus on cost management. The result is diminished customer service and satisfaction leading to increased churn.

Retaining customers and building customer loyalty is good for any business. Loyal customers stay longer, renew at higher prices, and act as brand ambassadors by recommending that business to friends and family. So how can an insurance company in a low touch, low purchase frequency industry, build customer loyalty?

1) It all starts with the customer (and their data)

Organizations successful in creating customer loyalty understand the importance of customer data to drive their retention and growth strategies. They create holistic views of the customer and ensure these views are utilized across the organization, in all divisions, departments, and channels in which they interact with customers.

They maximize the value of this data by incorporating both first-party data (PII, product, customer lifecycle, customer value) with third-party data (socio demographic variables, transactional data) to create a 360-degree view. In addition, they bring this data to life by analyzing and identifying unique marketable segments and creating differentiated engagement strategies to drive renewal and upsell for each segment.

2) Increase opportunities to interact with customers through product expansion

In a traditional low touch, low frequency industry, insurers are continuously looking for opportunities to interact with customers to positively reinforce their relationship. This can be achieved by expanding the ecosystem of related products and services to complement their core insurance offerings. For example, security products for home insurance customers, maintenance offers for auto insurance customers, and health monitoring for life insurance customers. 

This ecosystem expansion is in addition to typical multi-policy discount benefits and offers a more personalized service that consumers have come to expect from the brands they interact with. Consumers who engage with two to three products a company offers, are more likely to stay with that company longer, be more satisfied and pay a premium for the services.

3) Embrace digital channels to create personalized customer engagement

Organizations that succeed in delivering personalized customer interactions recognize the importance of approaching this as a marketing strategy and not simply a tactic. A personalization strategy that the entire organization follows, driven by the singular customer view and a customer-centric content strategy is the foundation for building ongoing customer engagement and loyalty.

Consumers understand the value of their data and have a high expectation that companies will use it to personalize their interactions with that brand. Successful organizations recognize this and understand the why and the how of delivering relevant content to their customers:

  • Message Continuity: Messaging serves as a consistent and relevant conversation from one touchpoint to the next. Messaging by segment type also reinforces the personalized engagement with the provider (e.g., families vs. newly married, first-time home buyers vs. retirees).
  • Message Sequencing: Timing and composition of the message must meet and fulfill the customer’s objective, whether that is to learn more, engage or purchase.
  • Orchestration: Assets, platforms, and technology must work cohesively to move customers through their unique journeys to the desired end goal.

4) Reward interactions and behaviors with relevant promotions

Rewarding customers by providing relevant and timely promotions also generates loyalty and satisfaction. Although channels and tactics may vary, promotions that leverage proven tactics to spark consumer emotion succeed in driving desired behavior.

Engagement tactics such as sweepstakes, instant wins and contests can be integrated with media, CRM and personalization strategies, and deployed as part of a calendar of touchpoints to reward desired behavior and recognize value. Consumers can earn points based on monthly or annual spend or for recommending a friend, which can be redeemed for opportunities to engage in these contests.

In addition, opportunities that reward customer engagement, such as watching or sharing content socially, create a sustained presence and relationship between the customer and brand. For example, life insurance consumers can be rewarded for downloading and utilizing a health monitoring and sharing the results back with the insurer.

The opportunities for insurers to create a sustained relationship with their customers are great. By utilizing data, building actionable segments, targeting those segments with personalized messaging, and relevant product extensions, you can create a platform of ongoing engagement that increases loyalty, reduces churn and increases overall customer lifetime value.

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