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Reward Past Allegiance, But Don’t Forget to Drive Future Loyalty

When developing a loyalty strategy for the insurance industry, there are unique considerations that must be explored. There is definitely a flight to customer centricity in commoditized markets, and loyalty strategies can play a big part in the effort to create differentiation and a unique value proposition. There are three areas in my opinion that demand special consideration in designing loyalty strategies in the insurance and wealth management sector:

  • Defining value
  • Creating actionable segmentation schemas
  • Measuring the incremental impact of loyalty

Defining value

Value is one of the most talked about subjects in the context of CRM but many times marketers have a hard time assessing value and using it to differentiate customer experience. In the insurance space, for example, loyalty and value are not always correlated because of the implications of risk and claims. For that reason, it is important to be able to create loyalty programs to reward behaviors that drive profitability beyond the initial product purchase. As an example, a loyalty program that rewards a customer for every additional accident-free yearly renewal and participation in a defensive driving course vs. simply rewarding customers that renew every year.

Create actionable forward-looking segmentation schemas

Loyalty should play a role in segmentation but should not be the sole driver. While a properly constructed loyalty program keeps an eye on rewarding behaviors that drive bottom-line profitability, too often "loyalty" means a focus on the past rather than the future. Actionable segments need to have a forward-looking view of the customer relationship as well, and thus looking at lifetime value (past and future) should be another segmentation dimension to help provide a more holistic view of the customer relationship.

Measure the incremental impact of loyalty

Most insurance companies have a variety of products in their portfolios but relatively few design needs-based customer experiences, due to complex internal business relationships, lack of alignment on who “owns” the customer and the dominant product strategy. As a result, it is hard to get a complete picture of loyalty or even design marketing programs that holistically address insurance needs from a consumer point of view. This is where measurement comes in, to play a role in proving the impact of loyalty and engagement across products and channels. This hopefully reinforces the idea that more integrated, needs-based customer engagement strategies can drive profitability across the business vs. at a product level.

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