I’ll admit it. I like “junk mail.” For the same reasons I like television commercials and radio ads, I often feel that my direct mail is a silent source of industry knowledge. It’s one of the reasons I haven’t elected to stop receiving my statements in the mail.
Fresh out of today’s mailbox, I have my life insurance annual policy statement. This is a rare piece of mail and one of the least interesting. It tells me nothing that I don’t already know. I’m still covered. I see my dividend. I’ll save money if I pay it annually. It goes into my file.
Earlier this week I received my auto statement. In some ways, to compare the two almost isn’t fair, but I’m going to do it anyway. The auto statement is six pages longer. There is more material to review, but there is also the bonus material.
- Would I like to review my coverage with my agent?
- I can get a discount if I will opt to receive my bill electronically. (I won’t, but that’s good to know.)
- I can get another service-oriented discount.
- Do I have mortgage coverage?
And there you have it. The auto statement is officially a communication and marketing tool that goes beyond telling me that I owe money. In fairness to my life company, they have a smaller cross-selling opportunity. But, on the whole, property/casualty carriers are ahead of life insurers in recognizing the power of billing as well as the power of “loyalty” selling.
It doesn’t need to be that way. In fact, some life insurers are catching up as life insurance is undergoing a resurgence of innovation and interest, with new product development leading the way. The group life and voluntary benefits providers have thought about it more, because they deal more with volumes of business among employers and small business owners. They are the leading edge of companies that are waking up to the opportunities. Many forward-thinking marketing and billing department heads are agreeing that if cross-sell and up-sell products don’t exist, they should be created. The billing touch point shouldn’t be wasted. Let’s look at six reasons that you should consider billing as a strategic market tool.
1. The door is open: In sales terms, every open door is an opportunity. Whether that is the door of a referral, the door of the mailbox or the “door” of the inbox, insurers have an obligation to treat an open door with care. Call it a qualified lead. Call it an interested party. Most of your customers will be reading your communications to see if they need to know anything. Their life insurance is important to them.
2. Better conversion rate: Every customer has already said “yes” to you once. Saying so again is easier; 50 percent easier according to Marketing Metrics. Gartner estimates that 80 percent of some organization’s future revenues will come from 20 percent of its current customers. If these statistics are even half true, then insurers should consider building a billing strategy as one of their key priorities for the coming year.
3. Orphan policies: According to LIMRA, only one in 10 life agents remains in the market for longer than 4 years. That means that many, if not most, policies sold by agents end up as “orphan” policies with no agent assigned to keep in touch with the policyholder. Meanwhile, a policyholder’s life events may be changing, and the way she views her coverage may be changing. She is likely to look elsewhere for additional coverage if your organization isn’t reaching out, whether that is through the mailbox or elsewhere. Protecting orphan polices is best done through communications. When possible, insurers should quickly reassign policies, but in the interim, billing can be used as a news vehicle to keep your organization visible and keep account information current so that the orphan policy won’t lapse due to non-payment, etc.
4. Build brand loyalty: A customer who has one product with you is much more likely to switch companies than one with 2-3 of your products. When they buy multiple products, they are giving you their business and their heart. They see your communications in their mailbox more often. In this way, selling the second product becomes as much a tool of loyalty (designed to limit attrition) as it is a tool to increase premiums.
5. Agent engagement: Agents love it when you drive business to their door. For those agents who either do very little cross-selling, or those who struggle with reaching out, billing can be a way to keep them connected to your policyholders. Even if you have no up-sell opportunity, placing the Agent name and contact information on a bill can be a way to remind customers that they have a friendly face to call upon with questions.
6. Money and Data: Using your bills as a marketing tool makes economic sense because you hold the “keys” to unlocking prospective sales. You may be using some of your marketing dollars to blanket your market with non-targeted or lightly targeted advertising. But when you target your current customers, and can use the data you know about them to hone your message and hit your mark. You know their age and some of their life events. Use these to your advantage.
These are just some of the forward-facing reasons for utilizing billing in your marketing. The back-end justifications are almost as strong. For example, modern billing systems will help you consolidate the billing of multiple administration systems. Novarica estimates that most life carriers are running at least five. Once you consolidate these systems and their data, you are better suited to use the data to sell and you are much better suited to serve your customers with electronic billing, payment and presentment. Not to mention, you save the maintenance costs of multiple systems.
One of the most compelling reasons to introduce a modern billing platform is that Billing, unlike some of your other systems, can be implemented and operated independently from your policy administration system. It is a simple replacement to consider before, during or after a policy administration system upgrade. It is also one of the supplementary systems that can be provided in a cloud-based environment, making it attractive to carriers wanting to focus on core systems and their own innovations.
Whatever your organization’s motivations, looking at billing modernization makes sense as a step in protecting your future. It helps your organization capitalize on every touchpoint, consolidates your various billing platforms and has one the best chances at reaping loyalty and engagement rewards. If you are looking to mine your existing client base with a lower cost per touch, you might look at your mailbox for inspiration.