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It’s not hyperbole to say that growth is the key to survival in today’s insurance landscape. Mid-sized insurance carriers are in a unique middle ground, squeezed on all sides. You have huge, incumbent carriers with deep pockets on one side. On the other side, you have agile, digital-first startups. Then, there are emerging new business models like embedded insurance. So, how are carriers, especially mid-sized players, supposed to compete while also hitting their growth goals?
Most insurers’ growth strategies revolve around two key pillars: new customer acquisition and new risk products. However, retention is just as crucial and should be the third pillar in your growth strategy.
Customer retention is essential for insurance carriers to maintain profitability, reduce costs, and thrive in a competitive industry. It’s not just about retaining customers for the sake of it but also about providing superior customer service, value, and personalized solutions that build long-lasting relationships.
How does retention reduce costs? New customer acquisition is expensive. According to the Independent Insurance Agents of Dallas, the insurance industry has the highest customer acquisition costs of any industry. It costs an average of seven to nine times more for an insurance agency to acquire a new customer than to retain one.
Rather than pouring your budget into acquisition, it’s much more cost-effective to strike a balance and invest in retaining the customers you already have. This creates new upselling opportunities for your sales and customer service teams to introduce new risk products and services that fit their needs.
Avoid Policy Churn
Carriers who don’t prioritize retention are at greater risk of losing customers, also known as policy churn. Policy churn is costly, as it involves losing future premiums and allocating resources to acquire new customers to replace the lost ones. Focusing on retention can help reduce these churn-related costs.
The first step in avoiding churn is providing a seamless, omnichannel customer experience. This is easier said than done. The reality is that insurance customer expectations have changed dramatically. Amazon and Netflix have made on-demand an absolute requirement, and insurance is no exception. Insurance consumers want immediate, anytime access to policy information, the flexibility of self-service during off-hours, and the ability to speak with an agent for more complex matters.
Omnichannel to the Rescue
Creating an omnichannel customer experience is essential to retaining insureds. An omnichannel engagement strategy is an ongoing process that requires dedication and a commitment to meeting customer expectations consistently across all touchpoints. Building an omnichannel experience leads to higher customer satisfaction, increased loyalty, and improved business performance. In other words, growth.
Building an omnichannel experience should be a top-down initiative. Ensure that your organization’s culture is customer-centric, focusing on putting the customer at the center of everything you do. Encourage all employees to prioritize customer satisfaction.
The next step is to better understand your target audience, including their preferences, behaviors, and needs. This will help you tailor your omnichannel strategy to meet their expectations. For example, how often should you contact your customers? Using data about your customers can help inform you when and how often to send proactive messages and on which channels. The time of day, day of the week, and timing during the month are critical factors to consider when planning proactive messages. It all depends on who they are and what they need at any time in the relationship.
Clearly outline your goals for providing an omnichannel experience. Determine what you want to achieve: increased customer loyalty, improved customer satisfaction, or higher retention rates.
A true omnichannel experience drives customer engagement. It increases customer satisfaction, retention, and lifetime value. But often, the term ‘omnichannel’ is misunderstood and underutilized. A robust omnichannel means more than just giving the customer many ways to communicate with insurers. Consumers don’t want more channels to communicate with; they want specific channels that suit their unique needs.
No two organizations will have the exact same omnichannel strategy. That’s why understanding your customer base is so crucial. Once you have a clearer picture of your ideal customer demographics, that will inform your multichannel strategy, whether that includes a branded customer portal, SMS text messages, emails, interactive voice response (IVR), chatbots, WhatsApp, and more.
Providing multiple, tailored channels for your customers is a great start, but more is needed. These channels must be relevant to how customers prefer to communicate with you. The channels must suit their specific needs. At the same time, your communications channels should natively work together to create a complete ecosystem of success for the customer. That means consistency in your data, messaging, and behavior across each channel.
For example, a saved payment method in the insured portal should be available when making a payment via SMS or IVR. Activity done in any channel should reflect in any other channels in real time. When everything feels and acts consistent, carriers will maintain the customer’s trust. Customer confidence is key to boosting retention in an industry wrought with churn, like insurance.
You can achieve more meaningful interactions with your policyholders through proactive communication that helps them solve problems. Sending helpful text messages, such as reminders when a premium is due or updating a customer on a claim, goes a long way. You can even open a direct line of communication with policyholders by sending links to chat with your CSRs. Always think of ways to be proactive. Demonstrating that you anticipate their needs is a sure-fire way to build loyalty. For example, sending a text message or email with helpful information about contacting the insurer, filing a claim, printing ID cards, and tips for risk mitigation.
Quality Data Means Quality Engagement
Regardless of your engagement channel, it’s critical to have updated, synchronous data systems to rely on. Current, accurate data that is easily accessible by the agent and the customer changes everything. With automation, customers can answer their own questions, make payments, and access their policy information whenever they want, from anywhere. This self-service design gives control back to customers and saves time for insurers.
When executed well, an omnichannel experience means the different tools an insurer has and gives to its customers are all interconnected. It means that when customers interact over the phone or on the web, they enjoy the same consistent experience. The personality of the insurer shines through each real-time interaction when an insurer follows an omnichannel philosophy. All of this adds up to a stronger relationship with your customers, who, in turn, will reward you with their loyalty. While growth may be the name of the game, customer retention is crucial to getting there.