Customer Experience

How to Win the Retention Game

In an insurance coverage industry battling rising costs and losses, the find it difficult to attract and keep customers is real.

Fortunately, research has shown that existing customers value good service and meaningful relationships even more than low rates. This means that, to maintain the customer relationships they have, insurers must concentrate on customer experience and engagement.

Here's why customers leave after a closed deal, and just what you can do to forge stronger, more profitable, long-term relationships.

Why Customers Leave (and Why They Stay)

New customers often shop on price, but even the best insurance rates don't retain customers who experience poor customer support.

In Gladly's 2021 Customer support Expectations Survey, 92% of customers polled said that they would stop using the services of a company after three or fewer bad customer service experiences – and 26% said it would take just one bad experience to make them leave, says Shep Hyken, chief amazement officer at Shepard Presentations.

“Your customers no longer compare you just for your direct competition. You're being when compared to best service they've ever received – from any company or anyone,” Hyken says.

That's a tall order for insurance companies, which still lag behind other sectors in customer service, the Actuary's Chris Seekings writes. The insurance industry's customer satisfaction index score fell in 2021 while the lots of a majority of sectors rose, says Affinion Vice President Karen Wheeler.

Insurance customers' needs are relatively simple: They want policies that meet their demands at prices they are able to afford, plus they want good communication using their insurance provider, says Bain’s Darci Darnell. “They expect their insurers to assist alleviate their anxiety, not increase it.”

In practice, however, insurance companies aren't delivering on these basic needs. Bain's fourth annual Customer Behavior and Loyalty in Insurance report, compiled by Henrik Naujoks and fellow researchers, found that most insurers are not delivering the standard products or ease of use their customers demand. The research found that 80% of insurance customers ages 25 to 40 rated their insurer low on the things that mattered most for them.

The transition to a digitally based customer support world remains racked with growing pains. Mark Breading describes an effort to cancel a magazine subscription that required three telephone calls, two web forms and an online chat session. In the end, Breading says, he contacted his charge card company and blocked the transaction – a process that was simpler than contacting the magazine itself.

Unlike magazine subscriptions, however, insurance coverage is often a requirement. Customers may already believe that coping with their insurance provider is really a chore; when the available communication tools are tough to manage, the connection can be damaged beyond repair.

“The challenge (and opportunity) is to let the smooth change in those interactions and also the related information between different channels instantly, so that the customer will get choice, and also the use of digital and human capabilities could be optimized,” Breading says.

How Insurance providers Respond to Customer Variability

Emboldened by easy information access and driven with a desire to save money, insurance clients are quicker than ever to switch carriers when their policy anniversaries arrive. To combat the standard transfer of customers, insurance companies have leveraged a number of tactics.

These tactics include leveraging data to enhance personalization and employing new tools and strategies to learn effectively for customers to buy property and casualty insurance, says Tom Super of J.D. Power.

However, digitization and its corresponding personalization no longer make companies stand out from their competitors. In fact, firms that don't provide a simple, personalized on-demand experience stand out from the crowd by falling short of everyday customer expectations, says Kevin Haydon, who works in the digital insurance platform EIS Group. While customers understand that buying insurance isn't as simple as ordering pizza, they expect exactly the same relative level of ease and personalization from both transactions.

When prices rise but communication does not get easier, customers feel the pressure to change insurers from two directions at the same time. That customers place such quality value on simplicity of use sends a powerful message: Insurers’ knowledge of value must also extend beyond the main point here, says marketing automation manager Brandon Carter.

“Value doesn't necessarily equal cheaper prices or even more stuff. It really means improving the customer's ability to solve problems and reach their set goals,” Carter says.

Customers have made it clear that they value insurers who help them solve problems and reach their goals – and who allow it to be easy to achieve this. These two elements thus be a powerful focus area for insurers.

Helping Customers Find Value within their Insurance Relationship

Understanding how different policy options will affect their lives may be the biggest factor influencing client satisfaction in insurance, says Mikaela Parrick at Brown & Joseph. Customers want to know how their coverage benefits them.

Currently, only 67% of insurance consumers – about two in 3 – think that their insurer enables them to understand their policies thoroughly, Parrick adds. When insurance companies put effort into helping customers connect coverage to personal benefit, however, their overall client satisfaction scores increase by typically 9 percentage points.

The procedure for learning how to communicate value to existing customers teaches insurance providers more about those customers, as well. This understanding helps insurance companies retain existing customers, attract new ones and grow their own main point here, says David Pieffer, who works in property and casualty insurance at J.D. Power.

“Since insurance is a 'must-buy' product for many customers, the main reason they're buying the merchandise is easy; however, why they buy a specific insurance company's product is not so obvious,” Pieffer says. Failing to understand a customer beyond their risk profile is a huge mistake for insurers hoping to adjust to current demands.

Think Big With Omni-Channel

Omni-channel in insurance offers benefits to the insurer by enabling more streamlined service, and it offers benefits to customers in the form of easier communication and transactions using their insurance companies.

Yet one of the biggest values of omni-channel for customer retention remains largely untapped: the ability to leverage an omni-channel platform like a tool for customer engagement.

“Companies using the strongest omnichannel customer engagement strategies retain an average of 89% of their customers,” says Kris Hackney of Applied Systems. Companies at the weak end from the spectrum, however, retain only 33% of the customers on average.

Enabling people to contact their insurer via their preferred channel is a type of personalizing the customer experience, also it doesn't require investments in big data.

Build Networks as an Insurer

Insurance companies are busily building digital networks to enhance the customer relationship. The value of human networks, however, should not be underestimated – particularly when today's platforms provide the opportunity to add valuable perspectives to the relationship between insurers and the insured.

An approach that incorporates insurance agents in to the company's overall de-siloing may have a stronger impact than merely improving technology, says Casey Gustus, CEO of Apliant. Agents remain the single best way to keep up with the degree of human personalization insurance customers want – and they make it easy for people to get their questions answered, creating a relationship customers want to maintain.

Expanding beyond traditional relationships might help bring insurance customers in to the fold and keep them there. For example, insurance providers can partner with financial advisers to achieve potential P&C customers who turn to their financial adviser for coverage assistance, says Brian O'Connell at Insurance News Network.

Research from Chubb and Oliver Wyman reveals that 40% of consumers who seek the help of financial advisers would consider switching to some financial adviser who also provides help with acquiring insurance, says Annmarie Camp, executive v . p . of sales and distribution at Chubb Personal Risk Services.

Partnerships like these, boosted by technology, help customers believe that their personal needs are met and that finding the insurance assistance they need is simple. This sense of support provides significant value and strengthens the text between insurers as well as their customers.