While life insurance coverage was once one of several Americans' most significant financial assets, a number of changes-economic, social and cultural-have caused it to become a lower priority. Customers’ top two reasons: that life insurance is too expensive, and that they produce other financial priorities.
Given the problem of acquiring new customers, it's imperative for carriers to pay attention to retaining existing ones. Actually, small increases in retention can mean large revenue growth, and the payoff can be substantial.
Reaping the advantages of a thoughtful customer retention program needs a long-term vision. Carriers should consider the possibility lifetime value of a customer (and the products he's prone to buy) that will allow a carrier to improve profitability-today as well as in the future.
LexisNexis recommends three steps on the path to a highly effective customer retention program:
- Acquire customers with retention in mind
- Develop a customer-focused communications agenda
- Understand the client experience
- Acquire customers with retention in mind
Effective customer retention begins with targeted acquisition. Carriers must understand their very own capabilities, risk appetite and services and acquire customers that they can serve well. The better a person aligns with a carrier's profile and preferred market spaces, the higher the likelihood she'll stay.
Segmentation and predictive models are key. Solutions available for sale include:
- Risk classification models to help carriers optimize leads and identify the most profitable prospects.
- Lookalike models to assist carriers understand the characteristics of the best customers and attract similar prospects.
- Lifetime value models to identify the possibility long-term return of a prospect-enabling a carrier to recognize prospects with the greatest future possibility of growth and loyalty.
- Prospect persistency to help predict whether a prospect will lapse inside a given time.
In short, successful retention efforts begin well before a customer is acquired.
- Develop a customer-focused communications agenda
Having done the legwork to get a suitable customer, carriers should ensure they have a technique for strengthening the connection. Each customer touch point is definitely an opportunity to achieve this, and these touch points ought to be outlined inside a customer-focused agenda and communication plan.
The customer agenda defines customer touch points, such as:
- Onboarding process. The onboarding process can set the tone for the carrier-customer relationship. For example, customers might receive a welcome note with contact details in the event of questions; where you can learn more about protecting their life, health insurance and other assets; how to generate a holistic financial protection plan; and much more. Carriers can tailor these communications for people and reinforce the company's brand, nurturing a discussion from the very start. These communications are usually separate from a carrier's requirement to provide legal policy documents, however this isn't to state the delivery of legally required documents needs to be stiff or un-tailored. All the process is an opportunity to nurture.
- Annual reviews. Many purchasers are either unacquainted with or unclear about coverage options, so annual comments are a perfect chance of the carrier in which to stay touch with every customer and offer risk management advice. Annual reviews also help position the carrier as an adviser, not only a company. In addition, carrier support for annual reviews can help a sales team stay on surface of its customers' life changes-while also positioning each salesperson like a reliable and trusted adviser.
- Cross-selling opportunities. According to their understanding of each customer, carriers can identify opportunities to cross-sell additional products, such as an annuity or supplemental health product. Carriers also needs to consider cross- or multi-product purchases inside a household-for example, for an insured's spouse, child or parent.
- Payment reminders and opportunities for automatic payments. Payment and premium reminder notices can trigger customers to lapse or switch providers, so managing these communications is crucial to retaining customers. Additionally, automatic payments can make paying life insurance premiums effortless for customers, minimizing the chance that they'll lapse.
Carriers also needs to make sure that they maintain continuity across all channels, synchronizing their market messages across all digital and traditional communications channels including websites, print and radio ads, social networking, email and direct mail.
Traditionally, carriers have minimized communications with their customers, believing that reminders about life insurance coverage are a reminder of that customer's mortality as well as a budgetary expense. As such, retention strategies were more focused on conserving customers who had already decided to cancel their policies, typically by providing less coverage minimizing premiums.
- Understand the customer experience
The customer agenda outlines when and how a carrier will contact its customers but doesn't address a person customer's unique needs. To better understand their clients and identify these needs, carriers should supplement their internal data with external data sources and predictive models. This really is an area in which the life industry has much experience and has often excelled, but carriers haven't been consistent in their pursuit of data for deeper customer insights. Exacerbating the issue, new sales have been harder to win, prompting carriers to concentrate heavily on acquisition-to the detriment of understanding current customers' needs.
The Internet and social networking channels have changed the way that customers make purchases-and insurance coverage is no exception. Instead of turn to a carrier or agent for advice, many customers now start with online investigation. These studies may include the carrier's website, in addition to comparison sites and online reviews. Increasingly, it also includes social media, which allows good and bad experiences to become reported and shared. In general, these channels limit a carrier's control over its brand and the client experience.
To better understand each customer's individual needs, and just how he experiences rapport with the carrier and agent, carriers can work with a data partner to:
- Tap into third-party data sources to achieve insight on a customer's life changes. External data can help carriers identify customers whose insurance needs might change: For instance, people often reevaluate their finances once they move or purchase a new home. Armed with up-to-date mover and homeowner information, carriers and agents can contact customers and advise them on ways to mitigate risk.
- Verify whether an insured has appropriate coverage. Customers can experience life changes and not want to update their life insurance coverage provider. Working with a data partner, carriers can obtain up-to-date, accurate and validated wealth and asset information-to be sure each insured has appropriate coverage and affordable premiums for their means, and also to offer alternatives if otherwise.
- Use models to look for the risk of a customer leaving. Market solutions can be found that will help carriers predict the risk of a client leaving, to ensure that carriers can take action before she leaves.
With data, analytics and predictive models, carriers can identify customers with changing insurance needs and life events and respond appropriately. A highly effective response will address a customer's specific needs-and, in an ideal situation, will deliver a tailored message in the right time. In addition, market solutions can enable carriers to establish event alerts that deliver automatic messages at the right time. For instance, a carrier could establish an automated event notification when customers apply for a new mortgage. An automatic process could send each client a note outlining tips for buying a home, while reinforcing the need for the life insurance the client already holds, in assisting to protect the home for the
