Insurance has become commoditized and we, as customers, have become very price conscious. A recent survey found that, of respondents who switched carriers, 50% did so for a better price. We all have access to the internet 24 hours a day, can quickly find the cheapest price and easily compare alternatives before we even talk to an agent. In fact, many of us would prefer not to talk to an agent but just purchase online.
Most industries depend on repeat customers to maximize their revenue but how do you accomplish this in an environment where easy comparison is making customer retention difficult and volatile?
The answer, of course, is customer loyalty. But the real question is – how do you foster this in insurance?
The traditional answer, and still a good one, is to improve your customer experience. By introducing new products, or product bundling with price discounts, your offering can become more compelling. But this typically isn’t enough, as it’s easy for your competitors to catch up. In my experience, this needs to be augmented with a pro-active customer loyalty program. Successful carriers are reaching out to customers periodically for non-transaction purposes such as inviting high value clients to a ball game. By introducing a system that suggests and monitors these interactions, your firm can stay connected to your customers.
The next obvious answer is leveraging customer insight. By understanding the customer across lines of business, cross-sell opportunities are opened up. More important to insurance is understanding the household for both current and future needs. Today’s dependents are tomorrow’s car drivers and house owners. Finally, with predictive models, carriers can examine the customer journey to prevent customer churn.
Many carriers are going a step further and introducing a new strategic directive which gets to the heart of customer loyalty and focuses their digital transformation objectives. These carriers are transforming themselves from vendors that pay out after a loss occurs into partners that help prevent the loss in the first place. This bold digital strategy involves the introduction of new products and services on the Internet of Things such as home monitoring, automotive telematics and mobile apps and marrying the resulting information with in-house customer data to identify customer needs and real-time risks, ultimately delivering pro-active notifications directly to the customers. BNP Paribas has this strategy and is using pro-active monitoring to warn home owners of fire or flooding. Similarly, IAG in Australia has a smart watch app that monitors driver fatigue.
In the age of the customer, insurance carriers can either battle for the best price, or the highest customer loyalty. What is your company doing?