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The loyalty laggards. The critical issue affecting insurance companies

  • Jed Mole

    Jed Mole

Created at June 30th, 2015

The loyalty laggards. The critical issue affecting insurance companies

9 out of 10 UK consumers feel no loyalty to any of their insurance companies*.

That’s a sobering headline for marketers working for an insurance brand; but unfortunately for them, not a particularly surprising one. There is a wealth of evidence to suggest that insurance companies are lagging in the loyalty stakes compared to other sectors; after all, most insurers have a window of weeks each year where they’re relevant to the consumer and how many consumers search an insurer’s website for some new content! Like practically every industry, insurer brands desire engaged and loyal customers at a time when customer behaviours are more complex and expectations are more demanding. The growing strength of price comparison sites has revolutionised this sector into being very price-sensitive as insurers compete more fiercely on it. Using price as an incentive may have short term benefits but if these new customers switch to a cheaper deal further down the road, there are limits to the effectiveness of this approach in the long term.

Enter loyalty.

We know the costs associated with acquiring new customers (widely recognised as being between 6 and 10 times more expensive than retaining an existing customer). With a distinct lack of loyalty in this sector, insurance marketers need to critically assess their customer engagement programmes in order to work out how to capture their customer’s hearts.

In order to do so, insurer should adopt this three step strategy to loyalty success:

1. Build a clear customer picture

Brands know by now the first step to building customer loyalty is to understand the needs of their customers. Yes, it is the basics, but it works. Do you know which customers are your most valuable? Do you know which are the most at risk? Knowing the answers to these kinds of questions and understanding your customers will help you to concentrate your resources. Do you know exactly what your customers what? Cheap insurance you can assume. But, better understanding their needs at a deeper level will allow you to better serve them more relevant communications and content, perhaps focusing on the importance of the quality of the product, relative to their lifestyle and interests? Building this clearer picture will not only help inform the design of future insurance packages and services tailored to the needs of your customers but will help you segment your customers according to current levels of financial commitment and disposable income. Also, knowing which individual within a household will be most receptive to your campaign will enable you to personalise communications and reduce marketing spend through less wastage.

2. Personalisation through communication

Once you’ve built a clear picture of your customers you’re ready to utilise this improved understanding to adapt your communications and send more personalised and relevant messaging. Loyalty can be encouraged through better communication; creating memorable, personalised campaigns and content can help you make better connections with your audience. Too many insurance brands run the risk of being stereotyped as faceless corporations. Adopting a personal and friendly tone that speaks to the individual and their lives across all communications can help humanise the brand.

Feedback is also key, as recent Acxiom research suggests that 54% of consumers will turntheir back on a brand having been let down just once!* Communications are not just one way, finding out what really happens and what really matters, especially to your customers, is fundamental to any good customer experience and therefore good business.

Above all, as we know customer may typically only be in buy mode for two to four weeksout of 52, promoting deeper connections between them and your brand, based on relevance to them as individuals and families, will increase the chances of a swift renewal, or at least reasonable consideration during the critical window.

3. Technology as the enabler

These first two steps can only be actioned if the correct technologies are in place. This increasingly means, being able to seamlessly engage customers across all touch-points and channels. Having the technology in place to be able to determine and action that if, for example, an existing (home insurance) customer is looking to buy a new car they you can serve them with relevant car insurance adverts in order to retain their custom and increase their loyalty.

This ultimately boils down to being able to support the smarter usage of data, leveraging knowledge and insight across marketing and customer service, being able to employ more precise targeting that combines offline and online data to speak to customer’s in the channel and language that they want at the right time; these are the new basics of marketing. Insurers can implement tailored responsive websites that serve customer-specific messages, unique to each individual depending on what stage of the sale process they are at. They must manically focus on online channels and assess ways in which they can utilise social media to ensure positive brand engagements and peer to peer reinforcements across all touch-points.

In today’s big data world, data success has become synonymous with personalisation, and the use of unstructured information in real or very near real time to personalise consumer interactions, is now expected of all industries by the consumers themselves. It’s the critical issue that insurer’s cannot afford to ignore. Putting a process in place to achieve greater customer loyalty must be central to an insurer’s marketing plans and data strategies.

See how you can help you reinvigorate your customer loyalty programme by downloading the RAC case study.

*Statistics gathered from Acxiom’s online survey questions based on 3,437 respondents