Several critical challenges prevent insurance companies from effectively retaining their customers and reducing churn. Insurance loyalty programs bear the potential to help insurance companies gain the competitive advantage in an extremely competitive marketplace. Let’s explore in detail how modern insurance companies can overcome their challenges and boost customer retention with help of insurance loyalty programs.
An insurance loyalty program is a type of customer retention plan for insurance service provider companies that enables them to retain their existing customers more effectively. An insurance loyalty program designed around making the customers feel more valued than mere purchasers of insurance plans is more likely to help in fostering long-term relationships. Moreover, providing personalized experiences as program rewards also holds the key to showing the customers that you have a good understanding of their individual needs.
The biggest challenge for insurance companies in almost every sector (health, auto etc.) is to educate customers on differentiating between the insurance products that are available in the market. Modern customers typically do not compare insurance products based on features but on the price, except a few ones who actually give significance to understanding the features.
As a result of such customer tendency, insurance companies are rather tempted to compete based on the product price. With increased focus on cost management so as to keep the product offer price competitive, insurance companies divert focus from the more crucial area of customer service, thereby leading to customer churn.
Secondly, it must be understood that taking insurance is more like taking a subscription for a specific time frame. Insurance companies often overlook the customer after sale of their product and focus more on other potential customers. Their major interaction with the existing customer comes only when it’s time to renew the insurance.
“As per a customer survey, 71% insurance industry customers agree to have interacted with their service provider rarely only once in an year“
Insurance policy bearers though have more interaction with their banking services partner as compared to their insurance distributor. Maintaining constant communication with the customers to keep them engaged is thus another challenge insurance companies face.
Insurance customers have a definite set of expectations from their insurers and hence their decision to buy a policy from an insurer is based on diverse factors. A survey done on 32,715 insurance customers revealed some interesting facts on customer loyalty. Let’s analyze the key takeaways from the survey.
“Competitive insurance pricing came out to be the top loyalty driver for 52% auto insurance, 50% home insurance and 38% life insurance customers”
So, policy pricing definitely holds importance as a significant percentage of customers evaluate insurance policies in terms of affordability. Availability of digital comparison tools nowadays has enabled customers to make comparisons and evaluate insurance offerings on the basis of price to get the best deal. Insurance loyalty programs thus need to be designed by accounting for the fair & competitive price factor – be it auto insurance loyalty program, health insurance loyalty programs or some other.
“Also, 57% customers agreed to share additional information with their insurance service providers in return for extra benefits.”
Out of these, few of the survey participants showed interest in knowing how their data would be used by the insurance company and how secured it would be. Hence, insurance service providers need to be committed to ensure absolute data security if they actually want to gain that trust.
“44% of customers said that they expected their health insurance provider to provide personalized advice on staying healthier.”
This clearly indicates how crucial is it for the insurance customers to get more value for the money they pay. It thus automatically becomes crucial for insurers to not only provide personalized advice but also leverage technologies like Big Data, Analytics etc., to personalize the customer interactions as well to get even better results.
Massive customer data holds tremendous potential to help insurance companies to drive their retention strategies. By creating rich profiles of customers using large volumes of actionable data, insurers can get a closer look into their customers and accordingly formulate engagement strategies that help drive revenue. Insurers thus have quite some opportunities to create a strong & sustained relationship with their customers. Utilizing the customer data, insurers can create a robust platform for ongoing engagement to reduce churn, increase loyalty and customer lifetime value.
So, it becomes extremely crucial for insurers to think out of the box in order to stay competitive and foster maximized loyalty. Embracing digital channels to ensure personalized customer engagement must thus be made a priority. Designing a loyalty program for your insurance customers is a powerful way to keep them engaged to your brand. Annex Cloud empowers insurers by providing the perfect platform for loyalty program design and implementation.
The leading customer loyalty and experience solutions company has assisted top global insurance brands to attain their customer retention goals besides helping them drive augmented revenue and ROI. If you want to learn more about Annex Cloud’s customer retention solutions for the insurance industry, feel free to contact our team.