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Are insurance providers building customer loyalty?

With the current regulatory focus on treating customers fairly and fair value, we can all think of companies across multiple industries that incentivize acquiring new customers by the fistful, yet do little to keep them. However, despite that high customer acquisition cost, there’s very little investment in building on that customer acquisition and creating loyalty and trust. Conversely, there’s significant investment in customer retention strategies, rather than on keeping customers because they absolutely love their experience. Take broadband, mobile phone and TV companies: everyone knows that if you cancel, a retention team will then offer you a better deal to keep your business. Making it difficult for the customer to cancel is actually part of the retention strategies of some of these companies. None of these practices show that these companies are loyal to their customers. 

For insurers, the measurement of business success is similarly flawed. They’re focusing on customer product acquisition, not customer satisfaction or their propensity to buy more. Here’s why insurers need to focus on customer loyalty, and how they can get there.

The difference between customer loyalty and retention

Retention is exactly as described, it’s a provider retaining that customer’s business. It’s certainly not a measure of satisfaction, it’s not a measure of customer value, nor is it even a measure of customer propensity to want to leave. Loyalty, however, requires a conscious effort by the customer: customers take meaningful actions to access the provider’s products, services and brand. Loyalty can be created by customer convenience, by their perceived value to the brand (recognition), by great customer service and experience, or simply the brand’s reputation. 

For example, take hotel or airline loyalty tiers. Customers will consciously pay more, be inconvenienced, and make buying decisions based on the fact that their airline or hotel chain recognizes and rewards them for their loyalty.

Within the personal lines insurance sector, carriers are still so slow to respond to customer needs. In the majority of cases, insurance companies are product centric, with their core admin systems built by product advocates and actuaries, and their products are built to protect the carrier profitability as a primary function and protect the policyholder as an adjunct.

This legacy culture and lack of responsiveness is just shocking. Take, for example, the recent challenges caused by COVID-19. Most carriers were either congratulating themselves because people weren’t driving anywhere and there was a rapid decline in motor claims, or concerned because everyone was at home and there was a 20% increase in shed fires, but this was countered in that burglaries and theft also significantly decreased. 

I certainly didn’t receive any communication from my providers, or any potential providers offering more relevant products, new services, or product amendments when there was clearly an opportunity for them to do so. It galls me that some 21 months on, the level of customer service by many companies is worse than it was pre-pandemic, and “the pandemic” is still their excuse for poor levels of service. 

How insurers can improve customer satisfaction

Now let’s look at the opportunity of doing it right. By eradicating their inside-out focus, and taking an outside-in approach by building customer satisfaction, loyalty and trust, insurance carriers could unlock so much more potential. 

In my family of five, we have 15 monthly insurance payments going out to 11 different companies across auto, household, pet, and warranty. Over the last few years, I changed nine of the 11 providers. Of the two I didn’t change, one I will always stay with as I had an excellent claims experience during Storm Desmond in 2015, and one I will be changing this year, as their customer service is non-existent (it’s actually customer avoidance). That in a nutshell describes the value of creating moments of delight and reassurance, rather than journeys of disappointment.

Most providers have an opportunity to increase wallet share (customer value management), and all have an opportunity to increase loyalty and retention (customer lifetime value), yet I see little or no evidence of them doing so.

Is this changeable? Absolutely. The ideal scenario for me (and all customers) is a provider I can trust that recognizes my customer value, and that I’m happy to reciprocate with loyalty as I know the experience and service will be great. 

Here’s how to make that happen: 

  • Offer a single, personalized insurance platform experience that changes with life events and is proactive in recognizing those changes
  • Make products easy to buy, and make it easy to understand what’s included in the coverage
  • Offer a single billing account
  • Reward customers for their loyalty
  • Build trust, and confidence, in the brand, and in the protection for customers and their families

At EIS, we have technology that addresses all of these points. It:

  • Is digital by design
  • Is customer centric in its DNA
  • Supports multiple lines of business
  • Is powered by turning data into knowledge and delivering great experiences
  • Embraces change and innovation at speed, enabling proactive prediction, not reactive repairs

For insurance companies, customer product acquisition isn’t the best measure of business success. By focusing on increasing customer satisfaction and building customer loyalty, insurers can capitalize on more growth opportunities. 

Want to find out more about how EIS can help you build customer loyalty, grow and transform? Talk to us.

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