Loyalty Blogs

Effective Tips to Acquire & Retain Customers in the Insurance Industry

  • Posted on January 9, 2024 by Robert
  • Reading time about 5 minutes
Insurance Industry

Insurance companies often struggle to attract new customers & retain them as every insurer offers similar services or products. We know that insurance is a low-contact industry and insurers hardly interact with their customers, which makes it more challenging to boost customer loyalty.

However, with the evolution of technology and the introduction of digital solutions, insurers can interact frequently with clients, collect their data, and offer personalized services with loyalty programs. In this blog, we will learn about the ways and technologies that insurers must use to solve their customer acquisition and retention problem & boost customer loyalty in the insurance industry.

Understanding Customer Loyalty Problems in the Insurance Sector

When we talk about insurance firms, attracting new clients is becoming more costlier over the years than retaining old ones. This number increased from 15.8% of gross written premium (GWP) in 2018 to 17.9% in 2022. Insurers are investing in customer acquisition rather than retaining old clients even after losing about 16% of their customer base every year.

One problem of insurance companies is that new customers might get heavy discounts but the price tends to increase with every renewal which punishes clients for being loyal. This is one of the reasons why customers would rather shop around for new and better premiums instead of staying loyal to a single insurer for long.

Talking about recent years, more and more insurers have been putting on efforts to boost customer loyalty by personalizing quotes and offering incentives. Research by Earnix says that 60% of the insurers that offer higher levels of personalization witnessed a significant increase in revenue per customer and 81% reported personalization is the main key that has brought the increase in customer retention.

Strategy for Customer Acquisition in Insurance

As we know the cost to acquire customers is quite high in the insurance industry, so we should be aware of techniques that can help insurers focus on the right contacts and reduce the acquisition budget. One effective way is lead scoring where you identify the most prospective customers from a list of contacts. Moving ahead from traditional lead scoring, we can use predictive lead scoring based on machine learning that captures customer behavior patterns more precisely.

Predictive lead scoring is a marketing approach that helps to identify sales leads that are most likely to convert by predicting clients’ future behavior based on past actions. To build a good loyalty program software solution aligned with a predictive lead scoring system, insurers can either make use of off-the-shelf lead scoring systems or custom lead scoring.

The ready-made systems are easier to implement & can integrate with CRM via APIs but integration capabilities are limited and have security concerns as you are sharing data with a third party. On the other hand, custom lead scoring can help build your infrastructure & choose the data source. The only problem is it is a long and expensive process.

To make predictive lead scoring work accurately, you need the data that must be fed to the machine learning models used. You need demographic data, subscription history, and engagement & activity. By using this data, you can train the models to choose the best leads. After acquiring the customers, the next step is to retain them.

Strategy for Customer Retention in Insurance

The insurance industry is known for high rates of customer dissatisfaction which makes customer retention a big challenge. Clients are usually offered insurance services that they can hardly differentiate between providers. Clients often make their choice based on price difference and they are likely to switch when they find a better price.

However, insurers are working to modify customer perceptions and the introduction of digital platforms helps to communicate more often with consumers and provide personalized quotes and incentive programs.

– Personalization

Personalization can be a great help but sending personalized quotes doesn’t mean it can be created from imagination. That is why, getting customer data is important in the insurance industry.

The first thing is to focus on data collection & monitoring where carriers can obtain new customer data using forms on digital platforms at the time of registration. The same data will be used to create the starting quote for clients. The next steps are behavior tracking mechanism and data analysis & usage.

– Incentive programs

Rewarding clients with incentives is another way to keep them loyal. Different forms of rewards can be used to encourage customers & make them interact more often with the insurers. If you are offering well-structured & engaging incentive programs, clients are likely to spend more or get expensive premiums just to get rewarded.

For instance, incentives in car insurance will reward users with incentive points every six months for safe driving hours, low mileage, safe stops, etc. & same can be used for travel, gift cards & more.

Another example is the incentive programs in health insurance where you can reward clients with a healthy lifestyle, keeping them engaged, loyal, and happy. Vitality is a UK-based company that enables customers to link their activity trackers & earn points for being active.

Closing Statement

After going through the blog, we have learned that insurance companies must keep focus on customers’ needs and leverage technology to offer better experiences. As customer loyalty and satisfaction revolve around a holistic experience with the brand, it is crucial to go for proactive engagement with tailor-made loyalty incentives keeping focus on overall experience as well.

Novus offers a wide range of dedicated insurance loyalty programs that help insurers across the globe acquire and retain customers effortlessly. A well-executed loyalty program can be a great help not just in expanding a higher customer base but also in differentiating the brand from competitors.

If you are planning to drive customer growth for long-term sustainability, connect with our team & build a loyalty program for credit unions or insurance firms to attain higher customer retention, better engagement & offer personalized experiences for customers.

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