Build Stability: How to Use Digital Tools for Better Customer Retention

Customer loyalty and retention are essential for stability in a rapidly changing world — and the world for property and casualty insurers is undergoing bigger changes than most.

Steadily decreasing auto insurance numbers, pitted against rising property insurance claims from extreme weather events, are leading to a state of uncertainty in which the bulwark of customer loyalty matters more than ever.

Add the revolution hitting insurance practices through the rise of insurtech and digital insurance approaches, and the industry is seeing changes unprecedented in its multi-century history.

But how can insurance companies build the stable ground of customer loyalty? How can they “hack retention,” as Worldwide101 founder and CEO Sandra Lewis puts it, thereby gaining more value from maintaining the customers they have than from chasing new ones?

Here, we look at some of the best practices surrounding customer loyalty and retention in the digital context, exploring ways to build reputation and keep customers coming back in an uncertain world.

Why Digital Affects Loyalty More Than Ever

The rate of new customers entering the P&C market has been slow for several years.

In 2014, a Bain & Co. survey found a total of 2-percent growth in property and casualty insurance as a whole: 4 percent in home coverage and just 1 percent in auto, according to industry analysts David Whelan and Sean O’Neill. Those numbers haven’t changed much in the years since, making retention of existing customers a must for predictable revenue.

Retention promises better value, as well. According to IBM social business manager Kimberly Trimble, insurance companies spend seven times more on attracting new customers than on retaining their existing ones. Loyal customers who attract friends and family to the insurer via word of mouth can greatly reduce the cost of finding new customers while continuing to provide value to the company with their own business.

Although retention beats attracting new customers on several metrics, embracing digital tools to improve retention and differentiate their brands hasn’t been P&C insurers’ top priority.

To date, “insurance customers who rely exclusively on digital channels tend to be less loyal than those who use multiple channels,” according to Henrik Naujoks at Bain & Co. As a result, many insurance companies have chosen not to invest in digital approaches.

The right digital approach, however, solves a number of problems:

  • It allows P&C insurers to gather and analyze data more easily, turning raw information into real solutions for its most loyal customers.
  • It enables companies to de-silo themselves, facilitating the creation of a strong omni-channel strategy that boosts retention regardless of the channel contact pattern customers prefer.
  • Both of these outcomes help companies boost their bottom lines by retaining current customers and encouraging the word of mouth that attracts new ones.

Customers like digitally based loyalty programs as well: 55 percent say that a loyalty program is important to their decision to stick with their P&C insurance provider, according to Ian Horsham.

Yet many remain uncertain whether their insurers even offers a loyalty program, despite the fact that digital communication makes it easier than ever to provide access to such programs.

Digital isn’t insurers’ only tool for attracting customers, and it shouldn’t be. But in today’s world, it’s a tool that cannot be ignored.


Best Practice No. 1: Get Focused

Some companies continue to take a “we might need this someday” approach to customer data collection.

In practice, however, this approach tends to obscure actually useful data and frustrate customers, according to Erik Deckers at GoDaddy. Curate which data you collect at each stage of the marketing funnel, and clean it periodically to update information, eliminate duplicate records and delete customers who have gone away for one reason or another.

Before swabbing the data decks, however, it’s important to determine what data is necessary to meet both customers’ needs and the company’s own budget. Lily Teplow at Continuum recommends asking questions like whether the information is critical to business operations, constitutes proprietary intellectual property, is required to fulfill business agreements or regulations, or “reflect[s] current, legitimate and useful business information or needs.”

“Data that fits none of these criteria may be suitable for deletion,” says Teplow.

Some insurance companies have leveraged what they track to offer more personalized experiences to customers — and to boost retention as a result. As Jonathan Crowl notes in Mobile Business Insights, insurers like State Farm have embraced telemetrics because the possibilities extend to the use of smart home devices like Google’s Nest. Offering customers discounts for using tools smart thermostats or moisture sensors attracts and retains the customers who are already interested in collecting and sharing personalized data.

When you organize and curate data intentionally, it becomes easier to track which customers can benefit from non-insurance ecosystem services. It also becomes easier to analyze the cost versus benefit of every service and product you provide, as well as where customers come from and where they go when they leave says marketing strategist Ben Jacobson.

“Your customer data is a look into their minds,” he says. “You can, and need to, put that knowledge to use.” By doing so, you can build customer loyalty for life.


Best Practice No. 2: Come Out of the Silo

“Avoid siloed internal structures,” says Bhavesh Vaghela, CMO at ResponseTap. “These barriers stifle collaborative learning and prevent organizations from getting a better understanding of the customer journey.”

Rohan Ayyar at LiveChat agrees. “A flexible omnichannel customer service ecosystem empowers your customers to have a response, personalized and seamless experience,” Ayyar says.

Omni-channel itself has become one of the best best practices in customer retention: Companies with a strong omni-channel presence retain 89 percent of their customers on average, Ayyar notes, while companies without an omni-channel strategy average 33 percent retention.

Part of de-siloing your organization is ensuring that everyone is speaking the same language, Betsy Bilhorn and Pierre Hulsebus of Scribe write. “Begin by establishing a common lexicon between all members of your team and all of your stakeholders so there is no misunderstanding or misconstrued intent or action along the way,” they write. When you do so, departments not only talk to one another about customers’ needs. They communicate.

While there are many ways to build an omni-channel strategy that works for your company and customers, integrating the customer retention management (CRM) system into the overall strategy — and making it accessible across departments — is a must.

A good CRM is essential to providing an outstanding customer experience, says Tom Smith, a research analyst at DZone. “Your customer-facing employees need to know what has taken place with this customer previously, so they can provide more personalized service,” Smith says. And a single, organization-wide CRM makes it easier to keep information updated, streamlined and instantly available for analysis wherever it’s needed.

Best Practice No. 3: Don’t Go It Alone

“Take partners with you,” DataArt senior vice president Alexey Utkin recommended in an article for PropertyCasualty360. “Digital transformation for an insurer is a group endeavor.”

To build the systems you’ll need for better customer retention in the digital age, it’s important to work with software as a service and other providers who can help you strategize, choose the right tools and implement them effectively.

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