M&S for business shares insights into its latest study on the best strategies when it comes to acquisition and retention schemes in the insurance industry.
The insurance industry is a competitive place, and, in such a market, it is increasingly important for providers to offer a strong customer acquisition and retention strategy.
M&S for business completed research into this difficult market to see which schemes prove successful and what customers actually want from their insurance provider. These are five of the things we learnt from our research:
1. Companies must offer something unique to their customers
Despite 95 percent of our consumer survey respondents stating that price was one of the most important factors in deciding which provider to choose, only 55 percent admitted that they went to the lowest priced provider.
Essentially, companies need to work hard to offer something extra provide value to the customer’s decision.
This is where the importance of loyalty and reward schemes are for companies to acquire new customers. Daniel Tamarjan, Online Marketing Manager of Freedom Health Insurance, says his company uses rewards, such as shopping vouchers, to ‘attract new customers and get referrals from existing ones’. When doing this, deciding the right scheme for your target audience is incredibly important.
2. Provide rewards for staying with the provider
Retaining the customers you have already attracted is essential for a thriving business. In such a fast-paced industry, the insurance companies willing to go the extra mile for their customers to reward their loyalty are more likely to succeed. Indeed, 78 percent of people switch insurance providers because they have been offered a better price. Still, as we established in attaining those customers, if you offered something more – like extensive cover or an incentive that beat another provider – your customer will stay.
Andrew Johnson, Director General of the UK Gift Card & Voucher Association, said that “loyal customers buy more and are often willing to pay more for the service you provide. To increase loyalty from customers holding insurance policies, insurers need to recognize and reward their most valued customers. Loyalty schemes encourage not only customers to buy more insurance policies, but also make them more likely to recommend them to their friends”.
3. Loyalty schemes are a great way to create brand advocates
A brand advocate willingly spreads your company’s message to current and future customers. People enjoy getting something as a reward out of recommending products to their friends.
The ‘refer a friend’ policy has become popular across a number of industries in recent years. This type of scheme gives a reward to customers who inform their peers of the company’s services which results in their friend becoming a customer themselves. Rewarding both the new and existing customer helps to build relationships at both ends of the spectrum.
Many companies use their own unique Refer a Friend Rewards Scheme to benefit their customers. For example, at Carrot Car Insurance “Every Carrot Card holder that refers a friend via our unique Facebook app will get a £40 referral reward for every friend that goes on to buy an insurance policy from us for the first time,” Ed Rochfort, Product Director, explains. “The number of friends drivers can refer and the amount of rewards they can earn is unlimited.”
4. Rewards help repair damaged relationships
Our research showed that customers become particularly disgruntled when their renewal insurance quote is higher than their original policy or if an issue is left unresolved and, therefore, more likely to defect to another provider. Customers require honesty and speed and motivation from the company to solve any issues.
Daniel Tamarjan from Freedom Health Insurance stated that the company only use physical rewards if the customer has had a difficult claims process. Identifying when a customer is having a bad experience is the first step, ensuring they feel that you have recognised how they feel via gifts and rewards is a great way to start building on that relationship again.
5. Make sure your service appears personalized
Customers don’t want to feel like part of hundreds or thousands of other customers. A study by Invensis Global Outsourcing found that customers want companies to communicate with them about things that are relevant to them, making it feel like they are being given a personalized service.
While it may be hard with a large amount of customers to offer an individualised service, loyalty schemes are great way to collect data to ensure you are offering the appropriate products and policies to your customer.
Andrew Johnson, Director General of the UK Gift Card and Voucher Association told us: “The most important thing is to make sure that the business is receiving all of the data available and carefully monitoring the information they get to improve their reward schemes going forward.” Offering awards above all else have to be attractive and attainable for your company.