How to unlock Customer Loyalty as An Insurer?

Customer needs are evolving faster than ever—and insurers face the pressing challenge of adapting just as quickly to stay relevant. The priority lies in widening the aperture and focusing on embracing the most impactful digital strategies that can help insurers foster customer loyalty and transform business retention into a potent value generator.

Industry overview

If there is one thing every customer-facing business relentlessly pursues, it is brand retention. After all, keeping customers is far more cost-effective than winning new ones. But, turning this aspiration into achievement is ten times more challenging and taxing for insurance incumbents for many reasons.

3 common Customer Retention challenges in the Insurance sector

1. As customers, we tend to prioritize the cost we bear for our insurance policies over who is actually the insurer. We try to maximize our savings in whatever ways we can and continue switching between insurance partners as per our needs.
2. Weeding through the amount of insurance providers that have flooded the market is a sheer pain point for customers. With a large pool of options to choose from, finding the optimal mix of services to choose makes for a difficult decision process.
3. Insurers continually confront the problem of simplifying the complex nature of insurance. Even the most easy-to-read policies bear some form of jargon and are difficult to explain. To complicate the matter even more there are many exceptions in exclusions, and failing to explain the insurance coverage in the simplest form causes insurers to lose customers.

To turn customers into brand advocates, insurers must continually work on three key agendas:

1. Pricing: Policyholders want to know whether or not they get a good deal on their insurance coverage. Insurers must focus on the broader market and peg their prices responsibly. This does not mean sacrificing quality but ensuring prices align with what customers are willing to pay.
2. Customer service: Customers expect fast, efficient, and personalized service in today's world. They don't want to wait on hold for hours or deal with automated communication systems that may miss the context. By continually improving service quality, insurers can show that they care about the experiences of their policyholders and are willing to go the extra mile to help them.
3. Uncomplicated offerings: Understanding insurance can be a rollercoaster ride through many details and intricacies that may trouble minds and instantly push them away. When offering insurance, companies must strive to break down insurance essentials in the most straightforward manner. By excusing baffling jargon, insurers can bridge the communication gap and create the foundation for more connected, amicable, and sustainable relationships.

To cultivate committed customers, scoring a ton in all these categories is crucial for insurers. However, it is a tall order to meet.

Tackling retention in a modern market

One of the largest challenges insurers face is how to retain customers in today’s market. Customer retention is a goal that requires a meticulous strategic effort. It is now commonplace for insurers to craft never-ending campaigns spanning across every channel that are backed by deep, analytical insights, and curate personalized offers that capture the pulse of the market.

But, creating touchpoints that attract, engage, and convert across consumer journeys is a tough nut to crack, especially for the insurance industry still reliant on obsolete systems.

Most insurance incumbents were not set up to deal with the digital age, making the industry notoriously complex. From IT infrastructure and back office processes to customer channels, almost every aspect of this industry is still built on outdated technology and poses adaptability issues. Consequently, it is a struggle to set up a new system or scale an existing one for insurers trapped in the cycle of processes over an aging and traditional IT infrastructure.

For insurers to sow brand loyalty and facilitate retention, they need to capitalize on the promise of evolving digital technologies and build the necessary infrastructure to address fluctuating customer needs. The road to getting there may be long, but it will pay off in the long run.

Top three Digital strategies for insurers that facilitate Customer Retention

By psychographic segmentation based on data, insurance providers can define the needs of various individual markets (first-time homeowners, college students, retirees, etc.) and create customized plans with desired features to attract and retain them. The external messaging can also be revolutionized with personalization, making customers feel heard and understood and fostering a sense of belongingness consecutively. So, simply put, if insurers think of customers, the customers will think of them.

1. Personalization at scale
   Customer experience thrives on personalization. Under any circumstance, customers are more likely to invest in brands that seek a deeper understanding of their target audience and shape more relevant and value-driven experiences. Through data capture and analysis, insurers can understand changing market dynamics, build an agile response mechanism in place, and curate personalized experiences that convert and sustain customers in the long run.
   
   By psychographic segmentation based on data, insurance providers can define the needs of various individual markets (first-time homeowners, college students, retirees, etc.) and create customized plans with desired features to attract and retain them. The external messaging can also be revolutionized with personalization, making customers feel heard and understood and fostering a sense of belongingness consecutively. So, simply put, if insurers think of customers, the customers will think of them.
   
   Case study: Lemonade Insurance, for instance, uses AI-powered chatbots to offer tailored policies to each individual based on their needs, leading to higher customer retention rates.


2. A bouquet of efficient, enhanced products and services
   The insurance sector draws a bad name for its tendency to resist change. Most policies offered by incumbents are static and lack options, discouraging customers from collaborating and triggering attrition.
   
   Today’s customers need fast, convenient, and hyper-relevant experiences across every channel. They need recommendations based on their interests, behaviors, and life stages. They want to be the ones calling the shots on what should be insured and for how long. Insurers must focus on reinventing products and services to adapt to evolving customers’ circumstances. They must continually expand offerings, incorporate multi-policy discounts, and simplify every customer journey stage. The winning formula for insurers lies in curating a personalized, omnichannel, customer-centric, and ever-evolving portfolio of products and services. And the bedrock of achieving is leveraging the data.
   
   With the aid of modern data-driven technologies, insurers can capture critical information across customer touchpoints and harness insights to build and scale their offerings at the speed of change. These insights can also drive essential decisions about choosing the right channel and time for delivering experiences, thus, showing customers that they are valued.
   
   Case study: Metromile, a pay-per-mile auto insurance provider, offers value-added services like real-time driving feedback and street-sweeping alerts, catering to unique customer needs and enhancing overall customer experience.


3. Competitive pricing
   First-hand digital data can significantly change how insurers price their products and how they consolidate their hold in the market. By scouring through insights and digging into their customers’ situations, insurance providers accurately perform a risk assessment and mitigation, leading to a lower insurance quote.
   
   The route of optimized pricing also starts with the IT estate of insurers. By doing away with obsolete, resource-heavy systems and pivoting to digital, insurers can save considerably on overheads and scale down the prices of products and services to directly benefit customers.
   
   However, a caveat must be noted. Insurers can bring prices down, but too low of a price can have implications and damage customer retention. Notably, there is a class of customers that looks for exceptional service irrespective of the cost. Reducing the price can cause customers to lose confidence in the brand and trigger a shift in their choice of insurance partner.
   
   Case study: Geico, one of the largest auto insurance providers in the US has been able to offer competitive rates to its customers by leveraging technology and maintaining a lean organization structure.

Top technologies enabling Customer Retention

Technology has been driving many seismic shifts in facilitating customer retention for insurers. Let’s go through technologies disrupting CX transformation for the insurance industry.

1. Big Data and Analytics: By extracting insights, insurers can tap into market behaviors and preferences. This, in turn, enables them to develop more personalized offerings better suited to customer needs. Big data analytics can help insurers identify at-risk profiles and take steps proactively to prevent them from leaving.
2. Machine Learning: ML can be effective for customer retention strategies employed by insurers. By taking advantage of data that customers are constantly generating, ML allows insurers to personalize better the products and services they offer each customer. ML can also identify early signs of customer dissatisfaction, allowing insurers to take corrective action before a customer decides to switch providers. Finally, ML can create predictive models that identify which customers are at risk of leaving and what steps can be taken to retain them.
3. Artificial Intelligence: AI is helping insurers retain customers and reduce churn. One way is through AI-enabled customer self-service platforms that provide real-time answers to policyholder questions, float new renewal terms and coverage options, and automatically file and track claims. AI can identify and nip the risks in the bud by measures, such as offering personalized discounts or proactively suggesting new products or services that might be of interest.
4. Robotic Process Automation (RPA): RPA provides insurers with a competitive edge in customer retention through superior customer service and enhanced efficiencies. RPA provides the ability to rapidly and accurately scale customer service functions while automating processes behind the scenes. RPA is also freeing up employees' time from administrative tasks so they can provide more personalized and valuable service to customers. In addition, RPA-enabled automated processes result in cost savings for insurers, which are passed on to customers through lower premiums.

Digital for Customer Retention: The opportunity bell rings for insurers

Incumbents who quickly adopt digital strategies and become early adopters of technologies will be best placed to retain their customers into the future. Digital transformation is no longer a choice but an imperative for companies looking to remain competitive in the years ahead. Are you ready to embrace change and make your insurance business thrive?