How insurance agencies can increase customer retention rates

by  Lianne Trantz  |  18 May 2017

Customer retention should be a top priority for any insurance agency that wants to avoid experiencing a 'revolving door' of accounts.

We've mentioned in a previous blog post that customer acquisition costs five times as much as retention and that simply increasing retention rates is a sure-fire way to improve any agency's bottom line.

But how does an insurance agency go about improving its retention rates?

To optimize retention rates, aim high

Before planning ways to boost retention, it's worthwhile to set a benchmark.

According to an estimate from the Independent Insurance Agents of Dallas, insurance agents enjoy an average retention rate of 84%.

Insurance agencies, of course, regularly manage thousands of accounts - and the cumulative effect of account attrition quickly adds up. According to Accenture’s 2015 Global Consumer Pulse Research, customer churn in the life and property and casualty lines alone represented $470 billion in lost business last year.

Achieving a high level of retention success is therefore extremely important for agencies, and it is attainable by significantly improving the customer experience.

To get your agency started and to increase customer retention rates, try the following three customer experience improvement strategies.

1. Improve the digital and omnichannel customer experience

Providing customers with a satisfactory digital customer experience is simply a “must” to stay competitive.

However, this is something that most agencies are failing to deliver on.

Insurance brokerage remains, fundamentally, a middle-man business. In the modern, self-sufficient consumer environment - in which doing everything from independently buying a flight online to booking a car rental is considered the new normal - insurance brokers need to adopt a thoroughly customer-centric approach that clearly demonstrates the value-add of their in-depth expertise of the insurance market.

And in the fickle world of e-commerce, where 55% of website visitors can be expected to spend less than 15 seconds on a website, delivering the information consumers require on the website (rather than through a telephone representative) is essential to doing good business.

Delivering a true omnichannel experience - one in which the same, seamless, customer experience is delivered irrespective of whether a lead expresses interest in a policy from your company's Facebook app, your website, or any other channel you operate - is another "must" if your company wants to adapt to changes in the modern marketplace and increase retention rates.

Omnichannel customers are lucrative, spending up to 30% more than other customers. But, they expect information to be delivered to them on the spot, directly where they are shopping from.

Delivering a true omnichannel experience isn’t easy, of course. A variety of systems needs to be integrated, but it’s clearly a strategy worth investing in.

If your agency doesn’t have a mobile app, a means of contacting a broker through social media, or device-optimized versions of its website, it’s time to climb aboard the omnichannel bandwagon.

2. Optimize procedures for processing claims

Handling customer claims efficiently is key to building and maintaining customer trust. Inefficiently handling claims is a quick route to both losing existing customers and spurring negative online reviews that can undo your business’s ability to land inbound leads.

Research proves that customers that have negative experiences don’t waste time in moving on. Forrester found that 30% of customers that experienced a poorly managed claims process subsequently switched providers within a year. Besides having ramifications for your bottom line, poorly designed claim processes can have legal consequences if they result in delayed payouts. Such processes can often be attributable to a lack of communication between insurance line teams, legacy systems that necessitate substantial manual back-office work to process the claims, and a lack of standardization in how claims are collected and processed.

Bolstering the overall digital customer experience – which should include strong emphasis on bringing legacy systems to the cloud – should go a long way towards improving claims times. Getting ahead of the pack by ensuring that all teams are integrated and using efficient tools to process claims will improve retention rates and prevent reputation-damaging reviews.

3. Personalization should be a key focus

Customers expect to receive a personalized experience from their service providers, which could mean tailored offers, customized correspondence and personal consultation, for example. An end-to-end insurance agency management platform with full cloud integration, such as Novidea, provides all the tools an agency needs to make every touchpoint of the customer experience individually tailored to the client's requirements, needs and purchasing patterns.

Big data, predictive analytics, and developing thorough buyer personas are also important enablers of the journey to personalized customer experiences. Increased upselling and cross-selling capabilities are also two additional advantages of having a deep, personal understanding of your customer base, in addition to increasing customer loyalty and evangelism.

In summary

High retention rates are achievable for those who are prepared to adapt to their customers’ expectations. This is particularly true for insurance agencies where dealing with high account volumes is a simple fact of business.

Delivering a stellar digital customer experience, fluid claims processes, and personalized service are just three of the ways that agencies can stand out from the crowd.

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