Customer retention has long been a struggling area for insurers. As such the team here at Ello recently surveyed over 2,000 consumers to uncover how valuable a customer is to a brand over the course of their lifetime. We looked at what customers are looking for in an insurance provider and, most importantly, what are the key factors ensuring they become loyal customers. If insurance companies chose to ignore customer loyalty in the insurance industry, they are going to face great financial losses.

It’s a fact that retaining existing customers is more cost-effective than acquiring new ones. Given that the average consumer spends around £417 per year on insurance, it pays for providers to invest in their customer retention strategies. Now is the time for insurers to shift their focus and prioritise loyalty for a positive impact on their bottom line. In this article, we explore what insurers should be doing differently to instil customer loyalty.

Shocking data about customer loyalty in the insurance industry

Do you know how many customers are disloyal to their insurance providers? Recent research we commissioned revealed fewer than one in 10 respondents feel like they’re a valued customer to their insurer. As many as 44% admit not being loyal to their home, car, or life/health insurance providers.

To try to save the situation, the Financial Conduct Authority (FCA) had to step in by publishing new rules on insurance pricing practices. Following years of complaints, the FCA had to ensure loyal customers don’t end up paying more for services.

According to the same research, one in five research respondents also confirmed they’re rarely offered better deals to stay with their providers for multiple years. Moreover, 14% feel it pays to be loyal to their insurer, echoing the need for a policy shakes up.

How to overcome CX challenges in the insurance industry?

When it comes to ranking customer loyalty across various sectors, insurance providers don’t currently fare well. Our data confirmed consumers are least loyal to their insurance provider compared to their telecoms, finance/banking, retail, and utility providers. Supermarkets currently come out on top, presenting a great opportunity for insurers to adopt some key learnings from the sector.

Various factors are impacting customer loyalty, from poor customer service, unethical practices, and a lack of trust to a single bad interaction. However, insurers must first ensure a customer-centric approach is adopted to increase rates of retention. Here are three essential steps they should take in this journey.

1. Use the data available

In recent years technology has completely transformed the way the insurance sector operates and has presented an exciting opportunity for providers to really hone on consumer behaviours. Nevertheless, many aren’t currently utilising the data available to create bespoke experiences for their customers. Without a doubt, using data could help to maintain loyalty and improve the overall service experience.  

2. Highlight your values

It’s essential to let your customers know what you stand for. Our research found customers prefer brands with strong values. They want the brands to be ethical and socially responsible. In the research mentioned above, we found that one in five customers admit they want the brands they use to take an active stance on environmental issues. The same number would leave a brand if it engaged in unethical practices. Insurers should, therefore, make a clear stand on their values and showcase them to customers.

3. Reward customers throughout their lifecycle

an image showing hands holding a gift as a symbol of customer loyalty.

Insurers need to look to other sectors that are performing well in customer retention and take note of things they’re doing. Price and values will always be key influencing factors across the board, but what makes a winning CX brand is also a loyalty programme ingrained in the business model.

Think Tesco, Vodafone, Nando’s, Starbucks and Monzo, each of whom reward their customers for sticking with them long term. Some of their initiatives include free meals, free coffee, discounts with other like-minded brands, and more. These are all small and inexpensive solutions that make customers feel more appreciated and drive engagement in the long run.

Final thoughts on customer loyalty in insurance

Loyalty is fragile and needs to be earned continuously. Furthermore, consumers are becoming increasingly selective when it comes to their buying habits. Brands across all industries are taking this into notion and designing strategies to overcome new challenges. Insurers should learn from companies that are leading on the loyalty front and utilise the available resources. Otherwise, they might start losing their customers.

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