In an environment where consumers are mainly driven by price and have easy access to compare the cost of policies, how does an insurance provider retain customers without a race to the bottom?
This question came to mind recently when I needed to renew a policy, just as this Econsultancy post came out.
The article looks at the efforts Direct Line Group are making to position themselves differently in a market typically focussed on price. Direct Line, who do not sell through price comparison sites, are currently running an extensive marketing campaign to highlight the ‘value’ of their products, rather than the ‘price’.
Assuming it is cheaper to retain customers than to attract new ones, how does a company differentiate itself enough to retain customers at renewal?
For the majority of people there is no need to communicate with their insurance companies on a regular basis. Assuming they do not have to make a claim for motor, home, pet or life insurance, policies are paid and nothing happens. With quick and easy access to price comparison websites and no relationship with your insurer, of course you are going to move to a more competitive provider at renewal.
Telematics insurers are in the fortunate position of being able to communicate with their customers on a regular basis. Some insurers vary the premium mid-term based on the driving patterns and behaviours of their customers, meaning there are opportunities for regular conversations with policy holders. This has led to higher retention rates for some telematics insurers above those of standard providers.
Insurers could use regular dialogue to encourage referrals and recommendations.
For most types of insurance, it is unlikely that everyone will be offered the same premiums. I have friends and family that have minor driving convictions, that travel a lot for work or live in a different postcode etc… All of these factors will affect their risk profile and therefore the cost of their policies. There is little point in my recommending an insurer to them based on price, when they will not get the same premium as I do.
But I would be able to recommend my insurer based on service and the narrative of the company. With all the data the insurance providers hold about me, they should be able to communicate a story which has a relevance to me, even when cross-selling services.
For instance, things like name, age, address, occupation, the car I drive, whether I drive abroad, whether I’m married, if I have children (and their ages) etc… are all relatively standard questions asked across home, motor and life insurance.
With this data an insurer could provide targeted messages to me as a customer to highlight the benefits of the insurance I have, for example a simple email once a quarter with a message like:
“We helped a married couple in Hampshire repair their damaged home after they were flooded. We also made sure their children didn’t miss a day of school. Watch this 90 second video with their recommendations on how to protect all your treasured memories.”
During the term of the policy, the messages could vary from making us feel comfortable and reassured to being concerned and more aware of negative outcomes. This could involve changing the message from “Here is how we can help you if things go wrong” to “How will your children cope if this happens?” for example. In doing so the organisation will not only reinforce my appreciation for their policies I have purchased and understand where it would be beneficial to buy new polices from them, but also go some way to maintaining a positive, personal experience of the company as a whole.
In a digital world where we are all facing an increasing lack of human interaction, it could be tactics like this that really help build trust and a connection with a provider, a clear way to stand out from the competition and encourage retention and recommendations.
Getting the message out.
We often see companies using retargeting methods to sell new things to us, but I’m not sure I’ve ever seen a retargeting marketing approach used as part of a retention plan.
With the vast amount of data insurance companies hold about me, profiling me (using Acorn or similar) should be very easy and accurate. This should allow for targeted social media adverts, backed up with e-mail and direct mail campaigns that reiterate the positive message of the value of the products they provide, not the price.
These messages are more shareable amongst my peers than one of price. The majority of my social circle are married, have school aged kids, live in the same area as me and are generally at the same stage of life as I am. Having a story we could all relate to, such as the family who got their home back after a flood, makes for easily shareable content.
And we all know the value of a positive referral.