How Insurance Agencies Can Boost Customer Retention to 95%
If you want your agency to be a success, making customer acquisition your top priority is a mistake. Customer retention is a far more profitable priority because keeping an existing customer is so much cheaper than going out and finding a new one. The average retention rate for the insurance industry is 84%, but the top companies in the industry are beating that average by 10% or more.
A retention rate of 84% may sound great, but that means you’re losing 16% of your customers per year. Let’s say your agency has 50 customers. If eight of those customers walk out the door every year, that means the first eight customers you bring on board aren’t improving your business so much as they’re making up for your losses.
According to The Independent Insurance Agents of Dallas (IIAD), insurance has higher customer acquisition costs than any other industry. Insurance agents can expect to spend 7 to 9 times more money acquiring a new customer than retaining an old one.
So how do you hang onto your customers? You give them good reasons to stay.
A recent McKinsey report found that more than 80% of all shoppers use a digital channel at some point in the buying process. Unfortunately, another study reported that 75% of insurance shoppers ran into trouble when purchasing insurance online. That means that customers want digital options to buy and manage their insurance products, but they aren’t getting those options.
The above studies refer to insurers buying directly from carriers, but the need for agencies to digitize is if anything even greater. After all, customers choose agents over direct purchase because they expect something extra from said agents, so if you don’t even provide a basic requirement like an insurance dashboard, customers will wonder why they bothered. And if you lose new customers because they get frustrated and give up on your antiquated onboarding process, you’ve just wasted all the money it cost to get them interested in the first place.
With a digital insurance dashboard, customers can use interactive online forms or even apps to fill out their paperwork – which will make it far less likely that errors will occur. These dashboards often include error-checking functions to further reduce the risk of typos and E&O.
The claims process is another area that’s crying out for digitization. A nondigital claims process usually means that either the customer is stuck filling out tons of paperwork, or there’s a long phone call during which an agent asks them questions and fills out the paperwork for them. Both approaches make it easy for errors to crop up, complicating an already complex process even more.
By providing a digital platform, agencies can stand out from the pack with a powerful unique selling proposition (USP). If your customers love your interface, they’re far less likely to pack up and move to another insurance provider, even if they can get a slightly better price elsewhere.
Once you’ve digitized your insurance platform, automating its processes becomes a lot easier. Automation is great for both agents and insureds: it saves agents time that they can then apply to revenue-generating tasks, and it opens up possibilities for insureds that can motivate them to stick around.
Automation tools can make your onboarding and renewal processes much faster and more efficient. For example, if you have a tool that sends auto-reminders to customers to fill out forms and applications, you don’t have to take the time yourself to check status and reach out to customers.
Insurance agencies can also take advantage of chatbot technology to help automate processes that improve their customer’s experience. Robotic process automation (RPA) is a terrific option for insurance agencies because it’s usually designed for easy setup and use, so you don’t need an in-house IT person.
Finally, consider automating your marketing messages. Physicians Insurance adopted an automation tool for sending monthly newsletters and raised its customer retention to 95% post-implementation.
Increasing wallet share is one of the best (and most profitable) ways to increase customer retention. Having multiple products makes customers “stickier” because moving away becomes more of a hassle. It also helps retention by improving customer experience.
Most people are very busy and don’t want to spend any more time than they have thinking about insurance. An agency that offers a “one-stop shop” for insurance can be extremely convenient and can save customers a lot of time. Consider:
- If they have all their insurance policies through one agency, then they have a single point of contact for any insurance-related questions.
- When it’s time to renew, they’ll be able to do it all at once instead of having to make time to speak with a bunch of different insurance providers.
- If something changes – for example, the customer moves to a new address – they only need to make one phone call or send one email to get all their insurance policies updated.
Naturally, selling each of your customers multiple policies will do wonderful things for the agency’s bottom line, too.
Customer experience is key to customer retention
That McKinsey report uncovered another eye-opening statistic, namely that satisfied customers are 80% more likely to renew their current policies than unsatisfied ones. Bain & Company (the inventor of the Net Promoter Score) has found in study after study that companies that prioritize customer loyalty are far more profitable than those that don’t.
Customer experience is a crucial part of customer retention, and the secret to providing a great customer experience is simple: give customers what they want. Your agency will then reap the rewards.