You don’t need a research report to tell you there’s a strong connection between customer loyalty and profits.
But new research helps quantify just how much loyalty is worth in the p&c business, why the value of a loyal customer is growing, how individual p&c companies rate in customer loyalty today, and what specific actions your firm can take to increase customer loyalty.
NEW TRENDS, NEW SENSE OF URGENCY
Chances are you’ve heard the old axiom that a 5 percent increase in customer loyalty can increase profits as much as 85 percent, and that it costs five times as much to win a new customer as it does to keep an existing customer.
A closer look shows that in the p&c industry, these numbers are magnified—and new trends are further increasing the impact of loyalty on the bottom line.
Without getting into the nitty-gritty numbers, here’s what new research is telling us:
• Loyalty and referrals are directly related, and insurance companies—particularly those selling personal lines—are more impacted by referrals than other businesses.
• The rise of social media and the ubiquity of smart phones, texting and instant messaging have exponentially increased the influence of word-of-mouth (both positive and negative).
• Younger insurance shoppers are even more influenced by referrals from their peers than older customers.
They are also less price-sensitive, less responsive to traditional marketing such as advertisements, more likely to gather information about insurance companies using online sources, and more likely to switch companies than baby boomers.
Finding creative ways to keep these young consumers loyal will be the key to long-term success for p&c companies and agents.
• Maintaining customer loyalty is a growing issue for agents as well as insurance companies.
The younger the consumer, the less likely they are to buy insurance through an agent at all, and the less loyal they’re likely to be if they do buy through an agent.
MORE LOYALTY INITIATIVES, BUT MANY MISS THE MARK
These trends are not lost on insurance company executives, and that is why customer satisfaction, customer experience management (CEM) and voice-of-the-customer (VoC) initiatives are now receiving top billing on the corporate agenda. Executives with titles such as chief customer officer and vice president, customer experience, not only have the ear of senior management but are also getting a seat in the C-level suite or on the board.
Clearly, customer loyalty has become a focal point.
Read the full article here.