How insurance agencies can boost customer retention by 95%
The average retention rate for the industry is 84%, but top companies are beating that average by 10% or more.
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 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.
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 seven to nine 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.
Digitize
A recent McKinsey report found that more than 80% of all shoppers use a digital channel at some point in the insurance 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 the options they want.
Customers choose agents over direct purchases because they desire the guidance, risk advisement, and assistance that you can provide; however, insurance buyers are increasingly demanding an online insurance experience on par with other aspects of their life. If your agency can’t provide a basic digital experience, such as an insurance dashboard or client portal, customers will wonder why they’ve bothered. And if you lose new customers because they get frustrated and give up on your antiquated processes, 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 insurance applications and forms to fill out all 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.
Automate
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, agencies who move the entire application and renewal process online, will open up a door full of additional benefits for their clients. Aside from providing clients an easy-to-use, TurboTax-like experience for the insurance renewal process, clients can now enter all their application data digitally, allowing for answers to questions in one application to automatically map to others. This alone will save clients a significant amount of time (and pain) as they no longer have to answer the same questions over and over again on their insurance forms every single year. In addition, digital application software will track the progress of applications in real-time, which allows for agents to setup automatic follow-up emails to their clients based on how much of their applications have been filled out.
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.
Mike Furlong (indio@n6a.com) is the CEO of Indio Technologies, a platform that simplifies the insurance application process for brokers and their clients. The opinions expressed here are the author’s own.
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