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How Much are Your Satisfied Insureds Worth?

Posted on October 13, 2016 by Daniel Taibleson in Digital Insurer

insurance customer experience matters

Data supports happy customers as key to agency growth  

Customers these days have a lot of options.

When it comes to finding new customers, insurance agencies and carriers do not.

Growth is the name of the game in insurance, and right now, the game is getting tough. P&C carriers and agents like yourself are feeling the squeeze with a slowing population growth and latest Reagan Big I study revealing that organic growth has been on the decline for the last three years.

insurance trends vertafore technology customers

On top of that, there are really only three main strategies to pursue: acquisition, retention, and cross-selling products, which is basically a hybrid of acquisition (read new business) coming from existing customers (retention). As a principal agent and business owner, you know that you have to maintain laser like focus on whatever strategy you’ve selected if you want to achieve your goals.

Our goal at Vertafore is help independent agents grow their business by utilizing technology to help them save time, save money, attract new customers, and retain the ones they already have. We do that in a variety of ways, for example, our customer driven design process, but it’s not just our internal processes and procedures that add value, it’s also really important to us that we’re providing you with useful data that helps you make informed business decisions. So when it’s time to sit down and evaluate an agency management system or your agency’s growth strategy, you can feel confident that you have all the information you need. Stuck and looking for some guidance? Pick up the phone, give us a call, and we can help walk you through whatever is that you’re facing.

Now, onto the numbers!

This is how much a satisfied insured is worth…

Insureds who have bad experiences don’t stick around, they move on. In 2014, 39 percent of customers shopped for a new insurer, and that percentage is growing every year.

The insurance realm is a little “stickier” than a lot of industries; quantitatively customers have less propensity to switch insurers, but qualitatively we know that this might be due to the complexity of the process (put bluntly, the hassle it takes to change coverage/carrier/agent etc). But of those customers who shopped for new providers in 2014, 29 percent actually switched. That’s a pretty large number when you consider how much money your competitors and direct writers are spending on marketing and advertising to try and get insureds to switch.

We also know that nearly a quarter of your customers already consider buying insurance from online service providers. Nearly half want more digital options than what most agencies currently provide. And only 15 percent of customers are satisfied with their current digital insurance experience (Accenture).  

So just because customers of the insurance industry appear to be a tad “stickier” doesn’t mean you should take them for granted. As a matter of fact, it’s more important than ever to hang on to the customers you earn by exceeding their expectations and earning their loyalty. Highly engaged customers are essential for the long-term health and profitability of P&C insurers because they are measurably more valuable than those customers who are merely satisfied. 

How valuable? These customers are worth 2.7 times more in lifetime value than customers who are passively engaged with an insurer, and worth 6.8 times as much as dissatisfied, disloyal customers.

So what do engaged, actively loyal customers look like?

vertafore insurance agent excited

They might look like the guy above, maybe not, but you can recognize them by four distinct behaviors:

-They purchase. This one is pretty obvious; highly engaged customers pay for your valuable services and products. What you need to know is: How much MORE do they purchase from my agency? Get someone in your office to crunch the numbers for you. Look one level deeper than “retention rates” and look at what is being purchased, why, and how. 

-They interact. These customers maintain an ongoing dialog with your brand, providing valuable feedback. Feeding off the example above, and easy way to look at the value of an engaged customer would be to compare the purchasing habits and behavior of someone who subscribes to your agency’s monthly newsletter. What do their purchasing habits look like? Do they end up spending 10% more than non-subscribers? Do they produce more referrals? How are they interacting with your brand? Answer this question, and then figure out how you can help them do it even more. 

-They promote. Involved customers recommend your business to friends and family, and pass on your brand content through their social media channels. But please, do not bite off more than you can chew with social media. It is best to think of social media as a paid promotional channel, or in other words, assume that you will have to pay to have your messages seen by your audience on social media. Add value where you can but don’t force it and try to engage in a conversation where you don’t belong. Quality over quantity. 

-They stay. Customers who feel valued and taken care of stay with your company, and are more likely to purchase additional services and products from you. If you’re looking for retention strategies, here’s a fun blog post from Help Scout and a pretty amazing free e-book on exceeding customer expectations.

Use these four behaviors as goals when you develop plans to attract and retain customers. What short-term actions and long-term strategies can you use to transform passive customers into loyal, high-value clients who purchase, interact, promote, and stick around year after year?

You build lasting engagement with your customers through positive interactions, not just sales. By focusing on meeting your customers’ needs and exceeding their expectations, you create powerful positive experiences which improve retention, create cross-selling opportunities, and earn you valuable referrals. 

Turn customers into brand advocates

vertafore insurance satisfied insureds

Word of mouth marketing is still the most powerful form of marketing. The impact is undeniable. I’ll try and product or service my best friend recommends. And when I like something he recommends, I instantly tell my other close friends. You might not be able to become best friends with your customers (maybe some of you are) but that doesn’t mean you can’t provide them with an experience that has them singing your praises from a mountain top.

It all comes down to exceeding their expectations. We’ve said it before, but it’s so important to agency growth that we created a free guide to exceeding customer expectations and even more recently, we tapped Jason Cass and a few other industry experts to help us produce a customer expectations webcast. The webcast is on-demand so you can watch it at your convenience. We really hope that you find the materials useful. Simply click below to watch the webcast.

Watch Now

Nearly a quarter of your customers already consider buying insurance from online service providers. Nearly half want more digital options than what most agencies currently provide. And only 15 percent of customers are satisfied with their current digital insurance experience.

daniel taibleson vertafore big data analytics expert roundup

Daniel Taibleson

As a content marketing manager at Vertafore, Daniel acts as the Editor-in-Chief of the Vertafore.com blog, uncovering and telling stories about the intersection of insurance and technology.

 

 
 

 

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