Good customer retention isn’t just a “nice-to-have” for insurance agencies — it’s necessary for survival. Insurance has the highest customer acquisition cost of any industry (it costs up to nine times as much to acquire a new customer than it does to retain one). If your agency suffers a high customer churn rate, your profits will be eaten up by the cost of replacing those lost customers with new ones.
Fortunately, agencies can often improve customer retention just by making a few tweaks in the customer experience they offer — customer experience is closely correlated to customer loyalty.
The higher a customer rates their experience with a company, the more likely they are to repurchase (loyalty ratings in these charts are based on Net Promoter Score [NPS] survey results).
Try implementing some of the below customer experience tips and you’ll likely see your churn rate plummet.
Improve your customer onboarding process
First impressions matter a great deal. If customers find your onboarding process frustrating, tedious, and a waste of time, that’s how they’ll think of you and your services — probably forever. If even a small problem crops up later, the customer’s negative impression will make it more likely that said problem will inspire them to bail on you.
On the other hand, if you make that first encounter a pleasant one, your customers will be more inclined to think of you in a positive light. Unless you give them a good reason to think otherwise, this positive impression can make your customers far stickier.
To improve your onboarding process, review the entire process to see how you can change it to make it better or easier for your customers. For example, if you find out early on which industry your customer’s business belongs to, you can eliminate all the questions that would only apply to businesses in other industries.
You can use past onboarding experiences to identify rough patches and find ways to smooth them over. If there’s a questionnaire that customers often find confusing, write up a brief guide or offer to walk the customer through it live. Make this offer BEFORE the customer reaches out to you.
A good onboarding process is customer-centric: you’ve got to see it through the customer’s eyes to know if you’re doing a good job with it. Ask a few non-insurance-savvy friends or family members to go through your process in the customer role, and then solicit feedback. If there are points they find tedious, confusing or annoying, your real customers probably feel that way too.
Ask what customers want and give it to them
The only way to know for sure what your customers want from you is to ask them. Asking your customers what they want and then delivering on those requests accomplishes two important things: it’s excellent customer service, and it shows your customers that you listen to and respond to their concerns.
For example, when it’s time to contact a customer, you might use the phone, email, text, chat, fax, or even a drop-in visit. If you ask each of your customers which communication channel they prefer, you’ll be turning a simple contact into a positive customer experience. Incidentally, you’ll also increase your chances of getting a quick reply.
Many agents rely on phone calls to reach customers, but a growing number of customers are digital-savvy and prefer email or even chat as a way to communicate.
But don’t go overboard with digital — what customers really like are having both online and offline communication options.
A multichannel approach gives your customers greater flexibility. If you’ve embraced multiple contact methods, then your customers have the option to resolve simple queries by email or by picking up the phone to talk through the more complex ones, for example.
Underpromise and overdeliver
When you’re on the phone with a customer and he asks you to do something for him, the quick and painless way to respond is to say you’ll do it. However, think long and hard before you do so — even if the request is something as minor as emailing a copy of a document to the customer.
Making a promise and not keeping it is worse than not promising at all. When you say you’ll do something, you set an expectation in your customer’s mind. If you then fail to do it, not only did the customer not get what they wanted, they also now think you’re a flake.
For example, if you promise to email that document and then discover you can’t send it by email for legal reasons, you’ve now put yourself in the position of having to go back on your promise. Far better to say something like, “Let me check if this document can be emailed and get back to you.”
If a customer asks for something and you politely tell them you can’t do it, they may be annoyed with you at the moment, but at least they’ll see that you’re honest. If you can give the customer a good reason why you can’t give them what they want (for example, email is not secure enough to transmit this particular type of information), you may even turn a negative experience into a positive one.
Don’t commit to something unless you are positive you can do it, and then do it.
Stay in touch
Don’t wait for your customers to call you with a problem or question; instead, look for opportunities to reach out to them several times a year. Ideally, those contacts should be positive ones. For example, you might send an e-card to your business customers on the anniversary of the day they started their businesses.
Regular contact with customers accomplishes several things:
- You get a chance to see which ones are on the verge of leaving and intervene. If you can catch problems early, you’re much more likely to nip them in the bud.
- You’re keeping yourself in the forefront of your customer’s mind. If one of your customers is speaking with a friend and the friend mentions that she’s looking for insurance, your customer is more likely to think of referring the friend to you if you’ve spoken with them recently.
- It gives you a chance to uncover information that could affect the customer’s policy. When a customer makes some change to his business or buys a new piece of business property, it might not occur to him to report those changes to you — but if you speak with him once or twice a month, you can take the opportunity to ask what’s new in his business.
Still, don’t go overboard and call your customers “just because.” There’s a fine line between maintaining a dialogue and pestering your customers. The trick is to come up with meaningful reasons to initiate a conversation (or email, note, etc.).
Get smart about technology
Advances in artificial intelligence have produced some pretty incredible products and services that can help you provide a better customer experience. And the better your customer experience, the happier and more loyal your customers will be.
For example, there are bots that can give you 24/7 customer support capability, streamline your email list management, and manage customer follow-up. The cost of subscribing to these bots is far less than you’d pay to have a human employee handle those tasks, which means they’ll be saving you money in the long-term.
Bots and other forms of robotic process automation (RPA) have become part of our culture, and customers have come to expect them. Don’t disappoint your customers and damage your bottom line by limiting yourself to manual processes.
Visibly add value
Most if not all of your customers have no idea what you’re doing behind the scenes to get their insurance policies up and running. Many of your customers have likely bought insurance from a website at one time or another without ever having had contact with a human being. If they think of insurance as something that happens automatically, how can they possibly value all the work you put into providing it for them?
While you don’t want to spell it out to your customers every time you perform some task for them, it is a good idea to educate your customers a bit about what’s involved with setting up their policies. This could be as simple as briefly describing the three policies that might fit the customer’s needs and then explaining why Insurer X is best for them. Such a discussion not only shows the customer that you know your stuff, but it also proves that you’re putting real time and effort into the service they’re paying you for.
Even better, you can find ways to add value above and beyond just providing insurance. Here are some examples of value-added services insurance customers particularly appreciate:
These kinds of services can make your customers far “stickier” by providing something they can’t readily get elsewhere. After all, your customers can get insurance from any insurance agency — but can they find another agent who will come out twice a year and take photos of their business property for claims purposes?
Reduce churn by improving the customer experience
Reducing churn and improving customer retention comes down to giving your customers the best possible experience from the very first time you speak with them.
You may think your best customers are the ones who never talk to you and who auto-renew every year, but you’ll likely lose those customers the second they find a better deal elsewhere. Your best customers are the ones who interact with you regularly and who know just what you’re doing for them. Those are the customers who will not only stick around for life but will send you their friends and family as future customers.