With many consumers expecting from their provider, how do businesses within tough industries like the finance sector attract new consumers and keep them loyal?
M&S for business decided to carry out some Insight research with the aim of discovering what makes a successful customer acquisition and retention strategy. While it’s all well and good acquiring customers if you have an attractive offering, retaining those customers is equally as key for a successful business.
While winning the business of consumers is important, concentrating on retaining their business is equally as important. This is perhaps easier said than done especially in the competitive climate of the insurance industry, however, research has shown that the companies that are willing to go the extra mile to reward their customer’s loyalty are the ones that are more likely to succeed in the long term.
But what are the main reasons for customers leaving?
78% of the participants in our survey stated that a better price is one of the reasons for them to switch insurance providers. Other reasons suggested were that they were offered more extensive cover, were seeking better customer service or were offered an incentive (e.g. gift card/reward scheme) by the new provider.
While rewards can help gain new customers, they can also be used to retain the existing ones. 81% of our consumers that completed the survey felt more valued if their insurance provider surprised them with gift vouchers from a third party company to reward their continued loyalty, displaying its effectiveness with consumers.
Carrot Car Insurance use a variety of reward schemes for customer acquisition, retention and to encourage safer driving as they track driving behaviours using insurance box telematics where customers get rewards for their style of driving or if they refer a friend. Despite the stereotype that ‘black box’ insurance is mainly only suited to new drivers, Ed Rochfort, Product Director at Carrot Car Insurance, said the company “experience a 62% renewal rate from existing customers”, a higher rate compared to other telematics-based insurance providers.
Andrew Johnson, Director General of the UK Gift Card & Voucher Association, agrees, stating that “loyal customers buy more and are often willing to pay more for the service you provide. To increase loyalty from customers holding insurance policies, insurers need to recognise and reward their most valued customers. Loyalty schemes encourage not only customers to buy more insurance policies, but also make them more likely to recommend them to their friends”.
Customers have chosen your insurance company because it caught their attention and had value to them. As soon as you lose that attention or make the customer feel undervalued, a competitor can easily be ready to take the customer’s business from them. Maintaining some sort of customer retention strategy will help you to keep your customers interested in the long term.
M&S for business provide the ‘Insurance Replacement’ service which allows insurance companies to offer M&S gift cards as an extra incentive to their customers if they make a claim. For more information on Insurance Replacement, please feel free to get in touch with us.