As Bain Fellow and founder of the Net Promoter System, Fred Reichheld, famously wrote:
“…a 5% increase in customer retention produces more than a 25% increase in profit. Why? Return customers tend to buy more from a company over time. As they do, your operating costs to serve them decline.”
Historically, customer relationships have not been a priority for life insurers as captive agents were viewed as the relationship owner. While this approach made sense a few decades ago, it has become increasingly less effective as life insurance sales and distribution began shifting to independent advisors.
Today, the value of ongoing customer engagement is well documented across industries, and research has demonstrated a direct correlation between engagement and business results. Carriers that do not have a post-sales customer engagement strategy are missing opportunities to identify additional sales opportunities, build strong customer relationships, and increase profitability.
Benefits of Customer Engagement
For life insurers, customer engagement delivers both hard and soft benefits, most of which can and should be tracked and measured. Benefits of engagement range from increased revenue to brand loyalty.
The Society of Actuaries (SOA) published a report on engagement that concluded:
“Engaged customers receive benefits such as health, longevity, financial wellness, and delightful experiences. Data from early adopters among insurers show that increased customer engagement results in lower claim costs, better persistency, brand recognition, and growth.”
There are several ways to measure the benefits of a customer engagement strategy, including:
- Persistency – akin to retention, it’s a ratio of total policies sold versus the number of policies that are renewed or in force. A strategic customer engagement program helps improve persistency by increasing customer satisfaction and renewal rates.
- Cross/upsell opportunities – engagement can identify opportunities to promote relevant products and services at a time when the customer is likely to be receptive. For example, upon the birth of a child, a growing family may need more life insurance coverage. Timely and targeted marketing increases the likelihood that a customer will increase coverage and/or apply for relevant new products.
- Lead generation – happier customers are more likely to recommend a company’s products and services to friends and family. In addition, these types of leads typically lead to easier customer acquisition.
- Lower claim costs – the impact of a customer engagement strategy on claims should not be underestimated. Providing programs that improve customer health lead to a better claims experience which ultimately lowers the cost of claims and increases persistency.
- Brand recognition – engaged customers are far more likely to not only recognize your brand, but also feel affinity for your company. Over time, and with a smart engagement strategy, recognition grows into brand loyalty.
- Growth – data from Gallup revealed that “a customer who is fully engaged represents an average 23% premium [bonus] in terms of share of wallet, profitability, revenue, and relationship growth compared with the average customer.”
Your customer engagement strategy should be delivering measurable results in each of these areas, and this requires a platform that can capture and analyze the data.
Zinnia Engagement & Loyalty
The leading SaaS engagement product in the life and annuity market, Zinnia Engagement & Loyalty is purpose built to educate and motivate customers to improve their financial, physical, and emotional well-being. The platform is powered by behavioral science and positive psychology to build customer loyalty and repeatedly draws customers back to the platform with its highly appealing, gamified experience.
By providing an engaging and valuable customer experience, carriers benefit from measurable ROI, improved key metrics, and valuable zero party data.
For more information about how Zinnia Engagement & Loyalty can jumpstart your customer engagement strategy and begin delivering results, please visit the following resources:
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