Many companies spend a fortune on marketing and product innovation to attract new customers and keep existing ones. However, it seems that consumers don’t necessarily like what is shiny and new. Often they prefer what is easy, familiar and doesn’t make them think too much. It turns out that too many options for consumers can be bad business and can have a negative impact on customer loyalty. According to A.G. Lafley and Roger L. Martin, the trick is to turn propositions into habits, rather than choices. The focus needs to be on cumulative advantage.
How does that apply to insurance?
It means that insurance providers can’t count on customer loyalty as they once did. Yes, a lot of customers rely on automatic renewal so they don’t have to hunt up new insurance providers. But, times are getting tighter and consumers are getting savvier, so they hunt online for better value and better prices. Insurers and brokers need to capitalise on this and provide compelling products that are easy to understand, simple to buy, and that don’t have complicated fine print.
They also need to take research seriously. For example, studies show that most consumers search for and compare insurance in early January. Queries in early January are 20% higher than at any other time of the year. So this is the time of year when marketing needs to be kicked into high gear.
Insurance providers also need to consider that more women than men search for insurance at this time, so they need to create campaigns that cater to women’s needs to capture an interested market. It’s also a good idea to create separate campaigns that target men to capture a new audience. Both need to tap into consumers’ tendency to make decisions on autopilot, without too much thought and consideration. Improve gut appeal and you can improve your customer base.
Car insurance and customer loyalty: A match not made in heaven
The question facing the auto insurance industry in 2017 is how retain customers in a year when customer loyalty is projected to drop significantly. Loyalty among car insurance customers has been declining for several years now, but 2017 has the potential to see extreme losses. For example, according to a report from QuickPages, only one in seven customers intend renewing their car insurance policy with their current insurer.
Basically, 39 million people want to switch providers. The good news is that insurers and brokers have the opportunity to pick up 39 million customers. The best way to attract some of these ship-jumpers is to look at product pricing and value for money. According to the QuickPages report, 78% of consumers look at price above everything else. After price, consumers consider the extent of cover, so value-for-money is particularly important. It’s also important simplify the buying process online and over the phone.
Not for want of trying
Car insurance providers aren’t out to intentionally fleece customers. Sure, premiums have increased by 17% over the past year, but so have all sorts of other costs related to car insurance. In fact, car insurance is still cheaper in the UK than anywhere else in Europe.
Customers have to consider that if they want cheaper insurance, they have to sacrifice something else. The sacrifice is usually extent of cover or high excess payments.
Balancing consumer needs, consumer budgets and cover levels is tricky across all insurance products. So insurers and brokers have a tough time of it. Then they also have to content with advances like insurtech and on-demand insurance products that operate on an “as-and-when-needed” basis. Not to mention Brexit.
There’s no doubt about it, insurers need to adapt to changing economic, social and environmental circumstances, and they need to use research and data to do so. Evidence suggests they are doing just that. Hopefully that will reflect in customer acquisition and retention – soon.