What Research Revealed about Insurers’ Customer Loyalty
Securing long-term customer loyalty is one of the highest priorities for an insurer’s business stability and growth. What if insurers had a road map that could help navigate those challenges?
Such a road map has been charted. What it reveals can help to inform customer loyalty strategy and identify the tools to execute it.
The academic team of Martin Mende, Ruth N. Bolton and Mary Jo Bitner[i] developed a matrix that shows the relationship between preferences from customers in how closely you are interacting with them and how that relates to their overall loyalty to insurers.
They analyzed survey data from 1,199 insurance customers, and followed up with purchase records from 975 of those customers. The data results in theories on how to serve each segment are not quite as straightforward as one might expect:
- Customers defined by high loyalty to your firm and a high preference for closeness in a relationship with their insurers, are comfortable and happy in receiving consistent contacts across multiple touch points.
- Customers with a desire for a close relationship with insurers, but with a lower level of loyalty, also featured the highest percentage of the 1,199 people surveyed, with just under 40 percent of all respondents reflecting this combination of attitudes. This is a desirable group on which to focus communication strategies in hopes of increasing their lagging loyalty.In many cases, these customers feel their preference for closeness in the relationship is not being reciprocated by insurers. For this group, it’s important to create messaging that consistently emphasizes the strengths of the insurer’s service.
- Customers who have high loyalty to their insurer firms but who seek a low level of contact from them are at an early stage. It’s important to treat them appropriately. Limit contact points.
- Finally, customers who have low loyalty and prefer a low level of closeness in their relationship with their insurers comprised the second-largest group in the matrix (about 29 percent). The researchers actually identified customer inertia as being a factor for this group. The recommended messaging approach is to emphasize the insurer’s high-quality services with a low level of communications frequency.
Differentiate Between Attitudes Among Customers
One of the big takeaways from this research is that insurers must differentiate between attitudes among customers. Customer service has increased in importance for today’s businesses.
A second conclusion that is equally important, though, is the necessity of having the means to carry out the communications strategies suggested by this study.
CCM Tools Allow Customer Loyalty to be Implemented
It’s an arrangement that mirrors what takes place in modern medicine. First comes the right diagnosis, and then a treatment plan follows. Customer Communication Management (CCM) tools allow the treatment plan for customer loyalty to be fully implemented.
As an example, consider the flexibility you need to be able to carry out the four strategies laid out above for each matrix. Your one customer communications solution needs to be able to produce multi-channel choices for delivery based on every customer’s preference. It could be in the form of a letter, an e-mail or a text.
Your solution needs to have the ability to avoid creating “silos of communications” within your company, so that the entire communications stream can be managed in a way that meets the customer’s expectations. You also can benefit by “right-channeling” messages, directing customers to the communications channel that is most appropriate in terms of effectiveness and cost.
A system that is going to clear such a high bar will need to be well conceived if it is going to be cost-effective as well as business-effective, and offer advantages like giving front-end users within your company a larger role with less need to rely on IT. Such a solution will also need to make your content library flexible and easy to use across multiple settings and formats.
Getting total alignment on all of these factors is the key to making customer communications a part of your business success both now, from the aspect of efficiency, and in the future, from the standpoint of reinforcing customer loyalty. When you successfully match that functionality with properly targeted messaging strategy, you’ve put your company in an ideal position to retain your customers.
[i] Martin Mende, Ruth N. Bolton and Mary Jo Bitner, “Decoding Customer-Firm Relationships: How Attachment Styles Help Explain Customers’ Preferences for Closeness, Repurchase Intentions, and Changes in Relationship Breadth,” Journal of Marketing Research, February 2013