What 1,199 Customers Communicated about Customer Loyalty to Their Insurers
Securing customer loyalty for the long term is one of the highest priorities for your business stability and growth. What if you had a road map that could help you navigate those challenges?
Such a road map has, in fact, been charted. What it reveals can help to inform your loyalty strategy and identify the tools you will need 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 your firm. (You can see their full paper, including the matrix, here. Customer loyalty is the vertical axis, and preferences for closeness are the horizontal axis.)
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 from them on how to serve each segment that are not quite as straightforward as you might expect:
- Those customers in the upper right quadrant of the matrix, defined by high loyalty to your firm and a high preference for closeness in your relationship, should be handled much as you would suspect. They are comfortable and happy in receiving consistent contacts from you across multiple touch points.
- Those in the lower right quadrant are a bit trickier. That group has a desire for a close relationship with your firm, but has a lower level of loyalty. This quadrant also featured the highest percentage of the 1,199 people surveyed, with just under 40 percent of all respondents reflecting this combination of attitudes. Obviously this is a desirable group on which to focus your communication strategies in hopes of increasing their lagging loyalty. In many cases, these customers feel that their preference for closeness in the relationship is not being reciprocated by your firm. For this group, you need messaging that consistently emphasizes the strengths of your service.
- The upper left quadrant are complete opposites of the lower right; they have high loyalty but seek a low level of contact from your company. The key here is to accurately recognize these customers for who they are at an early stage, and then treat them appropriately. You want to limit your contact points with them to as few as possible in order to not disrupt their satisfaction.
- Finally, the lower left quadrant is a real challenge (or a real opportunity, take your pick). They have low loyalty and prefer a low level of closeness in their relationship to your firm. Statistically, this was the second-largest group in the matrix at about 29 percent. The researchers actually identified customer inertia as being a factor for this group, so despite what many firms would instinctively turn to as a strategy with this quadrant, the recommended approach is putting emphasis on the high quality of your services in your messaging, but reaching out to this group with a low level of frequency.
One of the big takeaways from this research is that you have to be able to differentiate up front between attitudes among your customers. As customer service has increased in importance for today’s businesses, you may already be doing this kind of legwork. A second conclusion that is equally important, though, is having the means to carry out the communications strategies suggested by this study.
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