Dogs are often considered loyal animals. They’ll stick with you through thick and thin typically regardless of how often you take them out for walks or give them treats. The same, however, could not be said for customers of the insurance industry – but this is through no fault of their own.
The insurance industry, fueled by competition and perhaps even desperation, often appears to value new customers more than the old ones. At least this is how it’s perceived to those who’ve stayed loyal to brands.
Just like a new puppy, the industry showers new customers with ‘love and attention’. In a bid to attract new customers it appears they’re willing to do almost anything. Mostly it’s all about price and dangling that discount in front of would-be customers to sign them up.
But insurers are being watched and regulators aren’t pleased about this practice. The Financial Conduct Authority (FCA) has taken steps to force insurers to improve renewal information to help customers make a better-informed decision about their cover needs and how much they should be paying.
Meanwhile the Competition and Markets Authority (CMA) has made a list of recommendations to tackle unfair loyalty penalties. These include naming and shaming insurers who overcharge loyal customers.
But it appears to not yet be enough. This week motor insurers, in particular, got criticised for still offering new customers a better deal on their quotes than those renewing their cover.
According to research commissioned by Go Compare Car Insurance, 50% of drivers think that it should be illegal for insurers to reserve best prices for new customers at the expense of loyal ones that are willing to stick to their insurer.
Most (61%) drivers that participated in the survey felt insurers treat their existing customers less favourably by charging those who renew their cover higher prices than their new customers.
This should be of serious concern to the industry. It’s all well and good attracting new customers but if you’re losing the ones you already have – then what is the point? Then you’re just participating in a vicious cycle of getting new customers all the time. Customers will soon play ball and just keep changing insurer to get the best deal. What’s the point in being loyal?
The good news is that loyalty can be retained in a number of ways and technology can help you with this endeavor. Here are just a couple of examples:
- Listen to your customers: One of the best ways of communicating and realising what people want is through social listening. It’s not just enough to have a Facebook, Twitter and LinkedIn account. You’ve got to see what people say online and react to that buzz. So, follow them back – it’s just one of the many ways to show them that you value them and care about what they say. With his kind of intel, you can tailor your products to their needs and keep them through better service and giving them what they want (not what you think they want).
- Reward them for their loyalty: Retailers, restaurants and travel companies often reward customers for their loyalty, but insurers tend not to do that and instead alienate current customers by charging them more. This is often to compensate for giving them a heavily discounted deal at the start of the relationship. There are lots of plugins you can add to your website to create a referral scheme where your current customers can recommend your product or service to their friends and family in exchange for a discount or reward points.
- Get an app: We’ve discussed the pros and cons of having an app here before. Getting customers to download an app could be beneficial to both the business and to them. It will enable you to collect data on your customer and they could also use the app to change their personal details, apply for more products or get questions answered through a chatbot. This will all help in giving the customer a better service experience which, if done correctly, will encourage them to stay.