10 insurance customer retention strategies for long-term success
Data shows that the cost of acquiring new customers continues to rise, a trend compounded by the current economic downturn. In these market conditions, insurance carriers who come out on top are the ones who offer the best customer experience and demonstrate continued value to policyholders. It’s, therefore, imperative for insurance carriers to get ahead of the issues that could lead to customer churn.
In this blog, we’ll uncover how advanced insights from digital experience intelligence (DXI) connects the functions you need to surface insights, continually optimize the customer experience and provide greater value, ultimately leading to improved customer retention in insurance.
Key takeaways
A great onboarding experience keeps your policyholders coming back
Regular, purposeful communication supports improved customer retention
Building experiences around implicit and explicit feedback increases engagement and satisfaction
What is customer retention in insurance?
Customer retention in the insurance industry is the process of insurance carriers keeping policyholders engaged, satisfied and loyal to your agency over a period of time. It involves efforts to keep policyholders focused on your brand, product and services, reducing the likelihood of losing them to another insurance provider.
Focusing on retention helps insurance carriers build long-term relationships with policyholders, increases the customer lifetime value (CLV) and creates a loyal customer base. Successful customer retention strategies in the insurance industry are driven by digital experience intelligence, enabling carriers to:
Prioritize policyholder and customer satisfaction
Promote ongoing engagement
Deliver personalized experiences
Why is insurance customer retention important?
Customer retention plays an important role in the profitability of your insurance agency, especially because it’s more cost-effective to retain existing policyholders than acquiring new ones.
Research from Harvard Business School shows that increasing customer retention rates by just 5% can grow a company’s profits by 25% to 95%. For insurance carriers specifically, it costs 7-9X more to attract a new policyholder than to retain one, making it the highest customer acquisition cost of any industry. So it’s no surprise that retention rates are what separates thriving insurance carriers from struggling ones.
👉🏻 See how to calculate your insurance customer retention rate.
How to retain insurance customers
Below are 10 insurance customer retention strategies you can implement to keep policyholders returning to your agency when it’s time for renewal or when a need for new policies arises.
1. Have a strong onboarding process in place
A Forrester and Adobe study found that when businesses prioritize providing a great experience to clients, they typically see two times more annual growth when it comes to customer retention, repeat purchase rates and customer lifetime value compared to other organizations. With that in mind, there’s no better place to focus on building an excellent customer experience than at the beginning of every user’s journey—their onboarding.
First impressions are everything when building trust with policyholders. The onboarding process for your website or mobile app doesn’t just set the tone for the customer experience that follows—it’s also your first opportunity to clearly demonstrate the value you provide and showcase why your products and services are worth long-term investment.
A good onboarding process helps policyholders understand how to use your products and services effectively without causing them to feel intimidated or overwhelmed. Providing clear, simple guidance reduces the likelihood of frustrating policyholders and boosts their confidence early.
Think of the onboarding process as a relationship-building exercise where you can establish a personal connection with policyholders and create a sense of loyalty and trust. When customers experience value early on, they’re more likely to renew their insurance policy or return when a need for a new policy arises, and less likely to churn before realizing the benefits.
Below are a few ways insurance carriers can use digital experience intelligence to ensure their onboarding process is best-in-class.
User behavior analysis
Analyzing exactly how policyholders interact with your website or app during the onboarding process lets you identify common roadblocks and spot frequent drop-off points to understand where they are facing challenges. Behavior analytics can be used to optimize the onboarding flow for a smoother, more enjoyable experience.
A/B testing
You can test a variety of onboarding approaches with A/B testing, such as different flows, content or interactive elements. Using the data from A/B tests, you can measure which strategies contribute to a successful onboarding experience and incorporate those into your website or app design to improve the overall success rate. Advanced insights from DXI fill the gap in traditional A/B testing so you can make more insightful, data-driven decisions.
Heatmaps
Similar to user behavior analytics, heatmaps help you understand where customers are performing most of their actions. By viewing a visual representation of this information, you can easily see which areas of the digital onboarding process are the most engaging and which areas need improvement.
💡Expert tip: If you want to track trends in engagement or the impact of design changes on a specific element, or you have an interactive responsive website radically altering the layout of elements on different devices based on user actions, then you might want to consider an interaction map, the next generation of heatmap tools.
Customer journey mapping
A detailed customer journey map provides incredible insight into the onboarding process from the perspective of your customers. Charting user journeys this way lets you identify and address user struggles and refine the onboarding journey to ensure a smooth experience that leaves a lasting positive impression. We’ll cover customer journey mapping in more detail later in the blog.
2. Increase customer communication
According to research, customer churn is the highest after the first year of purchasing an insurance policy and significantly decreases after four years. Keeping your policyholders engaged as they approach and pass these milestones is key to long-term customer retention success.
Customers report that the top reason they switch products and services is because they feel unappreciated. Regular, proactive communication shows policyholders you care about their patronage, but finding compelling, authentic reasons to reach out can sometimes be a challenge.
This is where digital experience intelligence comes in. Monitoring key interactions gives you the opportunity to reach out to policyholders in a variety of engaging, targeted ways:
Lead form submissions
Using digital experience intelligence, you can see when visitors complete a form, such as a policy quote request. Creating targeted communications for this audience segment gives prospects a warm welcome and immediately establishes a positive relationship.
Usage and activity
Understanding how users behave on your website or app opens up a world of opportunities for proactive, personalized communication. For example, if a user has been repeatedly visiting your auto insurance web page , you can send them recommendations that are relevant to auto insurance. Other examples include acknowledging when policyholders complete actions like filling out a feedback form or verifying their email address.
Inactivity
Segmenting policyholders who have been inactive for a certain period gives you an opportunity to deliver re-engagement emails, special offers or incentives to encourage them to return.
Policy renewal
Prior to a policyholders’s renewal date, send a reminder email with information on available upgrades or exclusive offers for renewing. Important account information, such as changes to a policyholders’s premium amount, should also be communicated ahead of time.
Completed purchases
Sending a thank you message after a completed purchase adds a personal touch that reinforces your customer’s decision. You can also follow up with related product recommendations, information about complementary services and features, and guidance on how to use or access the policy they purchased.
Special occasions
Sending a personalized birthday message or reaching out to celebrate key milestones and anniversaries is a great way to make policyholders feel appreciated.
These are just a few of the ways digital experience intelligence can help you identify patterns in user behavior and trends to inform your communication strategy. Making your communications more regular and personalized will help enhance customer engagement and satisfaction, ultimately leading to higher retention and stronger relationships.
3. Understand the customer experience and customer journey
Understanding how policyholders experience your insurance website or app is an instrumental part of customer retention. Identifying pain points and areas of friction lets you proactively resolve issues and create a smoother, more satisfying customer experience that boosts engagement and reduces the likelihood of churn.
See journeys clearly
Customer journey mapping lets you see customer journeys chronologically. This step-by-step visualization of interactions is ideal for highlighting where the customer experience is currently working as intended, and where it could be improved.
👉🏻For more information on customer journey mapping, download a copy of the guide Digital Customer Journey Mapping in Today’s World.
Create customer personas
Customer journey maps can be viewed through the lens of different customer personas that represent various segments of your customer base. Analyzing journeys this way can reveal the unique needs, motivations and pain points of specific customer groups, so you can refine flows to match—and exceed—their expectations.
A deeper understanding of the customer journey allows you to anticipate and satisfy the needs of your policyholders along every stage. By optimizing each touchpoint, streamlining processes and ensuring consistency, you can deliver a seamless, delightful customer experience that strengthens customer loyalty and encourages people to remain with your insurance company.
4. Gather and implement customer feedback
Receiving direct customer feedback is an invaluable opportunity to improve the overall customer experience. It’s also a chance too rare to pass up since only about 4% of dissatisfied customers will share their complaints with a business. The rest leave, taking their business—and potentially transformative CX insights—with them.
But the magic happens when you have a dedicated voice of customer (VoC) program for gathering and applying customer feedback across departments. According to Gartner research, companies with a VoC program spend 25% less on customer retention than those who don’t. It’s even more powerful when your VoC tool is integrated with a digital experience intelligence platform.
Using a digital experience intelligence platform lets you fully capitalize on the feedback your policyholders choose to provide. By integrating with VoC tools that through various channels, including email, feedback forms and in-app surveys, DXI combines quantifiable data about the user journey with customer sentiments, opinions and suggestions. Together, these provide valuable insights that help you improve the customer experience for policyholders and achieve better customer retention.
5. Build trust with policyholders
Trust is the foundation of a long-lasting, loyal relationship with your customers. It not only leads to repeat business and reduced churn, but also increases average CLV and transforms policyholders into brand advocates who will promote your insurance agency among their friends, family and digital networks.
DXI platforms give you the information you need to refine and optimize journeys in ways that build trust among customers, such as:
Personalization: Advanced insights enable personalized interactions that make policyholders feel appreciated and understood.
Real-time reactions: Understanding the actions policyholders take on your website or app creates the possibility of offering real-time support and enhanced responsiveness to widespread issues, showing them that their digital experience is a top priority.
Consistency: Ironing out issues that impact the customer journey across all platforms builds trust with policyholders in the reliability and dependability of your brand.
6. Cross-sell and upsell policies to create value
Proactively identifying and seizing cross-sell and upsell opportunities is another way of increasing revenue and fostering long-term customer relationships. Research shows the more insurance policies a customer has with an agency, the higher the retention rate. The same research shows a 50% reduction in churn rate by cross-selling more than one policy. When customers have two or more policies, they are more loyal than if they have one.
DXI enable insurance carriers to take a data-driven approach and ensure such offers are relevant and contribute to the customer experience rather than detracting from it.
Activity-based suggestions
Capturing the actions policyholders take while on your website or app can reveal the products or services they are currently interested in. Product views and clicks can all be reviewed to gain a clear picture of what’s relevant for each policyholder, enabling personalized upselling opportunities.
Behavioral triggers
By continuing to analyze how users interact along their digital journey, you’ll soon gain a deep understanding of the behaviors that precede successful purchases, including the actions users who purchase multiple policies often take. With this context at hand, you can set up triggers that activate cross-sell and upsell messages at specific touchpoints for policyholders on journeys that look similar to previous successful ones.
A/B testing
Experimenting with different cross-sell and upsell strategies can reveal what works most reliably for different kinds of customers. A/B tests will give you the data around which variations perform better, allowing you to optimize the rate of success.
7. Offer tailored insurance policies
Insurance is an industry that has proven resistant to change, making it challenging to embrace changes in customer preferences. Traditional insurance carriers are used to taking the one size fits all approach to product development and offering standardized products and services to their entire customer base. This approach hinders insurance carriers from offering personalized products and services to meet the needs of each customer.
Because today’s customer expects a personalized experience regardless of the industry, insurance carriers need to offer custom policies to meet individual customer requirements. Conducting regular policy reviews will help make sure the coverage aligns with the customer’s changing needs and lifestyle.
Below are ways advanced insights from a DXI platform can be used to offer enhanced products and services.
Develop data-driven strategies
DXI offers a wealth of data about your customers’ behaviors, preferences and pain points. This information can be used by product and service teams to prioritize improvements to your offering based on real user experiences.
Identify opportunities to innovate
Uncover customer pain points and identify unmet needs through advanced insights. For example, user interactions may indicate that policyholders are searching for a product or service that isn’t currently offered. Reviewing these interactions can present opportunities for innovation and developing new products and features.
8. Improve customer support
Digital experience intelligence plays a vital role in improving customer support. With a deeper understanding of how visitors behave on your website or app, you can refine your approach to customer support and make data-driven strategy decisions to improve outcomes for policyholders, leading to greater overall satisfaction and fewer negative experiences.
Real-time issue detection
Digital experience intelligence tools can monitor user interactions in real-time, allowing your customer support teams to detect and address issues as they develop. Taking a proactive approach can help resolve problems before they escalate and begin to affect churn rates.
Customer behavior insights
Understanding how policyholders behave on your website or mobile app lets customer support agents anticipate and address support needs. For example, if policyholders frequently visit the same FAQ page, this may indicate the need for clearer documentation or additional support resources.
Personalized support
Customer support agents can use digital experience intelligence tools to tailor their interactions with policyholders. Knowing a policyholder’s history, preferences and past issues enables support teams to provide more relevant and effective assistance, and prevents frustration by asking them to repeat details they already provided. According to research, 72% of customers say that having to explain their problem to multiple people is poor customer service—showing just how much your agency could differentiate itself by eliminating repetition from the support experience.
9. Offer renewal rewards
Digital experience intelligence can increase the attractiveness of any policy renewal rewards. Understanding customer preferences lets you tailor your rewards, enhancing the incentive to renew their policy with you rather than a competitor.
Enhance your reward offering
The first step in offering effective renewal rewards is to ensure that the incentives are relevant and attractive to your policyholders. Using digital experience intelligence to understand the performance of existing renewal rewards helps identify which are most popular among policyholders and provide a clear view of the rewards that provide the strongest incentive.
Personalize rewards
Analyzing customer data to understand their interests, demographics and coverage history lets you provide personalized renewal rewards that are more appealing and relevant to your policyholders than any new customer incentives offered by competitors.
Additionally, you can segment policyholders based on their behaviors, preferences and past interactions with your insurance website or mobile app. Doing this lets you create varied reward offerings that appeal directly to different groups of customers.
10. Understand why clients return and churn
Identifying the root cause behind a policyholder’s decision to end their relationship with your insurance agency is key to taking decisive mitigating action. However, it’s just as important to understand what makes policyholders who previously churned decide to come back in the future. Digital experience intelligence helps you uncover why customers return and churn by revealing insights into their behavior, interactions and feedback.
Behavior analysis: Capturing user interactions lets you identify patterns that lead to positive experiences, as well as the behavior typical of policyholders who eventually churn. This context can help you design better customer journeys that lead to increased retention.
Conversion funnel analysis: By pinpointing the stages along the conversion funnel where policyholders complete or disengage from desired actions, you can make targeted adjustments to optimize completions and encourage return visits.
Segmentation and journey mapping: Segmenting policyholders and comparing the retention of different groups helps you identify factors that influence churn and return. Viewing the customer journey of each segment can further highlight the touchpoints that are contributing to a positive or negative customer experience.
It pays to know your policyholders
Combined with the strategies described in this blog, digital experience intelligence offers insurance carriers a significant advantage in the race to deliver exceptional experiences that build long-term, valuable customer relationships. Analyzing customer behaviors, preferences and feedback across all digital touchpoints gives your insurance agency the understanding needed to personalize interactions, optimize the onboarding process, address pain points promptly, and provide best-in-class customer service. The focus on meeting policyholder needs and expectations will help to increase customer retention, boost customer lifetime value, and secure a competitive advantage in the insurance industry.
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