By Stuart Lawrence, Head of M&S for Business
In a recent survey, M&S for Business found that reward and loyalty schemes are an excellent way for companies in the difficult insurance sector for a strong acquisition and retention strategy. This is one way to make sure the company stands out from the crowd, strengthen and repair customer relationships as well as make customers feel valued within the company.
Benefit 1: Acquiring new customers with an attractive offering
Despite the fact that nearly all the respondents in M&S for business’ survey (95%) stated that price was the most important factor in choosing their insurance provider, only 55% chose their current provider due to its low cost. It is clear that in the competitive insurance market, offering something extra alongside a reasonable price is one way to attract customers by adding value to the service. However, it is essential to tailor your reward scheme for what you want to achieve from your customers as some types of reward schemes encourage customer loyalty more than others.
Benefit 2: Customer Retention
Customers can be fickle, they will not be completely loyal immediately. Out of all the survey respondents, 78% of customers would switch insurance provider if they found another provider that offered the same policy, but for a lower price, better customer service or offered an extra incentive.
The insurance companies that show they care about their customers are the ones that are going to benefit the most. As Andrew Johnson, Director General of the UK Gift Card and Voucher Association, stated: “To increase loyalty from customers holding insurance policies, insurers need to recognise and reward their most valued customers.”
Benefit 3: Creating Brand Advocates
If customers are really impressed by your company, there is the chance they will become your own sales team, spreading the word about your products to their friends and family.
Ed Rochfort, Product Director of Carrot Car Insurance, described their brand advocate scheme: “Every Carrot Card holder that refers a friend via our unique Facebook app will get a £40 referral reward for every friend that goes on to buy an insurance policy from us for the first time.” The increasingly popular ‘Refer a Friend’ scheme is an effective way to both implement your customer acquisition and retention strategy with an incentive.
Benefit 4: Building Long Lasting Relationships with your customers
Customers enjoy feeling like the business they provide is being valued. 81% of the survey respondents said they would feel more valued if their insurance provider surprised them with gift vouchers as a reward for their loyalty. If you go above and beyond the service a customer is expecting from their insurance provider, this will build on your reputation and strengthen the business-customer relationship.
Before implementing this kind of reward, it is important to understand your customer first and through research, work out what the customer would want, what they value and how they would prefer to communicate with you.
Benefit 5: Repairing damaged relationships and winning back defected customers
Customers can become disgruntled with their insurance provider, particularly when their renewal quote is higher than their original policy.
When it comes to dealing with dissatisfied customers, honesty is essential. The research shows that consumers want their provider to admit when they have been wrong or try as hard as they can to resolve any problems that may arise. With the fact that customers are most likely to defect from an insurance provider if they start to feel devalued, reward schemes are a good way to repair a relationship as it identifies that the company has done something wrong.
Benefit 6: Staying one step ahead of the competition
It is essential to remember that the insurance industry is tough and challenging especially when insurance is something that customers are always looking for something valuable and inexpensive. Keeping reward schemes up to date and relevant is one way to stay ahead of the competition and retain your customers. With 45% of respondents stating they did not know whether their current insurance provider offered a reward scheme or not, it is clear that businesses need more contact with their customers to show the benefits of sticking with their company.
Benefit 7: Measuring customer behaviour
Consumers are always expecting insurance providers to understand what they need or want. According to a study published by Invensis Global Outsourcing Services, “consumers want offers that are relevant to them. Irrelevant spam mail, telemarketing calls and online advertisements are an irritant for many consumers and can affect their perception of the insurance company.”
A good way to make sure your communication suits a customer’s preferences is to get the information needed when they sign up to the reward scheme. With this information however, it is important to make sure it is organised in a way that can make taking the step to create a personalised service for your customers effective.