The laws of attraction

This article originally appeared in Best’s Review (subscription required)

With many U.S. property/casualty insurers stuck in a growth quagmire, retaining and attracting good customers has become critical to success.


Why it pays for P&C insurers to earn their customers' intense loyalty How Banks Can Manage Operational Risk


Financial Services


Bain Net Promoter System®

There's a way out of the quagmire--namely, a sustained program to earn customer loyalty. Customers who are promoters of their insurers stay longer, recommend the company to friends and family and usually cost less to serve.

All of those traits can be quantified. At one major U.S. P/C insurer, for example, we estimate that a promoter's lifetime value is worth, on average, more than twice that of a passive customer and about five times that of a detractor. (A promoter is a customer who gives a Net Promoter Score of 9 or 10 in response to the question, "Would you recommend your insurer to a friend or colleague?" A passive customer gives an NPS of 7 or 8, and a detractor gives an NPS of zero to 6.) For this particular insurer, the higher value comes mostly through longer retention, plus a boost from cross-selling and referrals, as shown in the chart.

Loyalty, in short, can improve the economics of the business.

But raising the level of loyalty is not a simple task.

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