Video
Insurance companies, which have long known the importance of customer advocacy, are finding new ways to build loyalty. Harshveer Singh, a partner with Bain's Financial Services practice, discusses how insurers can get closer to their customers and sell more products to individuals and families.
Read the Bain Brief: Customer Behavior and Loyalty in Insurance—Global Edition 2016
Read the transcript below.
HARSHVEER SINGH: The case to invest into customer advocacy and take a customer-centered approach has existed for a long while. Insurers have known this—that promoters are many, many more times more valuable than a detractor. And many insurers are now adopting that philosophy and bringing that philosophy into the way they do business.
Our latest report, published in 2016, highlights and reinforces some of the messages we found in 2014. And I'll name three. First, the fight to get closer to the customers, being part of a customer's life, is now getting more and more intense. More insurers are investing into getting there. They're also investing into offering services beyond just pure protection in an attempt to be part of an engaged life of a customer. Telematics is an example of that.
Second, you will know how important mobile is to all of us in our lives. And the insurance industry has somehow missed that beat. Mobile is now a means to not only engage, but also to offer interesting and simple services. And what we found was doing simple things right, just the basics—status update on your claim, status update on your application, status update on the nearby clinic where you could go for some test—those things make a big difference to the advocacy of a customer and engagement through a mobile channel.
The third thing I would mention is a classic in the P&C industry that's now happening in the protection industry as well: the race to the bottom, where price differentiation leads to more and more incentives being offered, and merging, and atrophies, and whole value leaks to the customer. Which is not wrong, per se, but what we've found is, price-sensitive customers don't stay long.
And the way out of that is expanding share of wallet. Getting more products into the same family unit, getting more products into the same individual, not only engenders more loyalty, but also gets you more referrals over time and creates a more sustainable business. In the end, the customers really want to simplify their lives. They want to do business with one carrier. And as long as you can give them the right solution with the right reasons to stay, they will stay.
Read the Bain Brief: Customer Behavior and Loyalty in Insurance—Global Edition 2016
Published in January 2017