Boost Customer Retention and Satisfaction Instead of Tolerating Customer Erosion

For insurance agencies and brokerages, adopting the right technology to manage customer relationships and satisfy customers’ expectations for modern, digitally augmented service can mean a competitive advantage and ensure the viability of their business.

Few touchpoints, high risk

Traditionally, insurance agencies and brokerages have few direct touchpoints with their customers. Once customers sign up for services and coverage, they may not initiate any interactions with their insurance agency unless they report a claim or update their policies. Except for rate adjustments or major organizational news, they might not hear from their insurance provider in years. When insurance agencies and customers keep each other at arm’s length this way, customers might not actively evaluate competing providers unless they experience issues with their current one. Without being necessarily loyal to their insurance service, they tend to be hesitant to change the status quo without a compelling reason—which a smart competitor might offer. The threshold for customers to consider providers that proactively approach them is low, and customer churn is always a concern with insurance agencies.

The high costs of customer churn

It’s far more expensive to gain new insurance customers than to retain existing ones. Some frequently referenced and requoted numbers, based on research that goes decades back, are from Harvard Business Review, which claimed that it can be 5 to 25 times more costly to win new business than to keep current customers. Harvard Business Review also cites independent research that demonstrates that a 5 percent improvement in customer retention can boost profits by 25 to 95 percent. Even with the wide ranges in these numbers, it seems clear that insurance agencies, like other service businesses, could greatly improve their profitability and viability by improving customer retention.

Why customers look elsewhere

Individual agencies and brokerages always find effective ways to counteract prevailing industry trends, but the insurance market overall is still subject to high customer turnover. According to the CallMiner Churn Index 2020, the total cost of churn for insurance companies was $2.59 billion per year, an increase of $540 million since 2018. Approximately 25 percent of insurance customers said that they had changed insurance providers in the previous 12 months. In the coming year, 43 percent more insurance customers were planning on switching to another insurance service than in 2018.

Many of these transitioning customers explained that feeling unfairly treated and overlooked for credits and promotions offered to new customers greatly contributed to their willingness to consider and adopt other insurance providers. According to another survey, 33 percent switched because they hoped for improvements in the ease-of-use they might find with another provider. A mere 11 percent felt that insurance providers met their financial needs. Almost 60 percent mentioned that some benefits included in their policies were no longer of value to them.

Most customers are open to InsurTech innovation

The insurance industry is at a dangerous crossroads where such events as global climate change and advancing cybercrime result in record amounts of insured losses while customers are increasingly on the lookout for competing insurance providers with more advantageous offerings. Many insurance firms are intensifying their use of technology to deliver better customer experiences and streamline their business at the same time as they’re looking to gain the business intelligence that helps them minimize their risk exposure. In consequence, the insurance technology (InsurTech) market is poised to expand at a 52.7 percent growth rate between now and 2030.

The majority of insurance customers welcome technical innovation by their providers. Sixty-nine percent accept AI as an element of experience improvements, and 44 percent are comfortable engaging with new providers through an app or website. Many insurance providers are increasing their investments in chatbot technology, which, within a comprehensive, omnichannel technology strategy, can help them serve customers and reduce overhead. The global market for chatbots is set to grow from $0.84 billion in 2022 to $49 billion in 2032.

Overcoming technology fragmentation

At Sikich, we have supported insurance agencies and brokerages for many years. When we talk with insurance agencies and brokerages, they’re always in favor of exploring modern technology to improve customer retention and customer experiences.

However, many insurance businesses cannot easily move forward with customer-centric technology initiatives, because their fragmented environments are not ready for this. A large number of insurance companies rely on 15 or more technology systems, although many use even more than that. In working with these clients, we help them articulate a technology strategy that allows for unifying their data sources and business functions on a single platform that can support customer experience transformations and boost organizational productivity. To that end, we often propose the industry’s most mature, highly reviewed, and well supported enterprise resource planning (ERP) or customer relationship management (CRM) solutions.

CRM as a unifying force

Sikich consultants often recommend Salesforce as the CRM system for insurance agents and brokers. Salesforce is a robust, continuously improving solution that’s easy to learn and use. As a cloud solution supported by a mobile app, it’s securely accessible for agency and brokerage employees anywhere on their preferred devices. We help you migrate to Salesforce in a smooth, efficient process with Sikich HEADSTART for Insurance, a preconfigured instance of Salesforce that comes with standardized processes and automations based on industry best practices. It can meet the majority of insurance clients’ requirements before any adjustment or customization. In HEADSTART for Insurance, we integrate Veruna, an agency management system (AMS) designed for Salesforce environments. By delivering integrated CRM and AMS, we keep your technology coherent and manageable, and make it easier for your employees to serve customers in a seamless, productive workflow.

Technology partner that understands insurance and customer challenges

As a Salesforce Gold Consulting partner, Sikich has delivered many successful deployments. Our Salesforce consulting team includes experts who have spent long stretches of their careers in insurance and financial services. As your technology partner, we understand how important client and customer experiences are in achieving your goals and outcompeting the also-rans. Internally, we use Net Promoter Score (NPS) and other relevant metrics to assess our clients’ experience quality and loyalty. Across all clients, our current NPS is above 87. We aim to deliver empowering, high-quality experiences at every touchpoint with you as well as within our organization.

Take the next step

To find out more or explore Salesforce for your insurance business, you can:

• Contact Sikich.
• Download our ebook Customer experience as a competitive asset for insurance businesses.
• Read other posts in this series:
  • Infographic: Deliver top-quality, highly competitive customer experiences in your insurance business
  • Article: Imagine what modern CRM could help you achieve for your insurance customers
  • Article: Gain customer intelligence to transform your most important business relationships
  • Article: Innovate the insurance customer experience and competitively address changing customer needs
• Watch videos on our YouTube playlist about Salesforce and the insurance industry.
• See how we help you generate Salesforce ROI.