Increasing customer retention rates by 5% increases profits by 25% to 95%. – Harvard Business Review
Take a minute to digest that.
Now that you are done, let’s dive into why you, as an Insurer, should explore the idea of using loyalty programs to retain and keep your customers engaged.
Why Customer Loyalty Program
As an Insurance company, do you seek out repeat customers? If not, it might be time for you to consider adding customer retention into your business strategy.
(We will talk “what is customer loyalty after you know why you should do it)
DO you know it is easier to sell to an existing customer, the probability is as high as 60 – 70% compared to 55 – 20% of selling to a new prospect.
Look at it this way: as an Insurance company, you don’t have to spend time and resources going out and finding a new client; you just do everything you have to do to keep the customers you have happy.
If you’re yet to be convinced that retaining customers is so valuable, consider research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) that shows increasing customer retention rates by 5% increases profits by 25% to 95%.
Let’s bring it home to something more personal…If you consider why you continue shopping at your favorite stores? Whatever it is – the look of the brand, service it offers or the community it provides -, there’s a reason that you go back to your favorite brand for more.
As an Insurance business, when you consider the things that make you a repeat shopper, it will be the first step in figuring out how to offer the same experience to your consumers.
One way you can do this is by creating a customer loyalty reward program.
To put in some light, let’s define customer retention.
What is customer retention?
CrazyEgg defined it thus –
“The customer retention definition in marketing is the process of engaging existing customers to continue buying products or services from your business. It’s different from customer acquisition or lead generation because you’ve already converted the customer at least once.”
It is a strategy used to increase the amount of repeat customers that shop your product. Whether it is buying a new policy or renewing one, the key factor here is that “the customer is not a one time user or spender.”
They always come back for more and more times, bringing other people with them. That’s the power of a satisfied customer – they become your brand ambassador, referring people to use your products or services.
When you successfully implement tactics targeted at making your customers repeat customers, you’re investing in a customer retention strategy. It’s about focusing on keeping your current customers loyal to your brand rather than only trying to recruit and onboard new ones.
According to Retention Science “- Customer retention should outweigh customer acquisition.
Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.