In a fast-changing and increasingly competitive insurance marketplace, carriers must put the customer experience at the center of their business strategy in order to improve customer retention and position themselves for success.
Property and casualty insurance carriers are facing rapid and pervasive changes in how they acquire, retain, and grow customer relationships. Residual effects of the financial crisis, emerging competitors, changing demographics, and technology evolution are just some of the environmental factors forcing a shift within the industry. Customer retention becomes a central focus when designing strategies for growing the business. Many factors are converging to impact a carrier’s ability to retain customers and compete effectively:
- New vehicle sales are down nearly 8 percent over the past 10 years, meaning increased competition for the buying power of fewer consumers.
- Declining household net worth and reduced buyer power creates a dip in the overall demand for personal lines of insurance.
- New competitors are forming within emerging channels, leaving many insurers vying for a smaller pool of policyholders — further pressuring profits.
- As direct channel use rises, customers are able to shop easily and switch companies more frequently. With insurers left competing in a smaller pool and customers eagerly searching for the next best thing, customer retention is dwindling.
- Carriers must provide 100-percent satisfaction 100 percent of the time or risk losing their existing customers to a competitor.
As these factors transform the industry, business expectations of insurance firms are fluctuating and forcing further changes changes around strategy, technology, and customer experience. Most notably, how do carriers bridge the gap between what their customers expect (their brand promise) and their actual experience? The ability to ask key questions to help identify where this gap exists across organizational operations and activities is vital to understanding the issues surrounding customer retention and loyalty.
Read more about West Monroe Partners’ approach to acquiring, retaining, and growing customer relationships. ?