3 Principles Health Insurers Must Follow to Increase Customer Retention
To retain or acquire? That is the question. This is a common debate among health insurance companies. Should insurers focus on maintaining their existing clientele or allocate resources toward gaining new customers?
On one side, acquisition is easy to measure and incentivize. Insurers can review their CRM platforms and track new client policies. Sales teams can quantify their marketing efforts and see tangible results.
On the other side, it’s hard to say, “We retained 10,000 clients because of this initiative.” You can’t definitively determine whether your efforts persuaded a client to renew. However, although it’s a dated study, researchers found that acquiring new customers can be six to seven times more expensive than retaining existing customers — and boosting customer retention rates by only 5% can lead to a 50-95% surge in profits.
Three Retention Strategies for Health Insurance Companies
So, how can insurers maximize customer retention? Let’s walk through three customer retention principles.
One Personality Does Not Fit All
Far too often, businesses adopt a transactional mindset when it comes to customers. Needless to say, customers have an endless variety of personalities. Insurers must segment their customer base in order to deliver more personalized experiences rather than a one-size-fits-all approach.
Insurers can learn a thing or two from the financial services industry, which also faces the ongoing challenge of customer defections.
A Deloitte study assessed how financial organizations handled customer retention over the last decade. The study found that segmented customer bases enable banks to better appeal to preferences and needs. This line of thinking coupled with more innovative and streamlined products led to increased retention.
Data Drives Design and Dollar Decisions
How’s that for alliteration? My wordplay aside, insurers have a wealth of data at their disposal. So, why not leverage it to figure out when to allocate resources to retention versus acquisition?
Analyzing demographics and behavior patterns can help insurers deliver more relevant communications. For instance, if you know your customers’ previous experiences (like what drove them to your plans), you can better understand their pain points. Monitor the data — premium increases, network changes, customer service calls.
Together, these insights can help you determine where to focus your attention and resources.
More Touchpoints = More Engagement
More often than not, the insurer-customer relationship has one touchpoint: policy renewal. It’s like receiving a Christmas card once a year from someone you barely talk to anymore — except more expensive.
Two natural ways to increase touchpoints and stay on your customers’ radars are (1) feedback and (2) education.
The first route is straightforward. Asking for feedback is an easy way to not only give your customers a voice but also increase engagement.
Second, insurance is a complicated subject. Use that to your advantage by sending simplified overviews of terminology, policies, etc. to your customers. The healthcare industry is gravitating toward a consumer-centric model as it is — one that enables people to make informed decisions. Education is an easy way to be a part of that movement.
Direct Mail for Health Insurers: Get to Know Sepire
To be successful, organizations need to take a data-driven approach to marketing. Personalization is key, but getting there can be a challenge—especially for marketers. Need help with your next acquisition, retention, or trigger program? Sepire can help.