Why Innovation Increases Customer Lifetime Value for Insurance Firms

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According to a 2016 survey by Twaweza NGO, the majority of Kenyans cannot afford or do not value medical insurance cover, let alone other types of insurance. Only 18% of those who are insured are privately insured. Considering this low figure, keeping and growing current customers is an insurance firm’s best strategy for protecting its market share. However, few firms are doing this well.

A few months ago, a friend checked into a Nairobi hospital to deliver her first baby. The day after, a customer care representative from her insurance provider arrived with a large bouquet of flowers and a card to offer congratulations. He explained how the new parents would need to go about enrolling their new born as a dependant on their current insurance policy. This was not perhaps the time to sell them other products, but in the months following the birth, no one from the insurance company followed up to cross-sell an education policy for the baby. My friend and her husband ended up seeking recommendations among their friends, relatives, colleagues and purchased a competitor’s product. Revenue that was literally in their provider’s pocket walked out the door, simply because of data silos — the lack of channels through which different divisions and departments can share information and coordinate activities, and thus increase the lifetime value of current customers through cross-selling.

Customer data is also rich in upsell opportunities. For example, the customer who runs through his/her outpatient allowance before his/her policy renewal date could be nudged to purchase a larger allowance next year. And there are all sorts of additional packages customers would purchase if they actually knew about them and understood their benefits. The problem is, service and renewals agents do not really know which extras to pitch to which customers and when.

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Weak analytics capabilities also make it difficult for insurance companies to identify customers who are likely to defect at the end of their policy period. This problem is compounded by the fact that a large portion of customers are introduced and managed by brokerage firms. Unfortunately, brokerage firms are as much a source of customer leakage as they are a source of new customers. To protect its own interests, a brokerage firm will quickly provide a HR director looking to switch medical providers for his/her company with recommendations for alternative providers. Without a system of capturing and analyzing customer satisfaction indicators, over time and outside the intermediation of a brokerage firm, an insurance provider cannot take measures to improve a customer’s experience and prevent attrition.

Customer re-engagement following attrition is yet another missed opportunity. What happens when a client, whether an individual or a company, fails to renew an insurance policy on the annual renewal day because of dissatisfaction with the product or service received? Is it likely that anyone at the insurance company will re-engage this customer later when the product is improved or around the time of his/her next annual policy renewal? Certainly, not all customers will re-engage, but some will and at a cost lower than the cost of new customer acquisition.

To overcome these challenges and take advantage of opportunities to increase customer lifetime value, many leading insurance firms across the world, including Farmers Insurance in the USA, CGU Insurance in Australia and our client, Azure Financial Services in the U.K., have deployed Salesforce, the world’s leading, cloud-based Customer Relationship Management (CRM).

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Imagine a single customer data management system that is accessible via the internet by all permissioned sales, service and renewals staff across all your divisions. This system has an integrated A.I. that automatically picks out cross-sell opportunities and notifies the relevant salespersons, helping them sell home insurance to medical insurance holders and vice versa, while also highlighting upsell opportunities to service and renewals staff, so that they know who to nudge, in what way and when. Einstein, the Salesforce A.I. can also predict who is likely to defect at the end of their policy period and who might be a good candidate for re-engagement. Agents have access to the target customer’s history right there on their Salesforce dashboard , as well as tips and instructions for how to best proceed with the upsell or cross-sell, which improves their ability to connect with customers. Salesforce can also be Integration with social media, email, phone and even internet connected devices such a motor vehicle trackers which gives the agent a 360o view of the customer. And even better, this system makes reporting on all these activities extremely easy, enabling users to create highly visual reports in just a few clicks.

In this highly competitive market, retain and grow your current customers with Salesforce. To learn more about Salesforce, reach out to Uwazi Consulting via email at sales@uwazi.co.ke

Written by

A Salesforce Consulting firm working with the social and private sector to strengthen the impact of technology and innovation in essential services.

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