How to Reduce Customer Churn in Insurance

Generating insurance leads and converting prospects to customers can be challenging enough. What makes it even harder to grow an insurance business is that, almost inevitably, some of the clients you worked so hard to find end up leaving. This occurrence, known as customer churn, is something everyone wants to know how to reduce. 

It’s important to both learn how to reduce customer churn and understand what’s causing it. Not only is it a sting to your ego, but it’s more expensive to generate new customers than to retain the current ones. In fact, Outbound Engine found that “acquiring a new customer can cost five times more than retaining an existing customer.”

More importantly, customer retention can be highly valuable. For one, you don’t want to be spinning your wheels, constantly adding and losing customers. That costs time and money. Plus, existing customers can be some of your best clients. Especially when they expand their coverage or start referring you to new ones. A famous Bain study found that in financial services, a 5% increase in customer retention yields 25% more in profit.

Fortunately, there are ways to reduce customer churn so that you can expand your business and even get more value out of existing customers, rather than always hunting for new ones.

In determining how to reduce customer churn, agents need to do some serious self-reflection. Auditing the process and looking at issues can be helpful. Reviewing the reason for leaving, such as whether clients switch to another agent or choose to forgo insurance, can be one piece of the puzzle. Another is figuring out whether clients had a bad experience, faced a technical problem, or any other issue that may have resulted in customer churn. 

Agents can also try to get in front of the problem to reduce customer churn. How so? By prioritizing customer experience from the first interactions all the way through renewals, agents can reduce the likelihood of clients leaving. 

If you want to reduce customer churn by making renewals easy, we can help. Click the button below to learn more. 

Prioritize Customer Experience to Reduce Churn

Too often, a poor customer experience causes churn. It’s one thing to have a customer cancel their policy or switch to a competitor because of pricing. You don’t necessarily want to race to the bottom on prices. But losing a customer due to ineffective service can hurt more because it’s often preventable.

“Among those who churned following a negative service experience, 53% would have changed their mind if they had been offered a better service plan, and 38% would have stayed if they had believed that the insurer’s service would improve in the future,” finds TechSee, a company that provides visual technologies for customer service.

To provide a great customer experience as a way to manage churn, aim for the following:

Thorough Onboarding: 

Once you close a deal, your work is far from over. If you want to reduce customer churn, you need to make sure customers are comfortable and engaged with the policy they just purchased, rather than feeling like the relationship is over. Make sure that new clients have a smooth, thorough onboarding process and fully understand details like how to access policy documents and where they can go for more information so that they feel like they can get the most out of their policies.   

“The sooner that clients engage with the solutions they have purchased, the higher their retention rate,” finds sales and marketing platform Vendasta in a study of small and mid-size business owners.

Continued Conversation: 

Similar to starting off on the right foot by getting clients to feel engaged with their purchases, you want to continue conversations with clients on an ongoing basis. If any issues come up that might otherwise cause customer churn, like dissatisfaction with a policy, confusion about claims, having trouble managing their policy, etc., you can potentially fix it and keep these customers.  

“Encouraging early and frequent SMB engagement with your products should establish value, keep your company top of mind, and promote strong business relationships,” says Vendasta.

Added Value: 

Another way insurance agents can reduce customer churn is by going above the baseline in customer service. Try to deliver an exceptional customer experience by providing additional value beyond what customer policies contain.

For example, insurance agents might decide to blog about business issues their customers would find helpful. Doing so not only acts as an insurance lead generation tool but also as a way to build customer loyalty to manage customer churn. Customers can feel like you understand their challenges and value your guidance, which makes you less replaceable than if you only compete on factors like policy pricing.

Improve Customer Renewals 

Another important aspect in determining how to reduce customer churn is to figure out what it takes to transition a customer from a first-time buyer to a repeat one. When it comes time for customer renewals, think about what has and hasn’t worked in the past and see if there are ways you can make it a no-brainer for customers to stay with your firm. 

Consider factors such as:

Pricing: 

You may not have a ton of flexibility on policy prices, but it’s at least worthwhile to consider how any cost adjustments you can make can reduce customer churn. But you don’t necessarily have to keep dropping prices until a customer agrees to renew. Building strong relationships and having genuine conversations with customers throughout the year, rather than just at renewal time, can help you get a sense of how large of an issue pricing is and what can be done about it. For example, if a customer is facing budget concerns and doesn’t know if they can renew their policy with you, maybe there’s an opportunity to bundle different types of coverage so that they save money overall while growing their relationship with you.

Process

While the price of a renewal can make a difference, the process also likely plays a big role in your ability to reduce churn. Think about how easy it is to stay as a customer of a subscription service, for example, versus having to place an order for the same item every month. If the renewal process is too complex. customers might feel like they’re better off looking for another provider. Using tools like Wheelhouse to automate the renewal process for both insurance agents and customers can go a long way toward reducing churn.

Customer Appreciation: 

Not only do you want to provide a smooth process, but you want your customers to feel appreciated and valued around the renewal process. Even if you automate areas like sending out renewal notices, you can still add a personal touch, such as by sending out thank you cards to customers after they renew their policies. That can make future renewals even easier, as you don’t want to be struggling to manage churn at every renewal point.

Learn From Your Customer Churn 

As much as you may try to provide a great experience and streamline renewals, some customer churn will likely happen regardless. Still, there are ways you can learn from your churn to reduce future occurrences. 

Churn Surveys

One way to learn from your customer churn is to send out short surveys to those who cancel their policies, similar to how someone unsubscribing from an email list might see a few options to select as to why they’re unsubscribing.

“Churn surveys elicit feedback from customers canceling or downgrading service with your company, providing an excellent opportunity to discover areas that could stand improvement to prevent more churn,” says Zendesk.

Analyze Customer Churn Behavior

While you might not always get responses to churn surveys, you can still try to analyze customer churn behavior to get a sense of what went wrong and where you can improve. Perhaps you notice that customers tend to cancel their policies early on in the relationship. That could mean you need to put more emphasis from the outset on ensuring clients find the right policies for their needs, rather than just trying to make a sale however you can. 

On the flip side, you can analyze what goes well with renewals. By looking at what types of customers make referrals for you and who leaves you positive reviews, you can look for trends. Perhaps there are similarities between the people who renew year after year, that you can use to improve renewal rates for other clients. Is there anything you did in particular for those customers that you could apply to others? By looking at all these areas, together, insurance agents can reduce customer churn and enjoy more stability in their businesses.