Churn—when customers leave or “churn away” from a company’s product or offering—is a key metric organizations use to determine progress and success (or the opposite).
But insurance is one industry that has fared better than the rest, with an average customer retention rate of 84%. That’s a churn of 16%—still not as good as it was pre-pandemic, but nowhere near as alarming as the post-COVID “new normal.”
How has the insurance industry weathered the storm? One factor is insurance’s “staid” reputation: “Legacy” companies are not so easily swayed by capricious market conditions.
In addition, some of the more progressive insurance companies are increasingly integrating technology, known in this industry as insurtech, to improve retention and adjust longstanding, often outdated practices for the better.
What can enterprises from other fields learn from the insurance industry’s relatively successful navigation of these topsy-turvy times? Here are a few insights from my experience in the field.
Be a sherpa, not a shark.
Sherpas are those friendly guides who take care of trekkers as they climb Mt. Everest or Kilimanjaro. Savvy insurtech providers are evolving their offerings to appeal to customers solely from a place of support, focusing on building exceptional customer service. Here are two ways to make customers feel they have an ally in your firm:
• Offer price comparisons with other enterprises in the same space, just as insurers offer price comparisons for relevant policies (even policies offered by competing companies).
• Keep your customers in the know about evolving products in your space. For example, if you run a customer success consulting firm, keeping your customers apprised of a new CRM offering could go a long way toward earning their trust.
Digital transformation is here to stay.
Digital transformation in the enterprise space is no longer a novel idea. In-person meetings have become video calls, video calls have become emails, emails have become text messages, etc.
But this will go even further.
Much like insurtech companies have begun to eliminate cumbersome interactions (like doctors visits) from the signup process, banks and other financial service enterprises, for example, have phased out superfluous teller visits with the help of digital banking apps. Other enterprises would do well to streamline their time-consuming touchpoints with similar types of digitization convenient for businesses and customers alike.
Enterprises that champion this form of convenience, backed by the latest technology, can empower customers to take care of their needs from their smart devices or home devices, instead of leading them into a cumbersome, time-consuming process.
Anything that requires in-person action rather than online activities should be revisited.
Research shows that three out of four B2B buyers and sellers now prefer self-service to in-person interactions. A positive customer experience (which is heavily correlated with ease of use) is viewed by a majority (54%) of CEOs as a primary competitive differentiator for their companies.
One survey found that 89% of companies that provided superior customer experience increased their revenue over the past year, compared to 61% of companies with average customer experience and 38% for companies with below-average customer experience.
The insurance industry has an advantage here: Insurtech companies have always been flush with customer data collected during the underwriting process. Now, they are leveraging that data to offer more niche, tailored policies better suited to each individual.
Enterprises should also consider tailoring their products for specific customers based on their own data (for example, taking stock of what point clients often bounce from their website).
Democratize your product.
Don’t just think about your most tech-literate users. While digitization is critical to enterprise success, organizations should nevertheless strive to emulate insurtechs in making their products available to the less digitally savvy.
For example, spreading customers’ interactions more evenly across multiple channels is how enterprises will do business in the future. McKinsey notes that the pandemic has “cemented omnichannel interactions as the predominant path for B2B sales. Even as in-person engagement reemerges as an option, buyers [have] made clear they prefer a cross-channel mix, choosing in-person, remote, and digital self-serve interactions in equal measure.”
Furthermore, 83% of B2B leaders believe that omnichannel selling is a more successful way to secure new business than traditional, “face-to-face only” sales approaches. That’s up from 54% before the pandemic.
Enterprises that embrace the tactics adopted by key insurance players will be able to differentiate themselves from the competition, better ‘insuring’ that they retain their most valuable asset: their customers.
Assaf Henkin is co-founder and president of Sproutt.