“All markets continually evolve; the successful are those who have a long term vision, set out their stall and make it happen.” Steve Jobs
Today, there is little emotional attachment to insurance brands, and aggressive price promotion has encouraged switching. Innovation within insurance providers has traditionally focused on ‘cost savings’ and ‘wording improvements’ i.e. it has been ‘risk focused’ not ‘client focused’.
Moreover, the entry of large consumer businesses, such as supermarkets, into the market, with their massive consumer footfall and well-developed understanding of customer behaviour, has accelerated the decline of traditional insurance brand loyalty.
The insurance sector holds a lot of information about its customers and works within the same data protection regulation as the supermarkets. The supermarkets utilise their data to deliver products to their customers that they either ‘need’ or ‘want’. Insurance providers do virtually nothing with this valuable data.
Insurers are signing away their intellectual property by supplying white-labelled insurance to supermarkets through ‘affinity’ deals, and also their potential to create fruitful customer relationships. What insurers have called ‘affinity business’ is misnamed as the genuine affinity is between the end-user and their provider.
The market has now realised that the aggregator model of chasing ‘cheap’ is a one way street to losing money and is a race to the bottom. Insurer brand affinity and brand loyalty are declining as we now know that ‘price’ does not buy loyalty.
The market has started to shift from being solely ‘price driven’ to ‘product/service driven’. Neither can insurers rely on inertia to maintain their retention levels; customers have become used to switching providers.
In summary, if you have won the business solely on price - you will lose the business on price. Improved profitability will be achieved by adding value and differentiation.
At Lumley Jacobs, we help insurance providers:
We advise insurance providers to start viewing policyholders not as ‘premium machines’ but as customers, who have ‘needs’ and ‘wants’ outside of their insurance requirements.
A 2% increase in customer retention can have the same effect on the balance sheet as cutting cost by 10%. Our initiatives improve retention.
Take your total number of customers and multiply that number by the average household income (£40,000). For example, a book of 30,000 customers multiplied by £40,000 = £1.2 billion annual income.
How much of that income is your company getting? We help increase this.
Increase your customer spend
Our vision is to see the focus shift from ‘Gross Written Premium’ (GWP) to a concentration on the ‘Average Revenue Per Customer’ (ARPC).
The decline in brand loyalty must and can be changed. Recapturing brand loyalty through customer engagement enables insurance providers to grow the lifetime value of their customers.
We develop existing brand loyalty into a brand affinity by improving your relationship with your customers.
Most insurers will say their key differentiator is their claims service. Ironically, this key differentiator is the one that insurers work tirelessly trying to ensure that as few people as possible experience (circa 90% have zero experience).
Incorporating non-insurance products and services within propositions helps add value and differentiate from competitors. This also provides a platform for brand building, retention strategies, PR and marketing.
At present customer interaction generally only comes at renewal or when customers claim. We encourage customer interaction and implement positive customer engagement programmes.
The insurance market is being detrimentally driven by multi-million pound advertising campaigns fronted by meerkats and opera singers. We think insurers need to get back to building their brands.
Historically, advertising was (and still is) the prime medium for customer acquisition, but this is an expensive way to capture customers. Today, there are other more cost effective and innovative methods to achieve increased brand awareness. We are achieving this through integrating products and services and utilising engagement programmes.
Non-risk income & Add On's
Selling both non-insurance products & servicesand insurance 'add on's' that your customers either ‘want’ or ‘need’ generates incrimental income.
We provide the complete fulfilment infrastructure managing the customer and the supplier journey.