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most insurers, however, do not have a view of their customers’ behav-
ior and preferences that is nuanced enough to carry out a highly effec-
tive retention effort.
This is in part due to a tendency to segment policyholders based on
pricing attributes and binding channel preference rather than on their
needs. Once they have an accurate view of the needs-based segments
that comprise their existing policyholders, insurers can determine
which segments are worth actively defending. For instance, a percent-
age of a carrier’s book is comprised of customers for whom price is all
important. These serial switchers will more
than likely leave for a competitor at their
next renewal. Insurers must decide
whether these customers are worth the re-
tention efforts, or whether they should
focus on retaining their more valuable
loyal policyholders.
This is a complex challenge. Many touch
points can influence a policyholder’s deci-
sion to renew and a good number fall out-
side the direct control or influence of the marketing function (e.g.,
claims, problem-resolution). This means that retention efforts demand
both strong marketing capabilities and the organizational alignment to
deliver on the brand’s promise consistently across all touch points.
Delivering on the brand promise
The emerging importance of segmentation and retention as elements of
a successful marketing approach in auto insurance leads inevitably to
the need for a third core capability: strength in delivering on the value
proposition and brand promise that carriers make to their valued cus-
tomers. The most sophisticated view of the needs and preferences of a
valued customer segment will be for naught if promises made to those
customers are not consistently kept.
This can be a tall challenge, because the touch points at which a cus-
tomer can gauge an insurer’s fulfillment of the promise run the gamut of
the value chain, starting with the initial interaction with an agent or on
the company Web site or Facebook page, through the billing and re-
newal process, all the way to claims and customer service.
Beyond Price: The Rise of Customer-Centric Marketing in Insurance
The most sophisticated view
of the needs and preferences
of a valued customer segment
will be for naught if promises
made to those customers
are not consistently kept.