How to drive loyalty and CLTV among young insurance customers

Topics
Mobile
Author
Brian Levine
Publication Date
4 May 2021

How to drive loyalty and CLTV among young insurance customers

Young policyholders are less loyal

In a recent Mobiquity survey, respondents under 56 years of age reported being 3x more likely to switch insurance providers than customers over 56. This massive generational shift showcases the need for insurance companies to revisit their customer experience strategy to find new ways of obtaining and retaining customers – especially younger ones. 

Regaining revenue after losing just one customer comes with a hefty price tag 

Although insurers can rely on the steady payments of their older customers today, the days of ignoring younger policyholders are numbered. Millennials have recently surpassed baby boomers to become the largest demographic in the US,1 and with their high propensity to switch insurance providers, it’s important for insurance companies to do whatever they can to retain the customers while also working to attract net new ones to account for growing attrition. We know it can take insurers several years to recoup the marketing investment required to generate a new customer - with the ease of switching digital policies, it may be time to rethink the traditional model. By understanding what drives loyalty, we think there are indicators of how insurers can adapt new ways of attracting and retaining younger customers.

So, what does drive loyalty among young policyholders? Our research shows that digital tools are the way forward for insurers that are serious about delighting young people, with those under 56, for example, placing double the importance on an insurer’s mobile app. Investing in tools that improve customer loyalty and lifetime value is a strategy that will set businesses up for long term success.

Digital experiences are the key to success for companies looking to attract and retain younger customers 

Policyholders between 25-40 years of age indicated digital tools are a key driver of switch behavior in the insurance space. Specifically, consumers were looking for a better insurance mobile app, more digital options for changing their policy or handling claims, and an easier to use web portal. The clear feedback we received from millennial customers on what would drive switching behavior is a strong indicator of both where to focus in retaining current millennial (and younger) customers but also provides clues on how to rethink your acquisition strategy. 

Start by revisiting your customer acquisition model

Investing heavily in traditional marketing tactics, like TV commercials and old school marketing to acquire new insurance customers, and in particular younger customers, may no longer make sense. Insurance companies need to research how their younger customers behave, where they look for new companies, and what they look for in a provider. 

Many of them don’t want to interact with a person unless they need to. So how can you offer digital tools that enable them to self-service? Is your mobile app accessible? Does it offer customers the ability to file a claim and get regular progress updates, pay their bill with their choice of payment types while getting gentle nudges to keep their policy in place, or view their ID card without even logging into the app? Making sure your platform offers what they want will go a long way toward helping them select you as their provider and keep them onboard.

Once you’ve succeeded in getting the interest of a new customer, are you making it easy for customers to digitally onboard with your insurance company if they want to switch from their current provider? What if they could take a picture of their current deck page to enable you to provide a more competitive policy without the customer filling out any information? These types of enablement strategies will push your business forward and help you meet the needs of the younger customers who have the ability to offer you longer loyalty and lifetime value, and therefore long term revenue gains. 

Why do insurance mobile apps matter?

Younger policy holders indicated they place greater importance in online reviews when they are looking to switch insurers, so making sure your app has great reviews in the app stores is an important marketing tactic that should not be overlooked. What’s more, 86% of policyholders under the age of 55 indicated that positive online reviews were an important factor for them in remaining loyal to their current insurer. (+12% versus those over 55)

To help guide you in the right direction, Mobiquity’s Friction Report tool points out the most important features of the world’s top used mobile apps as well as the top frictions that customers experience.

The Mobiquity Friction Report is a proprietary tool that uses artificial intelligence/machine learning (AI/ML) to analyze thousands of customer reviews on mobile apps, websites, and similar tools to help businesses see what they’re doing well and where they could use some help. Our Insurance Industry Friction Report shows how some of the best insurance mobile apps stack up. We analyzed Allstate, AmFam, Farmers, Geico, Liberty Mutual, Progressive, State Farm, and The General. Users reviewed the following features most frequently, indicating their importance for a seamless mobile app experience:

  • Billing is one of the most reviewed features, with customers looking to understand when their bill is due, how much they owe, and when autopayments are scheduled, with SMS and push notifications most effectively reducing friction.
  • Negative reviews mentioning login increased from 2019 into 2020. This remains a key opportunity for insurance companies looking to improve user experience. Have you explored passwordless login options or 1-time access codes sent via text message for those that constantly lose their credentials? 
  • Policy visibility is important and some users report not having transparency around their policies when viewing the typically dense information. Giving them the right information for their context and need could alleviate the confusion and delight the customer.

The bottom line: focusing on digital is key in attracting and shoring up your business into the future 

Younger demographics are the future of the insurance industry. And while new, digital customers may be more prone to switching, rethinking acquisition to focus on more cost effective, digital strategies may be the key to making this group profitable overall.

Learn more about the digital habits of all demographics in our white paper, “New research shows digital tools drive loyalty among younger insurance policy holders.” Download it today to get even more insights into how customer behaviors are evolving the digital insurance landscape.

Resources

  1. https://www.pewresearch.org/fact-tank/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/ 

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