How effective are loyalty schemes?
M&S for Business has recently conducted a survey into looking at the way companies in the tough insurance sector attract new clients, in addition to keeping new ones. The results found that by implementing a reward scheme, this creates a number of benefits for the company by making them standing out from the crowd.
Benefit 1: Acquiring New Customer with an Attractive Offering
While 95 per cent of respondents said price was one of the most important factors in their decision to choose a certain insurance company, only 55 per cent said that the company with the lowest price was typically the one they chose.
In such a competitive industry, it is essential for insurance companies to offer something extra to add value in the eyes of the business they are working with, which will in turn improve the reputation and attraction of the insurance company in the marketplace to acquire more customers.
Benefit 2: Customer Retention
Once you have won the business, the next step is to concentrate on retaining that business. The insurance companies that are willing to go the extra mile and reward the loyalty of the businesses they are working with, these are the companies that are more likely to succeed in the long run.
Businesses want the best deal for the service they are getting. This is why it is unsurprising that 78 per cent of respondents said they would switch insurance providers because they were offered a better price or had an incentive.
Andrew Johnson, Director General of the UK Gift and Voucher Association, agreed: “To increase loyalty from customers holding insurance policies, insurers need to recognise and reward their most valued customers. Loyalty schemes encourage not only customers to buy more insurance policies, but also make them more likely to recommend them to their friends.”
Benefit 3: Creating Brand Advocates
For ultimate customer loyalty, there is the chance to create a brand advocate out of them, who can spread your brand’s message and help find potential customers. These are the businesses that enjoy spreading your company’s messages and policies to help attract new or potential customers.
This can make the business feels like it has an active involvement in the running of the insurance company by helping them evolve. By rewarding those that bring new customers, it will make them feel valued amongst your clients and more likely to continue using your service.
Benefit 4: Building long lasting relationships
The ideal situation to make a business want to dedicate its time to a long lasting relationship with your company is to make them feel valued. By taking the time to reward loyal customers and thank them for choosing that particular insurance company over all the others, then that can earn their respect and a positive attitude from in return from the business.
To continue building on this relationship, it is important to understand the business you are helping first. Conducting research to understand what the business wants out of their policy, what they value and how they like to be communicated to.
Benefit 5: Repairing damaged relationships
From time to time, things can go wrong with the relationship between each business. From the survey, M&S for Business found that this happens mostly when insurance companies are not honest, either through a higher renewal quote compared to before or not solving issues or problems that arise. If this is unresolved, their business is more likely to go to elsewhere.
Investing time and money into keeping your existing customers happy is highly beneficial as it is much more cost effective to retain clients than attract new ones. Rewards and gifts are a great way to do this in addition to talking to the business to resolve the issue they are unhappy about.
Benefit 6: Staying one step ahead of the competition
Businesses will always be on the lookout for the best overall offering. The respondents of M&S for business’ survey stated that 75% of them would be persuaded to switch insurance providers if the other provider offered them insurance cover for the same price but with a better additional benefit of loyalty rewards. With price, reward schemes, customer service and brand name, it seems that insurance companies need to be doing all they can to make sure the businesses they are working with don’t move onto another provider.
With 45 per cent of respondents stating they did not know whether their insurance provider even offered a reward scheme, insurers need to promote the benefits they offer to potential clients to make sure they are fully aware of how beneficial it is for them to be a customer of theirs for the best competitive advantage.
Benefit 7: Measuring customer behaviour
While businesses are always seeking the best offering, they also will have rising expectation of insurance companies to automatically know what they like dislike, what they need and want.
According to a study published by Invensis Global Outsourcing Services, “Consumers want offers that are relevant to them. Irrelevant spam mail, telemarketing calls and online advertisements are an irritant for many consumers and can affect their perception of the insurance company.” The perfect way to ensure you deliver suitable offerings is through reward schemes where you can collect data and the customer’s preferences that will allow you to tailor your communication and interactions with the business you are working with.
It is essential to make sure this data is effectively used to measure your campaigns success. Andrew Johnson, Director General of the UK Gift Card & Voucher Association, told us that “the most important thing is to make sure that the business is receiving all of the data available and carefully monitoring the information they get to improve their reward schemes going forward.”