- The cost of acquiring a new customer is 7-9 times more than retaining an existing one
- Policyholders under 55 years old are 3x more likely to switch providers
- Almost half of those policyholders would not switch if they've already downloaded the provider's mobile app
- Digital tool will be why a customer switches insurance providers
Customer retention is a key component of the financial stability equation for insurance providers. It costs about 7-9 times more to acquire new customers than to retain existing accounts1. Despite that reality, many insurers are challenged with actively providing younger customers with what they want to stay loyal.
More people are managing their insurance policies digitally, but room for improvement remains, especially with younger generations. Less than a third of the 18-to-39-years-old demographic uses mobile apps for their insurance needs, while almost 60% of that same group uses those same apps for their banking needs. Unfortunately, most companies are keeping this data in silos where it’s difficult to access, let alone analyze. Unstructured data leads to poor integration of said data, which blinds companies to the many opportunities to extract value from this important asset.
It’s important for companies to adjust their marketing tactics and introduce new and improved digital offerings to hold onto the customers they have.
Three Key Findings on Young Insured's Habits
A recent study, according to Mobiquity, revealed policyholders’ habits and possible influences on their behavior moving ahead2. Overall, several areas were found to have room for improvement as they related to digital tools, especially for younger policyholders.
1. 38% of younger customers are less likely to switch insurers after they’ve downloaded their mobile app. Proper marketing to convince the younger demographic to download the mobile app is crucial. This generation can spot inauthentic marketing from a mile away. Contrary to conventional wisdom, millennials are more receptive to seeing advertisements3 and favor experience and interactivity over hard sells.
2. Customers under 55 are more likely to switch their insurance provider to a competitor at nearly three times the rate as those over 55, primarily because of the availability of digital tools. Mobiquity’s report also detailed older customers’ principal reason for switching providers is to receive a lower rate for equivalent coverage (92% of those surveyed), followed by the desire to find an agent closer to where they live (32%) and better in-person experiences (29%). It went on to say younger generations did not place as much emphasis on better in-person experiences or lower rates and placed significant emphasis on better digital tools. Instead, younger policyholders are approximately twice as likely as their older counterparts to switch to an insurer with better digital options and a stronger mobile app. And nearly a third of policyholders under 55 would switch to an insurer with positive online reviews, versus only 19% of those over 55.
3. Digital tools are equally effective at attracting and retaining younger customers. Digital tools have more relevance in the lives of younger consumers. Younger consumers are also much more likely to manage their insurance policies over the last year via increased usage of digital tool offerings than older customers. Over 90% of all individuals that increased their usage of mobile apps were under the age of 55. Younger customers also prioritized digital innovation as a significant motivator in deciding to continue business with an insurance provider – 85% of those under 55 responded that an easy-to-use mobile app was important to them, versus 57% of those over 55, to be exact.
Listen to Your Customers on What They Want
There is relative consistency regarding satisfaction with digital insurance tools, like mobile apps and contactless payments, across all age groups. But when the highest satisfaction scores cap out at 79%, it indicates there’s plenty of room for improvement. With millennials ballooning to 40% of the national population, it’s important for companies to adjust their marketing tactics and introduce new and improved digital offerings to hold onto the customers they have, such as an even easier-to-use mobile app, digital claims tools for self-service or a feature that enables bill payment via text.
The key to meeting customer expectations as an insurer is utilizing technology to improve the policyholder experience, particularly with seamless digital payment offerings. However, enhancing technology offerings to meet millennials’ preferred means of communicating and interacting with their insurance companies could be the key to retaining consumers of this generation.