Insurance Industry Should Get Ready to Embrace Loyalty Marketing
Loyalty marketing programs have long been embraced by retailers, restaurants, and credit card companies.
If you've ever cashed in miles, scored a free latte after buying a certain number of coffees, or been offered a discount on "your next purchase," you're already familiar with the way a loyalty program works.
According to the 2015 Colloquy Customer Loyalty Census, most US households belong to an average of 29 different loyalty programs and are actively using and earning rewards in about 12 programs per year.
This article looks at the following questions:
Is a loyalty rewards program structure useful for selling insurance? And if so, how will loyalty programs impact the way we go about marketing insurance moving forward?
An examination of the way loyalty programs work outside of the insurance industry can provide some valuable clues.
How Does Loyalty Marketing Work?
At its most basic, a loyalty program simply offers rewards of some type to enhance customer retention.
Since the cost of selling to these customers is far lower than marketing a brand or product to a new consumer, insurance companies benefit from an increase in revenues with a lower-than-usual marketing cost.
Selling more products to customers who are already happy with your brand is a low risk way to drive incremental sales and revenues each year.
By creating a loyalty rewards program with incentives that appeal to your repeat customers, your insurance business can leverage loyalty marketing tactics to keep a steady flow of revenues coming in.
Benefits of Loyalty Marketing in Insurance
While individual features may vary, rewarding customer loyalty will generally benefit your business in a number of ways, regardless of your industry:
Customer Rewards Lead to Expanded Revenues
Every rewards program varies, but in general, loyalty rewards programs encourage repeat purchases.
What's more, a well-done insurance rewards program could even trigger a first purchase by consumers who were aware of your brand but reluctant to take that first step.
Low-Cost Insurance Marketing
While you can spend a lot of money on rewards, your perks don't have to be expensive.
Tailored correctly, your loyalty program expenses will still be lower than the marketing costs incurred when you acquire a new customer.
Enhanced Brand Awareness for Marketing Insurance
Even though the primary goal of your loyalty program is to encourage existing policyholders to stick with you, your customers are likely to share information about the rewards they've earned with others, thereby boosting awareness of your brand.
Insurance Rewards Drive Larger Purchases
Customers wishing to earn a discount or enter a fun giveaway will actually purchase more to reach their goal- often adding ancillary items to an otherwise small purchase- just to access your insurance loyalty rewards!
Loyalty Marketing Enhances Market Research Data
Your insurance customer loyalty program can also be used to tell you more about your customers and clients.
Learn what triggers them to buy, what rewards they value, and what resonates with them best.
The better you know your market, the easier it will be to personalize your approach to insurance marketing.
Insurance Rewards Can Be Flexible
With loyalty marketing, insurance rewards you offer are up to you:
For some, simply offering an accessory or discount is enough.
Others selling an intangible product like insurance or credit may have to get creative, offering branded gadgets, partnering with another brand, or even marketing experiences to incentivize insurance customers.
Set it and Forget it
Another benefit for insurers?
A loyalty program runs itself, once you have a system set up.
By outlining the parameters and specifying what rewards are triggered at which point, an insurance loyalty program can be mostly automated.
Customer Loyalty & Insurance Rewards Program Possibilities
While a loyalty program has many benefits for all types of businesses, the insurance industry has been historically slow to catch on according to new research from the Aite Group.
"The insurance industry is increasingly leveraging loyalty marketing techniques, such as rewards programs, to nudge customers toward preferred behaviours." according to the recently released study, Loyalty Marketing in Insurance: The Nudge Game.
Interviews conducted with over a dozen technology vendors and insurers show that most insurance firms do not offer loyalty or reward programs-- but there is a growing interest.
Increased investment in IoT technology, telematics, and enthusiastic consumer adoption of reward programs in other industries makes the idea of loyalty marketing more accessible and appealing to insurers.
With fierce competition for customers, and a customer base that is increasingly cost-sensitive, insurers who get on board with loyalty programs could have an edge in coming year.
As the insurance industry begins to come closer to embracing loyalty and reward programs in general, there is still the opportunity to be the first to offer something special that is seen by customers as unique.
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