Tuesday, June 23, 2009

For auto insurers, is retention taking a back seat?

Until very recently I worked on the acquisition side of an auto insurance account, where these days it’s all about the price—with virtually every auto insurer claiming they can save you $400 or $500. (Which makes you wonder, if everyone can save you money, which companies are ripping people off?)

But perhaps the most eye-opening aspect of auto insurance marketing is the lack of respect paid to retention. After all, if you believe the accepted adage that for every $10 spent to acquire a new customer it takes only $1 to retain an existing customer—why are auto insurers plowing so many millions into acquisition and spending next to nothing on retention?

It’s especially important to have a retention strategy these days because of the changing relationship between auto insurance buyer and seller. Once upon a time, most drivers had insurance agents who they had a one-to-one relationship with—but now, with independent agents becoming a shrinking breed, and with the rise of direct-to-consumer providers like Geico, 21st Century and Esurance, times have changed. Most customers have no interaction with their insurance company, unless they have an accident or are mailing in their premium check.

Seems to me it’s time for auto insurers to take a fresh new approach to retaining customers, one that begins building a relationship well before the auto policy is about to expire and the customer can be swayed by the latest “you can save hundreds” TV commercial.

Thought one. Adding a message on a bill insert, while a no-brainer, will do absolutely zilch to build a relationship with best customers. What’s needed is a more robust approach that includes a regular stream of print and/or e-mail communications with relevant information drivers can use like:

• invitations to online or offline tutorials on choosing the coverage right for me and my family
• info on safety recalls and maintenance tips for my particular vehicle
• Safety advice for teenage and senior drivers on my policy
• Reminders of why my insurer is the right choice and what it offers that the competitors don’t.

Thought two. Start engaging via social networking tools. With people so often confused by their auto policy details (collision? comprehensive? low or high deductible?), it seems like there’s an opening for an auto insurance provider to become the online source for honest, helpful information. So who will step up?

While some auto insurers are moving in the right direction by gravitating toward the communications opportunities offered by Web 2.0, many of the executions are weak at best and some companies have chosen to do nothing at all. A few quick observations:

• Market leader Geico barely exists in the Web 2.0 world unless you want to count a blog for the Miss Geico offshore racing boat—and a few “Screw Geico” entries from unhappy customers out in the blogosphere. Kash, the bug-eyed stack of money that stars in Geico’s goofy TV commercials, does have a Twitter account—but has just a single tweet over the last 4-months. (Kash may be the quiet type, but one tweet?.)

Esurance icon Erin, animated hero of the company’s television commercials, has her own blog on the company Web site—but after a fast start in 2005, it seems like Erin may be all blogged out—she has a woeful total of three blog entries in 2009. (Is she busy on a TV shoot? Have her write from the set!)

• Then, there’s Allstate. Very active with Twitter, they appear to be doing a bang-up job of responding quickly to customer comments and concerns. They also appear to be the only insurer to set up an online community which can be found at goodhandscommunity.org. The community gets an A for effort, but the execution? In a future post, I’ll give it a full review.

This blog entry was previously published June 15, 2009 on Loyalty Truth.

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