Despite strong sales, customer retention was a challenge for a large supplemental insurance client. They had no program for customer communication and agents typically had not communicated with new customers beyond the point of sale. Consequently, the company saw unacceptably high lapse rates for newly sold policies. To position itself for strong, continued growth, they needed to improve their first year persistency scores (the percent of newly sold policies that remained active) significantly by reinforcing the purchase decision and keeping new customers engaged.
We developed a communication program allowing this client to reach each new customer immediately after the purchase and continue with additional communications throughout the first year. The primary goal of the program was to reinforce the new customer’s purchase decision, provide ongoing reminders of the product’s value and defuse potential “buyer’s remorse.”
Communications include personalized postcards, letter packages with keepsake items, a quarterly newsletter and a holiday greeting card. They also include referral requests and a customer care magnet.
The primary objective of the program was to increase customer retention by 3%. A control group was held out of the communications in order to gauge effectiveness. The result was a 9% lift in retention among the test group.
In addition to succeeding at our primary goal of improving new customer persistency, the program had a significant positive effect on factors increasing overall customer value.
Versus households not receiving the communications, at six months, results for households in the program were:
- 38% higher Annual Premium Value
- 36% higher number of policies held
- 12% higher customer household retention
It’s estimated the lift in retention represents an Annual Premium Value of up to $7 million. The program is currently expanding to create additional touchpoints including more customers.