M&S for businessAcquisition & Retention SchemesHow to
attract customers and keep them: Using reward schemes within your
customer acquisition and retention strategy.Developing a strong
customer acquisition and retention strategy can be tough in any
industry, especially the nancial industry. With many consumers
expecting more than the standard service, how do businesses within
the nancial sector attract new customers and keep them loyal?At
M&S for business, we have noticed through our experience that
the nancial industry, particularly the insurance sector, can be a
difcult market to implement a customer acquisition and retention
strategy. We often get asked by people within the insurance sector
what they can do to make their strategy a success and what the best
approach would be.While there is no one size ts all solution, there
are certain strategies which have proven to be successful in the
past. We have carried out some research, including a consumer
survey and discussions with industry experts, with the aim of
discovering what makes a successful acquisition and retention
strategy.The results of our research indicated that implementing
reward schemes is one way to stand out from the crowd, make your
customers feel valued and strengthen relationships with them.What
do consumers want?Benet 1 : Acquiring new customers with an
attractive oferingBenet 2 : Customer RetentionBenet 3 : Creating
brand advocatesBenet 4 : Building long lasting relationships with
your customersBenet 5 : Repairing damaged relationships and winning
back defected customersBenet 6 : Staying one step ahead of the
competitionBenet 7 : Measuring customer behaviourReward schemeBenet
1 : Acquiring new customers with an attractive oferingBenet 2 :
Customer RetentionBenet 3 : Creating brand advocatesBenet 4 :
Building long lasting relationships with your customersBenet 5 :
Repairing damaged relationships and winning back defected
customersBenet 6 : Staying one step ahead of the competitionBenet 7
: Measuring customer behaviourM&S for business Acquisition
& Retention SchemesAcquiring new customers with an attractive
oferingBenet 1As the industry is such a competitive market, it is
highly important for insurance providers to have a unique ofering
for their customers. With 95% of our consumer survey respondents
stating that price was one of the most important factors to them
when deciding which insurance provider to choose, it is essential
that those companies who cannot match on price have added value to
their policies and products.Interestingly, despite the high number
of respondents stating price as such an important factor, only 55%
stated that the reason they chose their provider was because they
ofered the lowest price. This shows us that despite most consumers
desire to get the best price, they will often choose a provider
that ofers them something extra of value. Other deciding factors
indicated by our survey were whether the insurance provider ofered
the customer a personalised or unique service, how highly ranked
the provider was and whether the provider ofered a loyalty/reward
scheme.What do consumers want?Most of the companies we spoke to
ofered some sort of reward scheme with the purpose of acquiring new
customers. Daniel Tamarjan, Online Marketing Manager of Freedom
Health Insurance, told us that they use reward schemes such as
shopping vouchers and cashback/cash discounts To attract new
customers and get referrals from existing customers. Daniel went on
to raise the point that some reward schemes were more successful at
encouraging customer loyalty than others, therefore choosing the
right scheme for your target audience is essential.Reward schemes
are used as a part of the total package ofered by a company. They
can also be used to encourage positive behaviour from the customer.
Vitality Health & Life Insurance ofer their customers two types
of reward scheme, Active and Status. The Active reward scheme
allows customers to build up points by being active and exercising.
These points can then be exchanged for perks such as cinema tickets
or a free cup of cofee. This works well for Vitality because by
encouraging their customers to live a healthy lifestyle they
decrease the amount of claims made. The Status discounts are in
place to appeal to less active people who still get some great
benets such as discounts on UK or Continental British Airways
ights.Reward schemes work as part of the wider ofering to
customers. Most people have price on their mind when shopping for
insurance, but when they are ofered a better service or added
benets their decision can be inuenced.A reward scheme is an
important part of acquiring new customers, however it is important
to consider the type of reward scheme in order to attract high
quality customers and reach the relevant audience.Putting it into
practiceKey TakeawayBetter serviceBenet 1 : Acquiring new customers
with an attractive oferingBenet 2 : Customer RetentionBenet 3 :
Creating brand advocatesBenet 4 : Building long lasting
relationships with your customersBenet 5 : Repairing damaged
relationships and winning back defected customersBenet 6 : Staying
one step ahead of the competitionBenet 7 : Measuring customer
behaviourM&S for business Acquisition & Retention
SchemesCustomer RetentionBenet 2Once you have established an
attractive ofer and have won the business, the next step is to
concentrate on retaining that business. With the insurance industry
being such a highly competitive market, this is sometimes easier
said than done. Insurance companies who are willing to go the extra
mile for their customers and reward loyalty are more likely to
succeed in the long run.More importantly, in order to know how to
retain customers, it is important to rst realise why they leave in
the rst place. Our consumer survey revealed that 78% of customers
switch insurance provider because they had been ofered a better
price by another provider. Other reasons suggested were that they
were ofered more extensive cover, were seeking better customer
service or were ofered an incentive (e.g. gift card/reward scheme)
by the new provider.Consumers within the nancial industry can be
quite ckle as they seek the best price, therefore to keep them
interested you have to ofer them what the competition ofers and
more.With 81% of consumer survey respondents claiming they would
feel more valued as a customer if their insurance provider
surprised them with gift vouchers for a third party company as a
reward for loyalty, it is clear to see that gift vouchers are an
efective strategy for customer acquisition and retention.What do
consumers want?Carrot Car Insurance use a variety of reward schemes
for customer acquisition, retention and to encourage safer driving
as they track driving behaviours using insurance box telematics. By
using Driver Style Rewards, Refer-a-Friend Rewards and Retailer
Cashback, Ed Rochfort, Product Director of Carrot Car Insurance,
informs us that Carrot Car Insurance has Experienced a 62% renewal
rate from existing customers, which is high when compared to other
telematics-based insurance providers black box insurance is
generally regarded as something only suited to brand new drivers in
their rst year on the roads.Andrew Johnson, Director General of the
UK Gift Card & Voucher Association, states that In a
competitive marketplace where customers nd it easy to switch
supplier, loyalty schemes are an efective way to increase customer
retention and improve protability. Loyal customers buy more and are
often willing to pay more for the service you provide. 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.Keeping your customers attention, making them feel
appreciated and encouraging loyalty throughout your customer base
should be a consistent part of your marketing strategy. The second
your customer feels that they are not valued you can be sure that a
competitor will be ready to take their business from you.
Maintaining some sort of customer retention strategy will help you
to keep your customers interested in the long term.Putting it into
practiceKey TakeawayIn a competitive marketplace where customers nd
it easy to switch supplier, loyalty schemes are an efective way to
increase customer retention and improve protability.Andrew Johnson,
UK Gift Card & Voucher AssociationSurprise your customersBenet
1 : Acquiring new customers with an attractive oferingBenet 2 :
Customer RetentionBenet 3 : Creating brand advocatesBenet 4 :
Building long lasting relationships with your customersBenet 5 :
Repairing damaged relationships and winning back defected
customersBenet 6 : Staying one step ahead of the competitionBenet 7
: Measuring customer behaviourM&S for business Acquisition
& Retention SchemesCreating brand advocatesBenet 3For a
customer to become a brand advocate, you really need to impress
them. Derek Singleton of Software Advice, describes brand advocates
as Satised customers who enjoy spreading your brands message and
helping current or potential customers. He goes on to say For
business-to-consumer (B2C) businesses, loyalty programs can be an
efective way to turn customers into brand advocates. People enjoy
earning stars, points, medals, and badges as rewards.What do
consumers want?One of the most successful ways companies are
creating brand advocates is by introducing refer a friend schemes
into their services. These schemes reward existing customers for
becoming brand advocates, telling their peers about the companys
great services and getting them to sign up. Many companies have
already adopted this strategy, for example, Simply Business ofer
existing customers a cash incentive of 25 for themselves and the
person they refer. Rewarding both the new and existing customer
helps to build relationships at both ends of the spectrum.Carrot
Car Insurance has their own specic Refer-a-Friend Rewards Scheme to
help them attract new customers. Ed Rochfort, Product Director of
Carrot Car Insurance, told us that Every Carrot Card holder that
refers a friend via our unique Facebook app will get a 40 referral
reward for every friend that goes on to buy an insurance policy
from us for the rst time. The number of friends drivers can refer
and the amount of rewards they can earn is unlimited.An efective
strategy is to make your customer feel like they are a part of the
team. Refer a friend schemes essentially turn your customers into
your sales team. They feel valued when they are rewarded and are
therefore more likely to continue using your service and also bring
in new business for your company.Although you want people to
naturally become brand advocates by providing an excellent service,
it sometimes helps to ofer an incentive. If nothing else, your
customers will be brand advocates because they appreciate the
rewards given to them.Putting it into practiceKey TakeawayRefer a
friendBenet 1 : Acquiring new customers with an attractive
oferingBenet 2 : Customer RetentionBenet 3 : Creating brand
advocatesBenet 4 : Building long lasting relationships with your
customersBenet 5 : Repairing damaged relationships and winning back
defected customersBenet 6 : Staying one step ahead of the
competitionBenet 7 : Measuring customer behaviourM&S for
business Acquisition & Retention SchemesBuilding long lasting
relationships with your customersBenet 4An American study carried
out by the Corporate Executive Board on 7,000 consumers concluded
that of those consumers who stated they had a strong relationship
with a brand, 64% said the reason they had that strong relationship
was because it had the same values as they did. Building a
relationship with your customer means having a strong identity as a
brand. You need to think about what you stand for, how you
communicate your message and the actions you take to prove
yourself.One of the best ways you can build relationships with your
customers is to make them feel valued. In fact, 81% of our consumer
survey respondents said they would feel more valued as a customer
if their insurance provider were to surprise them with gift
vouchers for a third party company as a reward for loyalty. This
strengthens the relationship as you are giving the customer more
than the standard service they have paid for.What do consumers
want?Highly successful insurance company Aviva launched a campaign
in 2012 in order to build on their relationships with customers.
Aviva noticed that traditionally insurance companies only have
contact with their customers during purchase, renewal and claim
stages of the process. This is not a best practice for creating a
relationship, so Aviva rolled out a three stage programme which
involved building a better understanding of the customer through
market research, refreshing their marketing strategy and
communicating their new strategy to the public. Aviva improved
their products and technologies used and added a unique added-value
loyalty programme which rewarded existing customers, therefore
creating a better relationship.Derek Singleton of Software Advice
states that Rewarding customers for their activity and time is the
focal point for building loyalty. If you take the time to recognise
your loyal customers and thank them for their business, it creates
a reciprocal relationship. Customers want a two way, give and take
relationship to know that they are appreciated.To build on customer
relationships it is important to know the customer rst. That is why
conducting in depth research is essential. Once you know what your
customer wants, what they value and the best way to communicate to
them, you can start implementing strategies to develop the
relationship.Putting it into practiceKey TakeawayRewarding
customers for their activity and time is the focal point for
building loyalty. If you take the time to recognise your loyal
customers and thank them for their business, it creates a
reciprocal relationshipDerek Singleton, Software AdviceDo the
researchBenet 1 : Acquiring new customers with an attractive
oferingBenet 2 : Customer RetentionBenet 3 : Creating brand
advocatesBenet 4 : Building long lasting relationships with your
customersBenet 5 : Repairing damaged relationships and winning back
defected customersBenet 6 : Staying one step ahead of the
competitionBenet 7 : Measuring customer behaviourM&S for
business Acquisition & Retention SchemesRepairing damaged
relationships and winning back defected customersBenet 5Sometimes
things can go wrong and customers can be left feeling dissatised
and disgruntled. Our research suggests that customers can become
particularly disgruntled when they get their insurance policy
renewal quote, which is usually much higher than their original
policy. Customers want honesty from their provider. They want to
feel that they are getting the best deal without having to ght for
it and they also want their provider to admit when they are wrong
and resolve any issues or problems fully. Customers are most likely
to defect from an insurance provider if the issue goes unresolved.
According to Colin Shaw, CEO of Beyond Philosophy, It takes 12
positive experiences to make up for one unresolved negative
experience. If an issue goes unresolved, it is unlikely you will
repair the relationship with your customer.What do consumers
want?Daniel Tamarjan, Online Marketing Manager of Freedom Health
Insurance, highlighted the importance of repairing relationships
with disgruntled customers. When asked about using physical gifts
as a customer reward, Daniel stated that We only used them for
claimants who had a difcult claims process. Identifying when a
customer is having a bad experience is the rst step, ensuring they
feel that you have recognised how they feel via gifts and rewards
is a great way to start building on that relationship again.And,
this philosophy is important across all industries. Last year,
almost 132,000 people switched their bank accounts from Barclays
bank. Barclays recognised the need to repair their damaged
relationships with customers and win back defecting customers, so
they introduced a new rewards scheme to do this. A spokesperson for
Barclays said, We have recently launched Barclays Blue Rewards to
give new customers a great reason to switch to us and existing
customers a great reason to stay and we are delighted with the
level of interest to date.Investing time and money into keeping
your existing customers happy is highly benecial as it is much more
cost efective to retain customers than it is to attract new ones.
Customers want you to recognise when you have performed badly and
make up for it. Rewards and gifts are a great way to do this but
you also need to resolve the issues that led to the customer
feeling disgruntled in the rst place.Putting it into practiceKey
TakeawayResolve issuesBenet 1 : Acquiring new customers with an
attractive oferingBenet 2 : Customer RetentionBenet 3 : Creating
brand advocatesBenet 4 : Building long lasting relationships with
your customersBenet 5 : Repairing damaged relationships and winning
back defected customersBenet 6 : Staying one step ahead of the
competitionBenet 7 : Measuring customer behaviourM&S for
business Acquisition & Retention SchemesStaying one step ahead
of the competitionBenet 6Consumers want to be with the best
insurance provider for their personal circumstances. Our consumer
survey respondents indicate that price, reward schemes, customer
service and brand name are some of the most important factors to
them when deciding which provider to choose.We also found that 75%
of respondents would be persuaded to switch insurance providers if
another provider ofered them insurance cover at the same price but
with the additional benet of loyalty rewards. This shows us that
customers are always on the lookout for the best overall ofering
and will go with the provider that benets them most.What do
consumers want?Not only is competition erce in the nancial services
industry, but information on each company is so readily available
online. Becky Roberts, representative of Carrot Car Insurance, told
us that Motor insurers are well aware that young drivers, and their
parents, have access to many tools such as comparison sites, social
media and blogs which provide them with up to date information on
providers and the best deals available when it comes to insurance.
The availability of information and the abundance of noise online
makes it difcult for insurers to stand out against the
competition.The Co-Operative insurance has set up a rewards program
for their customers which allows them to choose from a wide variety
of discounts on entertainment, home and garden, lifestyle and
leisure, travel and motoring and much more. They have even set up
an entire website dedicated to promoting these customer discounts.
This gives them a real competitive edge as potential customers can
visit this site before purchasing a product to nd out what kind of
rewards they will receive if they do so.To have a real competitive
advantage, you not only need to ofer added benets with your
products but you need to promote these benets so that potential
customers are fully aware of how outstanding your ofering really
is. From our consumer survey, 45% of respondents stated that they
did not know whether their insurance provider ofered a reward
scheme or not. This lack of awareness puts the insurance provider
at risk of losing these customers due to poor communication.Putting
it into practiceKey TakeawayCommunicate your incentivesBenet 1 :
Acquiring new customers with an attractive oferingBenet 2 :
Customer RetentionBenet 3 : Creating brand advocatesBenet 4 :
Building long lasting relationships with your customersBenet 5 :
Repairing damaged relationships and winning back defected
customersBenet 6 : Staying one step ahead of the competitionBenet 7
: Measuring customer behaviourM&S for business Acquisition
& Retention SchemesMeasuring customer behaviourBenet 7Consumers
expectations are constantly on the rise. They want the companies
they deal with to automatically know what they like, dislike, need
and want. According to a study published by Invensis Global
Outsourcing Services, Consumers want ofers that are relevant to
them. Irrelevant spam mail, telemarketing calls and online
advertisements are an irritant for many consumers and can afect
their perception of the insurance company. Loyalty reward schemes
are an excellent way to collect the data that ensures you make
appropriate oferings to the customer.What do consumers want?Many
companies are using the data they have collected from various
customer interactions to personalise and improve their service.
Knowing your customer allows you to predict what they want before
they ask for it, tailor your communication methods to each
individuals preferences and identify customer pain points. When
customers sign up to a reward scheme, you have the opportunity to
ask them a number of questions, gathering vital data and
information about that person so that you can target them with
personalised ofers.It is also important to efectively 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. Andrew goes on to say
It is good to ofer rewards, but it is essential that they are based
on development analytics. Above all, the best schemes are simple to
use and the rewards are attractive and attainable.We found that
successful measurement of a reward schemes efectiveness was a
challenge that many insurance experts we spoke to had to overcome.
Daniel Tamarjan, Online Marketing Manager of Freedom Health
Insurance, mentions that Internal confusion for people looking
after how these (reward schemes) are implemented and The lack of a
proper system to record how these rewards are applied made the
schemes hard to measure and implement, especially When running
diferent promotions at the same time (even if to diferent
audiences).Ed Rochfort, Product Director of Carrot Car Insurance,
told us that one of the challenges he faced Was to turn this
extremely accurate measurement of driving performance into
meaningful feedback that would enable us to reward our customers
for maintaining a positive driving score. Efective measure-ment and
application of data are critical for internal return on investment
analysis, but they are also important factors in driving the
rewards strategy forward and ensuring the appropriate rewards are
set according to customers needs and wants.To have a real
competitive advantage, you not only need to ofer added benets with
your products but you need to promote these benets so that
potential customers are fully aware of how outstanding your ofering
really is. From our consumer survey, 45% of respondents stated that
they did not know whether their insurance provider ofered a reward
scheme or not. This lack of awareness puts the insurance provider
at risk of losing these customers due to poor communication.Putting
it into practiceKey TakeawayIt is good to ofer rewards, but it is
essential that they are based on development analytics.Andrew
Johnson, UK Gift Card & Voucher AssociationMeasure
SuccessM&S for business Acquisition & Retention
SchemesConclusionBenet 7In order to stand out from the competition
in the insurance sector, companies need to work on their overall
ofering to the customer. While it is apparent many consumers look
for the best priced policy, this is not the nal deciding factor in
their decision making process. Most insurance companies are able to
match the prices of their competitors which means there has to be
something else inuencing the consumers decision.Implementing a
reward scheme for loyalty, referrals or signing up to an insurance
policy is a great way to increase customer acquisition, retention
and satisfaction. However, it is important that the ofering is
relevant to the individual and ofered at the right time. Allowing
customers to earn points and rewards makes them feel involved with
your brand and gives them the feeling that your service is worth
more than that of the competition.As with any relationship in life,
the one between business and consumer needs to be nurtured and
approached delicately. That is why research and planning are
imperative to the success of a reward scheme. If you get it right,
you can build relationships and create brand advocates who will
stay with you for a lifetime.At M&S for business, we have
developed an innovative new ofering specically for the insurance
industry, called Insurance Replacement. Insurance Replacement
allows insurance providers to ofer gift cards to claimants in order
to settle their claim. This unique ofering can speed up the claims
process and provides extra value to the claimant. For more
information on Insurance Replacement, please feel free to get in
touch with us.Are you looking to build a strategy around attracting
new customers or wanting to build on the relationships already in
place with existing customers? Speak to our dedicated team today to
see how M&S can help drive customer acquisition, retention and
loyalty within your business.Stand out from the crowd