This guest blog post was written by Aleksandr Peterson, a Technology Analyst at TechnologyAdvice. TechnologyAdvice helps technology buyers make well-informed purchase decisions through comprehensive product listings & industry analysis.
How to Use Your CRM to Predict and Prevent Churn
There's nothing wrong with prioritizing sales and acquisition. In fact, it'd be pretty hard to stay profitable if you didn't. But a lot of agencies invest so many resources in scoring new customers that they fail to adequately serve the ones they have.
As a result, customer satisfaction suffers. And as we all know, low satisfaction causes a breakdown in loyalty, which leads to churn—i.e., your customers take their business elsewhere. It's a vicious cycle.
Insurance agencies, in particular, know the effects of dissatisfaction and churn. A recent Accenture report found that customer defection in the life, property, and casualty sector could account for as much as $470 billion in lost premiums. Only 29 percent of customers said they were happy with their current provider. These numbers illustrate why customer dissatisfaction cannot be ignored.
Though it may seem less intuitive than the sales/acquisition route, agencies that successfully manage customer loyalty will have an easier time meeting revenue goals, expanding their market presence, and staying ahead of the competition. An analyst from Bain and Co. once suggested that a five percent increase in retention can generate a 25 percent increase in profitability for financial service companies.
There are many ways to cultivate loyalty, but the most effective efforts are those that scale across your entire customer base. For that, your CRM software is the perfect tool. Since you already use it to manage customer and account data, all you need to do is dig a little deeper: try to understand your customers' needs before they become pain points; deliver the right products and the highest caliber experience.
Below are five ways to make that happen.
Use Built-In Reporting to Troubleshoot Churn
Most CRMs offer built-in reporting tools to analyze trends in revenue, lead conversion, account creation, and more. An insurance-specific CRM may also track metrics such as policy renewals and annualized premiums.
Once you've pulled some of these reports, compare data between ongoing and broken relationships to look for patterns. Perhaps your churned customers share a common demographic trait or cite the same reason for leaving. Use this insight to curb future dissatisfaction (perhaps by modifying a product line or adding a new customer service feature).
Use Customer Data to Personalize Experiences
Your CRM database isn't just a glorified phone book; it's a rich repository of customer data. Each profile contains a 360-degree view of a customer, from demographic information to account history, product needs, special notes, and even digital body language. Use this data to make each interaction more meaningful and personal.
At the most basic level, that means addressing the customer by name in all communications (instead of by "Dear Valued Customer") and acknowledging their birthdays and life changes (marriage, job, relocation). On a deeper level, it means tailoring the customer experience to match their needs and objectives. Offer a customized policy or program based on the customer's age or occupation—for example, a special policy for retired senior citizens. This relevancy maximizes your value proposition and helps you maintain a competitive advantage.
Conduct Regular Check-Ins/Get Feedback
When you acquire new customers, don't just set and forget their accounts. Strong customer relationships are built, not bought, and they require regular maintenance. Use your CRM to automatically create follow-up tasks when a customer reaches a certain milestone or needs to be renewed. Conducting regular check-ins can be a great way to spot cross-sell and upsell opportunities which, of course, strengthen the customer relationship.
If you're looking for feedback on a broader scale, consider running a regular customer satisfaction survey to get feedback about what's working and what's not. Your CRM can help you populate a contact list, and in some cases, send the survey out through an email campaign.
Use Email to Keep Customers Engaged
Speaking of email, email marketing is a great way to keep customers engaged over time and fill in the gaps between other touch points. You can use transactional emails, of course, to remind customers of renewal dates or confirm account changes. These add convenience to the customer relationship. But email is also an opportunity to add value by nurturing customers with educational content. For example, you might send a free e-book about checking for gaps in life insurance coverage. The customer did not request this asset, but will nonetheless find it useful.
To ensure emails are always relevant and timely, segment your email lists by common characteristics and use automation rules to trigger delivery. Most CRMs integrate with third-party email platforms, although some provide their own email marketing.
Reward Your Best Customers
In principle, every customer is a valuable customer. But when you add the numbers up, let's face it: some are more valuable than others. That doesn't mean you should offer different service based on how much revenue an account drives, but it does give you a chance to reward high-impact relationships with special perks or incentives. If you do this correctly, your best customers will also be your most loyal customers.
Use CRM reporting (again) to segment customers based on the number of accounts or policies they hold, then decide what incentives you can provide—anything from rate discounts to exclusive membership privileges can be effective.
Progressive's Loyalty Rewards program is a great example: at varying levels of membership (gold, platinum, diamond, emerald, crown), members receive access to rate discounts and benefits such as accident forgiveness or priority customer service.
The only lasting way to reduce churn is to increase satisfaction and loyalty. As you can see, the technology you use to manage customer relationships plays a huge role in strengthening and expanding those relationships. That means you've got your work cut out for you, but it also means you have a head start. With the right CRM software, you can pinpoint where your relationships are weak and take the necessary steps to improve.
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