The cost of acquiring new customers is significantly higher than the cost of retaining existing customers. This is why it is imperative that customer retention strategies are prioritised within your business.
What exactly is customer retention?
Customer retention refers to a company’s ability to retain their first-time customers who will renew or continue with their product or service. This will be directly impacted by the number of new customers acquired versus the number of existing customers that will churn.
Churn is the term used when existing customers fall off the company books due to their policy lapsing either intentionally or unintentionally / canceling of their subscription or contract / choosing another provider or no longer requiring the service offered.
Customer retention strategies for the insurance sector (particularly short term insurance) are even more vital as on average, 7% of customers churn in the insurance industry, which has a negative impact on profitability and growth.
What is customer retention management?
Customer retention management is the process of maintaining relationships with your current customers and meeting their desires, needs and expectations long after they purchase your product or service. This will develop a degree of loyalty to your business and a desire to remain on your books.
There are several reasons why customer retention is critical to a company’s growth and success which are listed below:
- Affordability: It’s 6 to 7 times more expensive to acquire a new customer than it is to retain an existing customer.
- ROI: A 5% increase in customer retention can increase company revenue by 25-95%.
- Loyalty: Retained customers will buy more frequently and are prepared to spend more than newer customers. This is because they have firsthand experience as to the value of your product or service and choose to renew, time and time again.
- Referrals: Satisfied, loyal customers are more likely to praise a company and refer their family and friends, which has the potential for bringing in new customers at a vastly reduced cost.
Customer Retention Rate by Industry
The average customer retention rate varies across the different industries, and according to the 2020 roundup of Statista’s Industry Retention Rates, these are as follows:
- Retail: 63%
- Banking: 75%
- Telecom: 78%
- IT: 81%
- Insurance: 83%
- Professional services: 84%
- Media: 84%
How does our Retain&Sustain product help businesses retain customers?
- We intervene before you lose your customer. We engage with customers who have just defaulted on payment to promote the value of your product and offer a simple solution to make payment arrangements before they lapse or cancel.
- We re-engage with lapsed customers with the main objective of bringing them back onto the businesses’ books in a cost efficient manner. Once retained, the customer is likely to remain as an active customer for a further 12 – 24 months.
- We provide options to resolve account issues and queries personalised to our clients unique set of circumstances.
- Our product is easy to use and able to sit on any platform whether it be web-based, mobi, WhatsApp etc. We can fully integrate into our clients back-end systems and offer an ecosystem of partners and payment gateways. This will allow the customers to change banking details, make a payment or arrangements for outstanding payments.
Case Study: Momentum Insure
One example of a truly successful outcome of our Retain&Sustain product is our partnership with Momentum Insure. They required an interactive solution to improve premium collections, overall customer experience and customer retention. Our product helps guide the customers through an AI-powered conversation to help resolve any account issues and manage unpaid premiums. The product can be accessed through personalised SMSs and emails from the insurance provider, and the customers can in turn engage when it is most convenient for them, 24/7.
This resulted in a 80% completion rate, 74% collection rate, 98% non-cancellation outcome and 1200 retained policies in a 6 month period.
If you are interested in their success story becoming true for your business, please do not hesitate to contact us.