If there’s one customer journey insurance providers should nail, it’s the insurance policy renewal.
Well-worn marketing textbooks will tell you that the cost to retain a customer is one fifth of the cost to acquire a new one. Whether or not that exact figure rings true for your company, it won’t be far off. Letting existing customers needlessly leave is like shooting yourself in the foot.
So why then do my insurance providers do the bare minimum at renewal time? Their efforts go no further than a standardised posted notice with one or two follow-up emails. That’s amazing.
A nice surprise
My motivation for this post came this morning when I got a text from Service NSW (Roads and Maritime services to be precise). Two days out from my car registration expiring they sent me the following:
Usually, it’s the private sector showing the public sector the way, but not in this instance.
They got a lot right with this text:
- Very clear message, with personalisation showing which car rego they’re talking about (the number plate).
- Shortlink URL to a mobile-optimised payment webpage.
- Contact details to get in touch if I need to take alternative action.
- I got it at 8:47am when I’m lining up my day’s ‘to-do’ list.
Now it’s not quite perfect, but I don’t want to get bogged down in semantics in this post. It’s still WAY better than anything I got from my insurers for home contents, car cover or annual domestic travel.
So where are insurers getting their renewals wrong?
Critically, they stop at traditional snail mail and email communications.
My snail mail gets collected maybe every few days. Anything legit is buried with Aldi catalogues and Bunnings brochures. It’s always sent way too far in advance, usually over a month out. This earns it a place in the infamous kitchen mail pile, guaranteeing it’s forgotten or misplaced.
Then the email renewal notices run into usual email problems. Open rates of under forty percent. Junk mail folders. Emails getting sent to the work email of a job I left six months prior.
It blows my mind more insurance companies don’t send SMS renewal notices. There’s the 98% open rates. Complete control of delivery timings. And the ability to feature web links through to payment methods. But more than that, it’s how customers want to be contacted.
Digital marketing magazine reports that 75% of customers want to receive offers via SMS. This would no doubt be higher for a simple policy renewal reminder, given the prospect of an unregistered and uninsured car. But it also reinforces that customers would be open to renewal offers via SMS. Worth remembering for a last-ditch churn prevention tactic.
An easy business case
When SMS costs are sub-10 cents per send, insurance companies should see the value immediately. My comprehensive car insurance is $750 annually – that’s a little over $2 a day. If a text stops my policy lapsing for even one day then its paid for itself many times over. If it stops me from leaving and going to a competitor, the returns are enormous.
So, hats off to Service NSW for their timely text reminder this morning. My rego’s been sorted and they haven’t missed a day’s revenue. Happy customer.
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