Investigations underway, as loyal insurance customers lose out…

loyalty-insurance

It’s a sad truth that consumers face a “loyalty penalty” across a number of essential markets, which – as reported by Citizens Advice – could mean that many are overpaying by as much as £987 for energy, broadband and financial services.

With an investigation underway from the Competitions and Market Authority (CMA), looking into the home insurance market as well as Compare the Market for “breaking competition law”, your focus for 2019 needs to be on reinforcing your value to your long-standing customers.

 

Loyal customers lose out on £4.1 billion a year

In today’s competitive marketplace, brand loyalty should be rewarded, not penalised. Yet when it comes to mobile, broadband, energy and home insurance, this isn’t always the case.

Citizens Advice claim that essential service providers have been “undermining consumer choice by using processes which take advantage of people’s behavioural biases”, leaving many on “poor value deals” and affecting the most vulnerable the hardest.

Being penalised for customer loyalty, otherwise referred to in the industry as “price walking”, sees consumers paying more and more for every year that they remain with the same insurance provider – making their policy more profitable at their own expense.

It’s suggested that two in five (39%) Brits are unaware of this penalty, with over a third (35%) choosing to stay with the same company, simply because they find it too difficult or time-consuming to shop around for a better deal.

Loyal customers are seen as “cash cows”, and when they’re treated as such by a minority of businesses, their trust in businesses is eroded.

In 2018, over half (54%) of consumers are now under the impression that companies don’t have their best interests in mind, whilst one in six who have had a bad brand experience in the past have lost trust in other professionals from that sector.

If left to continue, this could lead to more and more taking it upon themselves to research and obtain cover for themselves, using a range of aggregators to do so and cutting the middleman – your brokerage – out of the process completely.

  

Consumers need help finding the best deal

There are a number of “key behavioural biases” that have a bearing on your customer’s ability to pick the right deal, according to Citizens Advice. First and foremost, they’re overwhelmed with choice, so they tend to instinctively drift towards the default option provided.

They’ll also make their selection based on: seemingly irrelevant information (anchoring), how a particular deal is framed (framing effects), and the immediate benefits (present bias).

So, it’s essential that you’re constantly sending them cross and upselling messages, reinforcing how much they could save by switching with your help and guidance, rather than allowing their policies to auto-renew.

A recent Which? study found that home insurance customers end up paying £75 extra per year than new policyholders, and given that 70% will stay with their provider for longer than a year, it’s fair to assume that this affects a significant proportion of the population.

Whilst the report goes on to suggest that the handful who have stayed with the same provider for over 20 years have faced an average premium payment of £396 per year, instead of the £195 offered to newcomers for their combined cover.

 

How will you strengthen your customer relationships?

From simple factors like our age, marital status and employment, to where we live and whether we can access the internet, it’s uncanny how some businesses are using the details of their customers’ lives to apply hidden costs.

As we head into the new year, you have the opportunity to position your brokerage as the greatest advocate for your customers, regardless of their insurance needs and demographics.

At BriefYourMarket.com, we want to help you to achieve your 2019 objectives. Get in touch at info@briefyourmarket.co.uk to find out how.

 

Stop worrying about what you can't change...
Maintaining your relevance in 2019
 

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Thursday, 13 December 2018

Investigations underway, as loyal insurance customers lose out…

loyalty-insurance

It’s a sad truth that consumers face a “loyalty penalty” across a number of essential markets, which – as reported by Citizens Advice – could mean that many are overpaying by as much as £987 for energy, broadband and financial services.

With an investigation underway from the Competitions and Market Authority (CMA), looking into the home insurance market as well as Compare the Market for “breaking competition law”, your focus for 2019 needs to be on reinforcing your value to your long-standing customers.

 

Loyal customers lose out on £4.1 billion a year

In today’s competitive marketplace, brand loyalty should be rewarded, not penalised. Yet when it comes to mobile, broadband, energy and home insurance, this isn’t always the case.

Citizens Advice claim that essential service providers have been “undermining consumer choice by using processes which take advantage of people’s behavioural biases”, leaving many on “poor value deals” and affecting the most vulnerable the hardest.

Being penalised for customer loyalty, otherwise referred to in the industry as “price walking”, sees consumers paying more and more for every year that they remain with the same insurance provider – making their policy more profitable at their own expense.

It’s suggested that two in five (39%) Brits are unaware of this penalty, with over a third (35%) choosing to stay with the same company, simply because they find it too difficult or time-consuming to shop around for a better deal.

Loyal customers are seen as “cash cows”, and when they’re treated as such by a minority of businesses, their trust in businesses is eroded.

In 2018, over half (54%) of consumers are now under the impression that companies don’t have their best interests in mind, whilst one in six who have had a bad brand experience in the past have lost trust in other professionals from that sector.

If left to continue, this could lead to more and more taking it upon themselves to research and obtain cover for themselves, using a range of aggregators to do so and cutting the middleman – your brokerage – out of the process completely.

  

Consumers need help finding the best deal

There are a number of “key behavioural biases” that have a bearing on your customer’s ability to pick the right deal, according to Citizens Advice. First and foremost, they’re overwhelmed with choice, so they tend to instinctively drift towards the default option provided.

They’ll also make their selection based on: seemingly irrelevant information (anchoring), how a particular deal is framed (framing effects), and the immediate benefits (present bias).

So, it’s essential that you’re constantly sending them cross and upselling messages, reinforcing how much they could save by switching with your help and guidance, rather than allowing their policies to auto-renew.

A recent Which? study found that home insurance customers end up paying £75 extra per year than new policyholders, and given that 70% will stay with their provider for longer than a year, it’s fair to assume that this affects a significant proportion of the population.

Whilst the report goes on to suggest that the handful who have stayed with the same provider for over 20 years have faced an average premium payment of £396 per year, instead of the £195 offered to newcomers for their combined cover.

 

How will you strengthen your customer relationships?

From simple factors like our age, marital status and employment, to where we live and whether we can access the internet, it’s uncanny how some businesses are using the details of their customers’ lives to apply hidden costs.

As we head into the new year, you have the opportunity to position your brokerage as the greatest advocate for your customers, regardless of their insurance needs and demographics.

At BriefYourMarket.com, we want to help you to achieve your 2019 objectives. Get in touch at info@briefyourmarket.co.uk to find out how.

 

Stop worrying about what you can't change...
Maintaining your relevance in 2019
 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Thursday, 13 December 2018
 
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