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The secret of keeping customers: not just price, says Junction
Research gives insight into how to earn customer loyalty
Immediate release: 24 May 2012
When choosing whether to renew car or home insurance, price is the deciding factor for just 39 per cent of customers, according to the latest industry research from Junction. Furthermore, even when cancelling their policy, price increase is the driver for only 43 per cent of people.
As part of a significant consumer insight exercise, affinity specialist Junction surveyed more than 3,500 insurance customers. The research examined the level of 'customer effort' required at various stages in the life of an insurance policy – purchase, mid-term adjustments, claims, renewal etc., as well as the factors that influence the decision to renew or cancel any policy.
Vince Chaney, Director of Marketing and eCommerce at Junction, said: "It's fascinating that price is much less of a decision factor than you might think. What this research has shown us is that people are seeking simplicity when it comes to renewing their policy. 18 per cent of customers cited 'easy process' as their reason for renewal. Buying car and home insurance is seen as a necessity, rather than a pleasure, so making it easy and simple is very important. With around 60 per cent of people saying that they are not driven by price at renewal, there is a major opportunity to keep their business – as well as the chance to persuade the 39 per cent who are price-driven that there are good reasons to stay with us."
Importantly, 12 per cent of people appreciated their insurance brand recognising their loyalty in some way, saying that this was their reason for renewal.
Other key findings suggested that insurance brands need to introduce a greater degree of flexibility around how they communicate with customers at renewal. Only 32 per cent prefer to receive a letter. 'Online' was cited by 26 per cent, with e-mail chosen by 22 per cent. More than one in ten (16 per cent) preferred a telephone call. Interestingly, SMS was not selected by any respondents.
Vince Chaney continued: "Customers today have a number of options available in how they deal with their financial providers. They will be more likely to stay with a provider if it can communicate with them via their preferred channel. For many, letters are inconvenient and outdated – an online alert or e-mail suits them much better. If we want to keep these customers, we need to be flexible in how we engage with them. It seems obvious, but most providers are yet to make any moves in this area."