As the recession in the US has brought about financial difficulties to millions of its residents, it is significant to retain existing customers.
Customer retention is absolutely important for those insurance agencies that have long term profit goals says the report given by JD power and associates.
The report showed that 30% of the households who earned less than $50,000 opted for new insurance carriers in the past year and almost 45% of the customers changed their carriers. And 26% of the households, those that earned more than $100,000 opted to buy new carriers leaving just 31% of them actually switching!
As 90% of the customers stayed back with their original carriers in the past year, those families that are more affected due to recession are a big challenge to retain for the insurers. Some of the insurers have somehow managed to increase the number of their customers in this difficult economic environment; this comes at the cost of other insurers of the auto insurance market in the US.
Amongst those customers who bring together many insurance products, the rates for retention is high shows the report.
The average rates for retention is 95%, those who bring together auto and home policies with the original carrier and it rates 92% for those who bring rental and auto policies together. And the customers who use just one policy at a time get average rates of 83% and 85% for those who don’t combine their auto and home insurances together.
Improving their retention by at least a percent for any of the largest us insurers can generate millions of dollars over the time period, so the slight differences in the rates of retention will have a big impact after a period of time. Innovating policies and satisfying customers would bring about huge incentives for the carriers.
The report shows that many variances are found between the various groups of demographic groups.
Different lifestyles and needs for insurance can be indicated through the differences shown in demographic groups. To retain customers it is important to tailor the products provided based on the different demographics of people instead of keeping just on size for all says bowler, the senior officer of JD power. More than 30 insurance carriers are evaluated but the surveys of the personal insurance retention report that researches on 275,000 customers holding auto insurance. Even all state, farmers, American families, progressive, state farm etc. are being evaluated.