Customer Retention Best Practices

Part
01
of two
Part
01

Supplemental Insurance Customer Retention Case Studies

Travelers Insurance Company and Aflac Inc., are companies that were able to increase customer retention. Travelers Insurance, in an effort to increase customer retention, consciously implemented a successful direct-mailing program from individual agents to customers. This resulted in a 5% increase in retention rate for agents who chose to participate in the program. Aflac focused their retention efforts on implementing a new enrollment database for their policyholders, allowing them to 'instantly access' their information at any time, which influenced retention rates positively.

Case Study 1: The Travelers Companies (Travelers Insurance)

Company Overview:

Best PracticeS:

  • Travelers Insurance utilized a database to analyze customer desirability.
  • As a result of this database analysis, Travelers implemented a direct-mailing program that communicated with five new policy buyers within the first year. The communications vary based on which insurance is bought.
  • The mails were sent from the policyholder's individual agent and not from the corporate office of Travelers.
  • Travelers also implemented a website for individual agents to review the status of their program. The program showed them what happened to agents who implemented the program (in terms of customer retention) compared to those who did not.

Content Contributing to THE Success of Direct PracticeS:

  • Travelers created a one-to-one customer contact system that consisted of a personalized letter, generated and sent 60 days before annual renewal that provided a review of the policy and a reminder of the renewal date; a thank you card in the 1st quarter; a cross-sell postcard in the 2nd quarter; a newsletter in the 3rd quarter; and a seasonal card in the 4th quarter.

How the Practice was Successful:

  • Overall, agents who did not participate in the program lost 17.3% of their customers in the first year while agents who participated in the program lost only 12.2%
  • For auto insurance customers as a whole, participation in the direct-mailing program increased the client retention rate by 5%. For property insurance, the increase in client retention was 4%.


Case Study 2: American Family Life Assurance Company (Aflac)

Company Overview:

Best PracticeS:

  • The company implemented a focused increase in cross-selling and up-selling.
  • In their 2012 financial analyst's briefing, they cited that "the value of a second policy is much more than the additional profit from that policy. The value is in increasing the retention rate (the persistence) of the first policy. Somehow, when people own two (or more) policies from a company, they are more loyal than if they just own one."
  • Aflac used its Wingspan Enrollment Solutions, an enrollment software platform, to create a more seamless experience for agents in voluntary benefit enrollment and communication, which made up-selling and cross-selling more easily managed for individual clients. It also provides continuous feedback to the customer following their first enrollment period.

Content Contributing to THE Success of Direct PracticeS:

  • The company used targeted software to allow policyholders to view their policies at any time, which allowed agents to communicate to customers about new benefit enrollments, thus increasing the percentage of cross-selling and up-selling.

How the Practice was Successful:

  • According to Aflac's 2012 financial analyst's briefing, the company saw a decrease in account defections as a result of the initiatives, especially for new accounts.


Case Study 3: Supplemental Insurance Company — Retention Efforts Led by Progressive Impressions International

Company Overview:

Best PracticeS:

  • The primary objective of the program was to increase customer retention by 3%.
  • The supplemental insurance company implemented a communication program aimed at increasing first year persistency. The insurance company utilized direct mail to reach each new customer immediately after the purchase and continued with additional communications throughout the first year.
  • The primary goal of the program was to reinforce the new customer’s purchase decision, provide ongoing reminders of the product’s value, and defuse potential “buyer’s remorse.”

Content Contributing to THE Success of Direct PracticeS:

  • Communications via direct mail included personalized postcards, letter packages with keepsake items from the company, a quarterly newsletter, and a holiday greeting card. They also included referral requests and a customer care magnet.

How the Practice was Successful:

  • In comparison to a control group of new customers, which was held out of the direct mail communications, the customers receiving the direct mail communications had a 9% increase in retention.
  • This retention rate was three times higher than the original goal.
  • Furthermore, after six months of receiving direct mail communications, there was a 12% increase in customer household retention.
  • Progressive Impressions International estimated that the lift in retention outlined in the case study represented an annual premium value of up to $7 million

Research Strategy

In order to research this request, we first extensively searched for any relevant case studies that specifically addressed customer retention within the supplemental insurance industry in the United States. While we were able to find a case study that checked all criteria, the name of the supplemental insurance company profiled was not provided by the source. The logo of this company was present on the ad copy of the case study but it was blurred and illegible. We attempted to identify the company further by searching through the client list of the company that provided the case study (Progressive Impressions International). However, we were unable to find the name of the supplemental insurance provider outlined in the case study. Nonetheless, we felt it was important to include this case study because it provided clear, useful, hard data about the customer retention improvement strategy that was implemented, was specific for supplemental insurance, and provided clear statistics about the success of the initiative.

For Aflac, most of the data came from a financial analyst's briefing in 2012. However, while the document did proclaim that the customer retention initiative that was implemented was successful, it did not provide hard numbers about the level of improvement. Furthermore, while the document did provide information that their strategy (improving their enrollment database) allowed for 'continual' and 'perpetual' communication with the client, it did not provide specific information about the number of times customers engaged with the content or the number of times agents were communicating with policyholders. While the initiative was published more than two years ago, the company made it clear that it was an 'ongoing initiative,' implying that they are still using these strategies.

Part
02
of two
Part
02

Subscription and Membership Customer Retention Case Studies

Some case studies that showcase companies best practices in customer retention within the subscription membership market are Comcast Corporation's utilization of bundling, Ipsy's customer rewarding programs, and Marvel's tiered loyalty program.

Comcast Corporation

Company Overview

  • Comcast Corporation is a global media and technology company with a total market capitalization of around £132 billion. It has two primary businesses: Comcast Cable and NBCUniversal.
  • Comcast Cable is one of the US’s biggest video, high-speed internet, and phone providers.
  • NBCUniversal operates a slew of news, entertainment, and sports cable networks.

Customer Retention Practice Used

  • Price bundling is a sales and marketing tactic used to demonstrate added perceived value to customers where, if customers purchase just one product, they pay a certain amount. However, if they purchase a package with two products, it costs more, but it is cheaper than buying those two products separately, on an average between 7% to 15% cheaper.
  • Comcast uses bundling as a strategy of customer retention. Nearly 70% of customers bundle multiple products from the company.
  • The company says bundled customers exhibit lower churn rates than those subscribing to a single service.

What Comcast Says Regarding Bundling

  • Comcast advocates and promotes bundling through their Xfinity discovery hub where they discuss the benefits of choosing one provider for internet and mobile service.
  • They also provide additional product information like Xfinity X1 feature that enables users to link their TV, phone, internet, and tablets together.

Why It is Among the Best Practices

  • According to 56% of Americans, one of the top three reasons for keeping their pay-TV subscription is the fact that it's bundled with their home internet bill, according to Deloitte's survey.

Ipsy

Company Overview

  • Ipsy is a monthly subscription service that costs $12 per month and provides subscribers with a makeup bag of five deluxe cosmetics samples.

Customer Retention Practice Used

  • The company uses Skinnerian psychology, a concept that rewards customers every time they perform a certain action. This method can be applied to make customers keep a certain behavior.
  • Ipsy awards points for actions like referring friends or gifting subscriptions. They also reward points for ordinary actions like following the brand’s official influencers (called “Ipsy creators”) on social media or leaving reviews (even negative ones).

Types of Content They Are Using

  • Ipsy gifts glitter, exfoliating cleanser, and lotions based on the points customers have.
  • The company offers points based on different criteria such as joining, referrals, following content creators, and providing reviews on products offered.

Why Rewarding Customer Behaviors is Effective

  • All successful brands rely on Skinnerian psychology to an extent, but subscription box services are better at using Skinner’s insights than most methods.

Marvel

Company Overview

  • The Marvel Cinematic Universe is an American media franchise and shared universe centered on a series of superhero films, independently produced by Marvel Studios and based on characters that appear in American comic books published by Marvel Comics.

Customer Retention Practice Used

  • Marvel uses a tiered loyalty program that ranks members into certain groups based on a certain metrics. Each rank/tier is defined by a set variety of rewards, services, or benefits, which increase in value as customers progress.
  • Participants can reach four levels: Insider, Agent, Elite, and True Believer. These statuses reflect on how comic book fans may define themselves in the comic book community. And it also allows fans to showcase their level of commitment to the community.

Types of Content Used in Regard to Tiered Loyalty Programs

  • Depending on the tier, subscribers can engage with Marvel on social media, read articles on Marvel.com, watch Marvel videos, listen to Marvel podcasts, check in at Marvel movies and events, and take surveys.

Importance of Tiered Loyalty Programs

  • Tiered loyalty programs are popular because they benefit both the customer and the company. They provide companies new ways to engage with customers, shield companies from the competition, and enable companies to segment customers even better.

Research Strategy:

In order to provide the case studies, we leveraged a compilation of leading publications and industry databases.
We began our research by searching for a precompiled list of case studies in best practices in customer retention within the subscription market. This strategy was insufficient as there was no single data source that fully addressed the topic. For this reason, we had to change our approach and focus on identifying the best customer retention strategies among different companies. After analyzing the data found, we selected those practices that were best suited or were utilized the most by subscription service companies. Upon identifying the best practices, we were able to identify the top companies utilizing the practice.

Sources
Sources

From Part 01
Quotes
  • "Communications include personalized postcards, letter packages with keepsake items, a quarterly newsletter and a holiday greeting card. They also include referral requests and a customer care magnet."
  • "The primary objective of the program was to increase customer retention by 3%. A control group was held out of the communications in order to gauge effectiveness. The result was a 9% lift in retention among the test group."
  • "Versus households not receiving the communications, at six months, results for households in the program were: ... 12% higher customer household retention. It’s estimated the lift in retention represents an Annual Premium Value of up to $7 million."
From Part 02
Quotes
  • "Price bundling, also commonly known as package bundling, is a sales and marketing tactic used to demonstrate added perceived value to customers"
  • "As a business, there are several different reasons why price bundling is an effective pricing strategy for a business"
Quotes
  • "Both companies say bundled customers exhibit lower churn rates than those subscribing to a single service"
  • "56% of Americans say one of the top three reasons for keeping their pay-TV subscription is the fact that it's bundled with their home internet bill, according to Deloitte's survey"
  • "56% of Americans say one of the top three reasons for keeping their pay-TV subscription is the fact that it's bundled with their home internet bill, according to Deloitte's survey"
Quotes
  • "Comcast Corporation is a massive global media and technology company with a total market capitalisation equivalent to around £132bn"
  • "It has two primary businesses: Comcast Cable and NBCUniversal"
  • "Comcast Cable is one of the US’s biggest video, high-speed internet, and phone providers through its Xfinity brand"
  • "NBCUniversal, meanwhile, operates a slew of news, entertainment and sports cable networks"
Quotes
  • "A cheaper price for everything you need, only one company to contact if you have questions or issues, and even added functionality (with some providers, your services can even interact with each other, like Xfinity’s X1 feature that links your TV, phone, Internet, and tablets together)"
Quotes
  • "All successful brands rely on Skinnerian psychology to an extent. The concept is simple: if you want customers to continue a certain behavior (like renew subscriptions or leave reviews)"
Quotes
  • "Each activity you complete as a Marvel Insider brings you closer to the next level of Marvel fandom"
Quotes
  • "A tiered loyalty program is a type of membership program where customers enjoy permanent perks and benefits depending on their rank"
  • "tiered loyalty programs rank members into certain groups based on a certain metric. Each rank – or tier – is defined by a set variety of rewards, services or benefits, which increases in value as customers progress"