Driving Effective Customer Retention for Life & Pension Companies
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In an industry where it costs 13 times more to acquire a new customer than to retain an existing customer, where a 5% improvement in customer retention can cause an increase in profitability between 25% and 85% (Reichheld and Sasser 1990) and where only 37.6% of customers think their insurer made a great or fair amount of effort to retain them, life and pension companies might consider shifting some of their sales and marketing investment from attracting new customers to maximizing customer value through persistency and improved customer retention.
As insurance organizations expand focus to include not only customer acquisition but also persistency and retention, they can learn from leading organizations that have gone before
them using an analytical Customer Relationship Management (CRM) approach. We have identified a few key high value practices from these leaders related to retention. These high value practices are partially enabled by technology and partially enabled by leadership's ability to think "outside the box" in pursuit of attrition reduction.