Why Customer Advocacy is Crucial for Insurance: 10 Challenges Solved

Read time:  9 mins

Insurance is often associated with complex calculations, risk management, and pricing strategies. But in the digital age, where recommendations and social influence carry significant weight, the power of customer advocacy is a game-changer for insurance companies. At Mention Me, we've witnessed this transformation firsthand. In this blog post, we'll explore why customer advocacy is crucial for the insurance industry and highlight the ten key challenges that advocacy can effectively address.

The Significance of Customer Advocacy

Mention Me has had the privilege of working with a diverse range of clients for over a decade, empowering them to harness our technology to drive growth through customer advocacy. Along the way, we've had some eye-opening revelations. Perhaps the most surprising was how well referral marketing works in the insurance sector. To be honest, we began as skeptics, doubting whether customers would discuss insurance with friends and assuming that price outweighed recommendations in the decision-making process. However, our experience over the past five years, collaborating with insurance brands like Staysure, Many Pets, Police Mutual, and Linxea, has unequivocally shown us that advocacy is one of the most potent tools insurance companies can wield.

Now, let's delve into the specific hurdles that insurance providers face and explore how customer advocacy can be the solution to each.

10 Challenges Advocacy Can Overcome in Insurance

1. Overcoming Price Comparison Sites Dependency

The journey of customer advocacy consists of various stages, from initial brand awareness to meaningful, action-oriented advocacy. This journey can be quantified and analysed to gain valuable insights.

By measuring the progression from awareness to action, you can pinpoint the most influential touch-points in your customer’s journey. Armed with this knowledge, you can tailor your marketing efforts to create campaigns that resonate with your audience, moving beyond observation to active influence.

Many customers often resort to price comparison websites when shopping for insurance. Advocacy can help insurers shift the focus back to their own websites, reducing dependence on price comparison sites and enhancing economic viability.

Many customers often resort to price comparison websites when shopping for insurance. Advocacy can help insurers shift the focus back to their own websites, reducing dependence on price comparison sites and enhancing economic viability.

2. Mitigating Price-Centric Purchases

Customers who arrive from price comparison sites are typically laser-focused on finding the lowest price. In contrast, those who come via recommendations from friends are less price-sensitive and prioritize trust and quality, often willing to pay a bit more for a reliable insurer.

3. Addressing Data Scarcity Beyond Purchase

One of the inherent challenges in the insurance industry is the limited engagement with customers once they have made a purchase. Advocacy programs provide insights into customer engagement outside the typical buying cycle, fostering relationships.

4. Establishing Reasons for Engagement and Relationship Building

Monitoring customer engagement and activity beyond the purchase cycle provides insurers with valid, natural, and welcomed reasons to engage with customers, allowing insurers to build relationships with their best customers. 

5. Targeting Ideal Customers through Referrals

Customers are not created equal. Advocacy programs enable insurers to attract customers who closely match their preferred customer profile. Referrals typically result in your best customers bringing in their best friends. This makes these customers more likely to meet any qualification criteria and to be more valuable when they're on board, enhancing the quality of the overall customer base.

6. Evaluating the Full Value of a Customer

Relying solely on past and forecasted spending to assess customer value is one-dimensional. Advocacy metrics, like extended lifetime value (ELTV), consider both spend and the value of referrals, offering a comprehensive view of customer worth.

7. Optimising Customer Acquisition Strategies

ELTV data can guide insurers in identifying the most valuable customer segments to target, leading to cost-effective acquisition and enhanced referral rates. This may be in Google & Meta lookalike audiences where referral data can reduce CPAs by 20%. Or it could be through demographic profiling where businesses such as Experian can identify segments to target. Often ELTV points to a totally different demographic profile to target than one dimensional LTV data.

8. Elevating the Quality of Customers

Customers referred by advocates tend to exhibit lower loss ratios, higher retention rates, and increased advocacy. Integrating more of these customers into the base improves overall business metrics.

9. Justifying Investments in Customer Satisfaction

While top insurance brands understand the importance of exceptional customer experience, the challenge often lies in justifying such investments when short-term financials are prioritised. Advocacy data and an ELTV view of the world makes it easier to justify enhancing the customer experience. For instance, in one of our clients, a customer who is an Promoter, according to the NPS definition, has 31% higher LTV than a customer who is a Detractor. However, when you also incorporate the value of their advocacy and look at it from an ELTV perspective, they are 78% more valuable. This data can help make investment decisions to delight customers that might not otherwise have been made, despite being in the short and long term interest of the business.

10. Reinventing Insurance Economics for Long-Term Success

The fundamentals of insurance economics boil down to acquiring and delighting customers such that they want to stay with you at a price that will let you win in the market. Advocacy enables insurers to transform their economics so as to gain a sustainable competitive edge in the long run and ultimately win against competitors who are engaged in the race to the bottom on price.

In conclusion, customer advocacy isn't just an optional strategy for insurers; it's a critical choice that can tackle the unique challenges of the insurance industry head-on. At Mention Me, we've seen the transformational power of advocacy in helping insurance companies enhance customer relationships, boost profitability, and secure a winning position in a dynamic and competitive industry.

Ready to turn your satisfied insurance customers into life-long, passionate advocates? Let’s start a conversation. Our solution empowers you to identify true advocates, harness their authenticity and drive organic word-of-mouth growth. It’s time to take action and elevate your customer advocacy game with Mention Me. Get in touch today!