It’s time to renew my car insurance again. And again, with grim inevitability, I see that my current insurer has increased the premium by 40%. Why? I’ve had no accidents, managed to avoid the speed cameras and have, at least as far as driving is concerned, led a blameless life over the past twelve months. So why the increase?

I know that if I phone the insurer and ask, they will instantly offer a reduction but, because I know this increase is unjustified, I won’t. I’ll just change my insurer – again. Which brings me to the subject of customer loyalty.

At a time when companies are straining every sinew to encourage customer loyalty with cards, points and a host of other incentives, why are insurance companies pursuing policies that seem calculated to drive customers away?

Superficially, it seems to pay. A recent article in This is Money estimates that 16% of people forget to change there insurers at renewal time. This amounts to around 6 million people, benefiting the insurance industry to the tune of £675million.

So this leaves 84% of customers looking to change their insurance provider every year – surely a customer service low point in any industry.

So, who’s at fault?

The insurance industry argue that the customer is to blame for the situation as they have shown themselves to be entirely price driven, disloyal to whoever makes the cheapest offer. But it is the insurers themselves who stand to gain most from greater levels of customer loyalty. Unlike most retailers, insurers have a wide range of personal data available to them with which to decide who they want to incentivise to remain loyal customers. The onus therefore is upon the insures themselves to strive to create a loyal customer base; something that will never happen with opportunistic and unjustified price rises!

I believe most people would rather have a single provider that they can trust to give good service and reasonable prices rather than having to trawl through comparison websites every year and try and decide who’s really making the best offer. In every industry – even insurance – customer loyalty is up for grabs, but it needs fighting for.

What are you doing to retain your customer’s loyalty?

Beyond price, what do your customers value?

What would make them recommend your products or services?

I hope these questions get you thinking and if you have any questions about how Customer Plus can assist with your customer loyalty please get in touch.

Tim Goodwin – Senior Consultant