Financial businesses offering loyalty reward schemes are failing to communicate benefits to customers, and are potentially losing out on sales.
In a survey of insurance company customers, M&S for Business found that while 95 per cent of people said price was one of the most important factors when deciding what policy to buy, only 55 per cent said it was the only reason.
Indeed three-quarters said they would change to a rival offering the same product at the same price but only if they gave them a loyalty reward scheme too.
However despite most insurers already running these kind of reward schemes, 45 per cent of customers said they did not know if their insurer offered a scheme or not.
Stuart Lawrence, head of M&S for Business said this suggested that communicating the scheme on offer to customers was just as important as the scheme itself.
Implementing a reward scheme for loyalty, referrals or signing up to an insurance policy is a great way to increase customer acquisition, retention and satisfaction. However, it is important that the offering is relevant to the individual and offered at the right time,” he said.
Allowing customers to earn points and rewards makes them feel involved with your brand and gives them the feeling that your service is worth more than that of the competition. As with any relationship in life, the one between business and consumer needs to be nurtured and approached delicately. That is why research and planning are imperative to the success of a reward scheme. If you get it right, you can build relationships and create brand advocates who will stay with you for a lifetime.
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Lawrence said there are various steps companies in the insurance and financial sector need to follow to ensure customer acquisition and retention strategies work.
This includes acquiring new customers with an attractive offering not just based on price but added value such as a personalised or unique service and a loyalty/reward scheme.
Regarding customer retention, Lawrence suggested researching the major reasons behind customer churn such as getting a better price elsewhere, more extensive cover, better customer service or being offered an incentive by a new provider such as gift vouchers. You have to offer them what the competition offers and more,” Lawrence said.
Creating brand advocates amongst a firm’s customers is another strong strategy. This can be done through implementing “refer a friend” schemes into their services where customers can receive rewards for bringing in new business.
Repairing a damaged relationship with a customer is also vital and that may mean, Lawrence said, a company admitting when they are wrong and resolving any problems fully. This will keep them happy and keep them loyal to your business.