Conventional wisdom says that customer loyalty is a key ingredient of most companies’ success. In insurance, measurement of persistency is often a proxy for loyalty and is a long-established basis for understanding future profitability; for a long time, the Financial Services Authority published reports on lapse rates in life and pensions products as an indicator of quality.
However, the conventional approach to loyalty takes the rather corporate-centric view that, if a business is well run, it has a right to expect loyalty from its customers. But in reality there is no automatic right to loyalty.
A recent survey of more than 2000 consumers commissioned by the customer benefits and loyalty firm, Collinson, shows that many insurers are jeopardising customer loyalty by failing to offer a personalised experience for customers. For small organisations, where Corporate Social Responsibility is often difficult to describe, AFM’s The Loyal Company concept, with its supporting paper and video, provides a framework for demonstrating commitment to doing the right thing, and AFM encourages its Members to reflect on how loyal they are to all key stakeholders, including: their customers, their owners, their employees, their suppliers and to the wider community in which they operate.
The quality of these relationships is, at least partly, within the control of a company. Getting the balance right across these areas will contribute to creating the right operating environment, by which:
- Customers enjoy a long and fruitful relationship
- Owners receive regular and growing value
- Employees are motivated and stay in post for the long-term
- Suppliers and business partners provide productive support
- The community, and society at large, recognises the contribution the company makes to general prosperity and well-being.
AFM continues to explore these concepts further by reference to the mutual insurance sector, drawing on case studies from our members:
- Paycare has produced a Loyal Company Manifesto, demonstrating their loyalty commitment not just to policyholders but to all core stakeholders including their team, their Board of Directors, suppliers, and their local communities. Kevin Rogers, CEO, urges all businesses to review their loyalty strategies amid concerns that some brands are neglecting existing customers and focusing their efforts instead on incentivising new ones [read more]
- Medicash demonstrates Gold standard in loyalty to customers