Room for Improvement in Insurance and Banking
To support their growth, many business to consumer (B2C) firms in the Los Angeles area are focusing on retention marketing. These growth strategy examples show that insurance and banking could perform better.
A typical approach is for a brand to focus initially on acquiring customers (acquisition marketing), and then realize the considerable value of focusing on retention.
Retention Marketing Skills in High Demand to Drive Growth Strategy
As of February 22nd, some 59 jobs came up on a Google search for “retention marketing job Los Angeles.” This compared with 100 jobs for “acquisition marketing job Los Angeles.”
Examples of retention marketing positions for growth strategy in recent search are Senior Manager, Retention Marketing (Blue Shield of California), Marketing Manager, Customer Engagement & Retention (Ravel), and Customer Retention Marketing & Loyalty Manager (Lull) as well as Retention Marketing Manager (Los Angeles Times).
Additional growth strategy examples using retention marketing include brands such as Fashion Nova, ServiceTitan, Viacom, Meredith Corporation, The Honest Company and CBS Interactive.
The “typical pay for this type of work” ranges from Glassdoor’s $83K-$150K to Salary.com’s $78K-$120K or, on the low end, ZipRecruiter’s $32K-$90K. Relevant experience is usually a minimum of three years.
The job market for retention marketing talent in Los Angeles is so hot that candidates can wait for recruiters to find them, and an experienced candidate can find multiple new positions in less than six weeks.
Retention Marketing Lags Acquisition Marketing in Interest for Growth Strategy
Over the past five years in the United States, interest in acquisition marketing has consistently outpaced retention marketing, as measured by Google searches. The gap has not closed.
This focus on acquisition is interesting given that subscription models are recognized as superior to other eCommerce models. Subscription models are also known to be good for customer retention, with increasing popularity. A significant 71% of adults across 12 countries were subscribers to at least one brand in 2020. That’s up from 53% five years ago.
Growth Strategy Examples: Retention for Automobile Insurance and Banking
Automobile insurance is a high value category with average annual premiums ranging from $565 for minimum coverage to $1,674 per year for full coverage. There is also considerable variation by state, vehicle, driver, etc. It’s well known in the insurance industry that consumers who have only one product with the insurance company are more likely to leave than consumers who have two products.
Ownership of multiple product lines increases customer retention. A typical example is that a customer who has both automotive and homeowner’s insurance with the same company is less likely to leave than a customer who has only automotive insurance. This is true across a number of financial service categories beyond insurance.
For instance, in banking, a customer who has both their personal and business accounts at a bank is more likely to remain with that bank. As a result, insurance companies often offer savings and discounts for consumers with multiple product lines. Banks will offer reduced fees and additional services. These are retention strategies.
Another well known industry dynamic is that younger consumers are more likely to defect than older consumers. It’s also well known that younger consumers, e.g., ages 18-24 are riskier drivers and more likely to have accidents. As might be expected, many insurers offer loyalty discounts for long term customers and also safe driver discounts for those who do not have claims and accidents. These are also retention strategies.
Insight to Action was selected to work with a cross-functional team at a leading automotive insurer to work on increasing retention, or in the parlance of the industry, reducing lapse-can. This was a large effort that included analytics as well as qualitative and quantitative research.
Room for Improvement in Retention Marketing for Insurance and Banking
An important finding that was that between 17 to 26% of customers who left perceived that no effort was made to retain their business even though the company was aware that they were considering leaving. Moreover, some of the reasons for leaving were addressable, including more convenient payment options, such as auto withdrawals from bank accounts, debit and credit cards.
For customers who were specifically concerned with price and affordability, it was important to demonstrate that the company is looking for options, and to offer the customer retention-oriented benefits they value.
My own recent experience with securing a PPP loan in 2021 has led me to question my primary banking relationship with Chase. While Chase has outstanding online banking that makes day-to-day transactions much easier for me, they sent me no less than six emails of rejection for the PPP loan, offering objections that I couldn’t address.
By comparison, City National here in Los Angeles demonstrated a good track record with PPPs in 2020 and treated my PPP application with persistent attention. They assigned a Relationship Manager who helped interpret the answers from the online portal and who coached me through providing the documentation. I’m pleased to say that I got the PPP funding from City National, and this experience is making me question why I retain Chase for my banking.