Toops Scoops: It Bears Repeating

We may be running the risk of belaboring the obvious here, but another survey from J.D. Power, just released this week, reiterates the importance of customer retention, especially in recessionary times.

Although focused on auto insurance, the report is interesting in its findings about consumer buying practices. The report looked at more than 275,000 auto insurance customers evaluating more than 30 insurance carriers across the industry, including AIG /21st Century, Allstate, American Family, Farmers, GEICO, Liberty Mutual, Nationwide, Progressive, State Farm, The Hartford, Travelers and USAA.

The report finds that in the past 12 months:

30 percent of households with annual incomes below $50,000 shopped for a new insurance carrier, and 45 percent of those customers eventually switched carriers;
26 percent of households with annual incomes of $100,000 or more shopped for a new carrier, and 31 percent of these eventually switched carriers

The message shouldn't be a surprise: while everybody may be feeling the pinch, the buyers most likely to switch carriers (probably based on price) are those with less revenue at their disposal. I'd extrapolate to say that this probably applies to commercial buyers, too, who are similarly looking to cut back during these tough times.

Another no-brainer confirmed by the study is that increased retention rates are related to bundled insurance products. Retention rates averaged 95 percent among customers who bundle home and auto policies with the same insurance carrier and 92 percent among those who bundle auto and rental policies. Conversely, retention averages only 83 percent among mono-line auto customers and only 85 percent among policyholders who do not bundle their auto and homeowners insurance.

Again, this is a reflection of the fact that the more closely you tie customers to your agency with products and services, the harder it will be for them to move their business over to another agency.