Retention Strategy with Millennial Policyholders

Within the last decade, the global business marketplace as a whole has undergone several facelifts when it comes to the comprehensive sales process. Perhaps the most noticeable change within this spectrum is the hefty online presence of most businesses. As a result, billions of dollars and man hours have been spent by insurance companies making it easier than ever to get a hassle-free online quote.

Within the same timeframe, a new and less predictable group of consumers has emerged — millennials. Consequentially, the stability of the average book of business has been inversely impacted due to the ease of switching companies. At the forefront of this liquidity is the millennial demographic, which according to Nielson, makes up roughly one-fourth of the U.S. population.

Compared to their counterparts of generations before, millennials have grown up with a vastly different shopping experience. Just like computers have slowly made libraries obsolete, the online presence of insurance companies is slowly doing the same to brick and mortar agencies. Captive agencies, once high and mighty within our sector, have flattened, while web-based companies have thrived. Valuable market share has changed hands at an unprecedented rate and updated our industry’s identity.

To stabilize this segment, we must understand the demographic more clearly. According to the U.S. Census Bureau, the average pre-tax income of millennials is $33,000, significantly lower than their contemporaries. In addition, SDL researchers concluded that millennials use their smartphones about 45 times per day. With these two statistics alone, it’s simple to understand why the millennials have become significantly less loyal than generations before. Although today’s youngsters earn similar wages as recent college grads of years past, they are now funding expenses that didn’t exist 15 years ago like wifi and cellphone data. With less disposable income, these customers tend to shop more based upon price, making them quick to utilize online resources to save a few bucks.

Although pre-Y2K insurance sales differed significantly compared to current times, many insurance agencies have failed to adapt. Historically, insurance has not been shopped each year by most policyholders and most changes were made face-to-face. Yet, 16 years into the millennium, changing communication standards have made it socially acceptable to maintain financial services without meeting an agent face-to-face.

The good news is that for agencies willing to adapt, there is still time to maximize the potential of millennial policyholders. By strategically using the same principles that have made this sector so unstable, agents can make insurance more of a “set it and forget it” aspect of life. Adopting new payment options like re-occurring auto-drafts from a checking account or credit card enables agents to offer millennials a more hands-off experience. This strategy alone provides the consumer with less responsibility. Making customers less apt to be reminded of small changes in premium increases an agency’s chance of long-term retention.

Another approach to millennial retention is to keep more detailed CRM data. Staying up-to-date on financial information such as auto lienholders and third-party interests at apartment complexes can serve value at the time of a claim or during renewal as the need to rely upon the consumer is again minimized.

By harnessing the same concept that has made this arena so unsteady, agencies are able to increase both retention and customer satisfaction. By taking payments, insurance certificates, and renewal information out of the client’s hands, the consumer’s personal involvement is put on auto-pilot, making the idea of switching companies unappealing.

Topics Agencies