Why insurance customer retention should be higher on your list of marketing KPIs

Auto insurance marketers tend to focus on clicks and conversions, but are they the best indicators of growth?  

Instead of converting every lead, marketers need to target the safest, most valuable drivers. Not all customers are created equal, and without a solid retention strategy and the right insights, insurance marketers could be converting drivers that limit long-term profitability. Because safe drivers have up to a 5x greater customer lifetime value than average drivers, investing in these customers can be a sound strategy for scalable growth. 

To prioritize quality drivers over quantity, marketers need to rely on telematics data for segmenting and targeting prospects based on their risk profiles. Additionally, mobility data helps insurers monitor, benchmark, and reward their safest drivers — providing the groundwork for valuable insights and new ways to retain drivers.

Safe drivers have up to a 5x greater customer lifetime value than average drivers.

Shift your focus away from short-term KPIs 

While short-term KPIs, like cost per acquisition (CPA), seem like a quick and easy way to measure growth, they often fail to capture the lifetime value your best drivers offer. Acquiring more drivers with high premiums may look good on paper, but these drivers inevitably yield a higher risk of filing claims for collisions and accidents. 

By re-evaluating your marketing KPIs, you can change your focus to customers with the highest lifetime value and boost profitability.  

Why is insurance customer retention a vital KPI? 

By re-evaluating your marketing KPIs, you can change your focus to customers with the highest lifetime value and boost profitability.  

When insurance customer retention strategies become a priority, your business can reap the benefits of long-term customers. If you’re unclear about where to start, gather data on how new clients perform over time using benchmarks like profitability and lifetime value. With data sourced from longtime customers, you’ll be able to: 

  • Make data-driven decisions upfront that provide long-term advantages 
  • Track lifetime value over months — and even years — for existing customers 
  • Gather accurate insight into the value of new customers at the time of sale 
  • Forecast the profitability of low-risk vs. high-risk drivers during acquisition  

By improving customer retention, your business can achieve two important outcomes: 

  1. Greater marketing ROI: Targeting tools and predictive data sources can help you attract and retain top clients. Investment in telematics programs or mobility data upfront can help you make informed decisions about which customers you should target and acquire for greater profitability and ROI. 
  2. Loss ratio improvement: Telematics helps insurers as well as customers: Policyholders save money when they are good drivers, while insurance carriers are exposed to fewer losses. The loss ratio improvement using a telematics program is roughly 10% better than conventional approaches. 

Find and retain the best drivers with Arity 

Reach 200 million customers across the digital ecosystem based on exclusive behavioral data when you partner with Arity. You can accurately link insurance costs to driving behavior with the Arity Drivesight® score, and reward customers for safer driving. 

Our telematics programs can lower rates on even the safest drivers by up to 30%. With individual driver safety recommendations, give customers a reason to stay. 

Learn more about marketing solutions by Arity.