Referrals and brand advocacy are important for most businesses. It’s no different for insurance companies. Particularly when the industry faces an issue of low consumer trust and tightening regulations.
A referral programme helps insurance companies restore consumer trust, craft a compelling point of difference, whilst adhering to new industry regulations. Referral programmes encourage your customers (and even your employees) to advocate your brand in order to bring in warm, highly qualified leads.
In this blog post, we’ll take you through the benefits a referral programme brings to your insurance company. Follow us in our step-by-step guide of planning, designing, establishing, implementing, monitoring, optimising your referral programme and ensure its success.
Contents:
Benefits of an insurance referral programme
Referral programmes offer several benefits for insurance companies and their customers. Some of the advantages you can expect from implementing an insurance referral programme include:
Increased customer acquisition
Referral programmes are a great way of increasing customer acquisition.
According to the New York Times, 65% of companies receive new business from their referral programmes.
With a referral programme in place, insurance companies can leverage their existing customer base to acquire more leads. Incentivising existing customers to tap into their network of friends and family also increases the brand’s reach. This word-of-mouth strategy introduces your brand to new audiences.
Higher conversion rates
The conversion rates of ads in the insurance sector are consistent with many other industries. However, as many businesses across sectors know, paid advertisements are costly. They are also a drastically ineffective lead conversion tool compared to referral programmes.
The average conversion rate of an ad is 5.10%. Leads acquired through referrals see 30% conversion rates on average. The reason for this huge difference is that referred leads feel a degree of familiarity towards the brand. Such sentiments drive higher rates of conversion and generate more revenue.
Increased trust and credibility
Consumer trust of the insurance company is at an all time low. In a recent survey, just 13% of the British public said they trusted their chosen insurance provider. There’s various reasons why. Usually, it’s through a lack of good customer experience, retention and engagement strategies, and neglecting to cultivate a sense of loyalty with customers.
Insurance companies can reverse low consumer trust through a series of loyalty-building strategies. In addition to these, once a sense of loyalty begins to emerge in the customer base, the implementation of a referral programme is best suited to negate negative sentiments and low trust.
Put plainly, referrals have the ability to grow trust.
A report by Nielson showed that an incredible 92% of consumers trust referrals from friends or family over any other form of advertising.
When someone we know recommends a brand to us, we instantly consider it due to the connection with the brand advocate and the weight that relationship carries. So, if you want to build credibility and trust, a referral programme is definitely the way to go!
Cost-effective marketing strategy
Referral programmes and referral marketing as a whole, are very cost-effective compared to other advertising channels. The insurance sector spends a substantial amount of the revenue generated from premiums on advertisements.
But as we’ve already seen, with a referral programme in place, insurers increase brand awareness and conversions. The money and resources spent and invested in traditional advertising and lead generations, can instead be allocated to referral rewards, engagement tactics and retention strategies.
Higher policy retention rates
Once the allocations in retention initiatives are made you can begin customer retention efforts through loyalty programmes and rewards incentives. Rewarding brand advocates for successful referrals makes them feel valued and appreciated.
From a customer’s perspective, 70% of their buyer’s journey is based on how they feel.
Making them feel valued and appreciated is critical to retaining them long enough that they champion the brand.
Data insights and analytics
Like all good programmes, referral programmes provide valuable data and insights into your customers, enabling you to identify certain behaviours and referral patterns. Insurance companies use this information to optimise your marketing strategies, identify customer segments, and refine referral rewards to resonate with advocates more effectively.
Planning and designing your referral programme
It’s time to look at how to plan and design your referral programme. Since we know the benefits we need them to inform our plan and design to create an effective referral programme.
Set clear objectives and goals
Referral programmes require careful planning and consideration. You need to begin your plan by setting a goal for your referral programme. What do you want to achieve? Higher customer acquisition? Increased retention? What about brand awareness?
The truth is, a referral programme can achieve all of these things and more! Eventually, you want all of the benefits a referral programme can bring to your insurance company.
That said, you want to start out with one overall goal. Consider the benefits above. Which one resolves your most pressing challenge? Bringing in lots of leads but not converting? Not generating enough leads?
Identifying this one challenge focuses your strategy. Break the overall goal into smaller, tactical objectives. Each of these should have an assigned department, team or individual.
Identify target audience
Now that you’ve identified your most pressing challenge the next step is to identify your target audience. Avoid the mistake of qualifying your entire customer base as potential members of the referral programme. This won’t be the case.
Instead, you need to analyse your current customer base. Look for common characteristics, such as demographics and behavioural patterns. Insurance providers actually have a great opportunity to effectively segment their customer base into distinctive criterias of policy type and insurance coverage.
Conduct market research by sending out surveys and feedback reports to these segments. You could even include focus groups. Gain insights into the potential that these segments have in aligning with the overall goal of your referral programme. In other words, you want to identify the types of customers most likely to participate in the referral programme.
Define referral incentives and rewards
Incentives and rewards will always encourage a good portion of consumers to behave in a commercially desirable way. Of course, this is something you expect from your referral programme. To make it truly effective however, you need to narrow down the focus of the referral programme to a very specific action. In this case, it’s to champion the brand.
Making referrals is the ultimate expression of customer loyalty. So, the rewards or incentives you offer should be up to scratch.
At least 64% of consumers say that what you offer has a direct effect on whether they refer others to your brand.
As an insurance company, your customers might feel a gift card is a little bit lacklustre for bringing in business. With the cost-of-living crisis through the roof, they may be more delighted with a discount on car insurance.
During the market research, broach incentive and reward ideas to customers. After you receive the results, try to understand the commonalities between customers that have the same reward preferences. Then plan out different incentives for different segments at different stages of the customer lifecycle.
Determine programme structure
This is where the structure and mechanics of the referral programmes comes into play. Perhaps a gift card is sufficient enough for a certain demographic of brand advocates. But will this be a one-time offer or an incentive you use repeatedly? Perhaps a discount on vehicle insurance premiums is an unsustainable blanket reward.
You will need to define the eligibility criteria, limitations and exclusions when designing your rewards package. For example, will rewards be based on a fixed amount discount or a percentage of the referred individual’s premium?
Develop clear communication and encourage engagement
The messaging and marketing materials to communicate your referral programme must be compelling. Explain how the rewards of the referral programme benefits your customers and simple it is to participate. Various communication channels should be used to promote the referral programme to targeted segments of your customer base.
Keep customers excited and motivated to refer others. To drive consistent engagement, you need to share regular programme updates, reminders, and success stories of referrals.
Consider gamified elements. Adding these can increase engagement by up to 30%.
Simplify the referral process
The referral process should always be simple for brand advocates and new leads to work. Anything that doesn’t work as intended, takes too long or is just too complicated causes frustration. That’s the last thing you want anyone to feel about the referral programme.
Provide customers with a seamless way to refer others. This could be via a referral portal or a dedicated landing page.
Provide excellent customer experiences
Excellent customer service is so fundamental to the success of an overall referral marketing strategy. If your customer service or support is lacklustre, implementing a referral programme will be a complete waste of effort, time, and resources.
If you plan to provide exceptional customer service, deliver on your promises, and exceed customer expectations, you’ll stand to gain a lot from your referral programme.
When planning your referral programme, make sure the necessary team members are trained properly. At times customers may contact a member of your team to explain how the referral process works. Some consumers might struggle to understand the rewards, particularly if tied to specific coverage and premium conditions.
Establishing your insurance referral programme
Insurance companies need to establish their referral programmes as part of the deal they offer to customers. In other words, all that careful planning needs to be wrapped up into a single strategy and deliverable, and shouted from the rooftops.
You need to use various marketing channels to promote your referral programme with a compelling message.
Promote your referral programme on marketing channels
The first port of call should be your existing customers. Satisfaction and loyalty, as we know in the insurance industry, is below average. Announcing the referral programme to your existing customer base will build anticipation and a wave of delight.
It also casts the net over warm and highly qualified leads who are paying customers. So, what’s the best marketing channel for the big reveal?
Email marketing
Emails! More than 8 out of 10 people will open a welcome email. Your existing customer base are being invited to join a new programme.
Technically, you could call that a welcome. Besides, the most effective email subject lines pique curiosity and include promotional materials.
Social media
Other marketing channels include social media platforms. Create engaging posts, videos and guides that clearly explain how the referral programme works. Social media is a great way of engaging both existing customers and new leads. They can spread news of the referral programme to their networks by sharing your promotional content on social media.
Just remember to include incentives for them to share. Referral links or unique discounts codes are a great way of tracking referrals too.
Website and landing pages
The referral programme should feature heavily on your website and dedicated landing pages. There should be a clear outline of what the programme has to offer. Details such as rewards and how customers participate should be accompanied with eye-catching design and compelling copy.
Encourage employees to promote the programme
Employee advocacy should not be overlooked particularly by insurance companies. A study by Hinge Marketing shows insurance companies see the third biggest amount of referrals from employees. There’s certainly a trend amongst insurance employees that you should leverage.
Employee referrals in the insurance industry are predominantly on social media. They generate 60% more growth in leads on social media and an increase of nearly 57% of website traffic.
Use social proof
As the referral programme begins to mature it will begin to yield results. This is the time to catch up with members to get their verdict of the programme. Positive experiences should be shared with other existing customers yet to sign up and potential leads. Testimonials, success stories, and statistics that show customers actually benefiting from the programme, should be shared on the above marketing channels.
Craft a compelling referral messaging
To craft a compelling message about the referral programme you need to do these two things:
Highlight the benefits of the programme
Everything about the messaging should focus first and foremost on the benefits that the programme has to offer your customers. Focus on how it benefits both the referrer and the referred individual. Emphasise the rewards, whether they be cash incentives, discounts on premiums or exclusive perks.
Personalise the message
What the programme has to offer should also resonate with your target audience. The language and the tone you use should align with the preferences and values of your customer base. You should have some insight into what these are from market research and your segmentations.
For good measure, speak directly to their needs, concerns and aspirations in order to create a personal connection and evoke an emotional response.
Monitoring your referral programme
Always evaluate the performance of your referral programme. Always. There’s no other way of assessing the impact your efforts have on your revenue and retention rates. There’ll always be a few bumps and scrapes along the road. But by analysing data you can identify areas that need improvements and necessary adjustments.
Setting up referral tracking mechanisms
Track and monitor referrals using technology such as referral tracking software, CRM systems or custom built solutions. These will help you to measure the effectiveness of the programme and even your marketing efforts. Collect and analyse the data to identify key segments.
Train agents and employees on programme guidelines
As previously discussed, insurance employees can be considerably useful in your overall referral marketing strategy. The insurance industry compared to other industries enjoys relatively high employee advocacy.
Provide training and resources to both employees and agents so that they don’t just promote but also manage your referral programme. They must have a thorough understanding of the referral process and all of its workings, terms and conditions, to answer customer inquiries and resolve issues.
Consistently monitor and analyse your referral performance
You should regularly monitor key metrics to get a full picture of how well the referral programme is performing. Metrics should track the number of referrals, conversion rates, generated revenue and customer acquisition costs. The data will yield insights into purchasing and referral trends, patterns and areas of improvement.
Adjust your programme as necessary
All of the data you gather through consistent analysis will allow you to optimise the programme. Data-driven insights should always inform any changes you make to your referral programme.
For example, test different rewards incentives, messaging strategies and even methods of referrals. See which ones yield better results and performances in the metrics.
Of course, don’t change something that’s working well for the majority of your customer base. Yet you should always strive to understand what could resonate better with even the smallest demographic. That’s why it’s important to encourage feedback to drive retention, engagement and other key KPIs.
Ensuring your referral programme succeeds
All of the metrics, marketing and planning involved in making a successful referral programme are without a doubt important. However, all of that effort can quickly fall apart if the programme itself just isn’t…interesting.
To ensure your referral programme succeeds, you need to focus on constantly improving the customer experience. This means maintaining proactive communication with referred prospects and offering truly exciting incentives, reserved for on your top referrers. Let’s get stuck in!
Continuously improve customer experience and satisfaction
Improving the customer experience and overall satisfaction takes a lot more than simply optimising the programme with data-driven insights. Sure, that’ll improve the effectiveness of the programme, plus sharing feedback is always a positive from a customer’s perspective. But proactive communication can lead to so much more.
Offer additional incentives for top referrers
Metrics will help you identify your top referrers. The personalised communications you have in place should offer rewards informed by identified spending habits, referral behaviours, and previously shared preferences.
All of this information and insights from extensive market research and your own experiences will shape your rewards. Exclusive VIP status for top referrers injects a sense of achievement for your biggest brand advocates. It also helps you responsibly scale exceptionally valuable rewards to a small but lucrative demographic. Needless to say, the rewards should also answer the needs of insurance customers.
Some rewards examples in VIP clubs include: priority customer service, dedicated account agents or managers, access to premium services and features.
Encourage referrals beyond policy sales
Referrals should be encouraged outside the policy sales cycle. The best way to do this is to build on rewards like the VIP example above and develop the programme further. That way, you can implement rewards such as policy upgrades and cross-selling in exciting, engaging ways. Both of which are essential for driving retention and a steady long term revenue stream.
For example, you could include reward tiers to your referral programme. These add a sense of exclusivity to the referral process and clearly show top brand advocates that they are appreciated.
Percentage-based rewards, cash bonuses, luxury gift items from partners, travel vouchers and even unique experiences, can all be locked behind specific milestones or referral thresholds.
Another great way to encourage referrals outside of the sales cycle is to use leaderboards. This adds a sense of competitiveness, which is a powerful motivator behind consistent engagement.
Drive revenue and retention today using the power of a referral programme
There should be more than enough information to get you off to a good start designing your very own referral programme. But, if you want to find out more, or simply get some more advice, contact us today!
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