The benefits industry has lagged behind most other sectors in developing a focus on lifetime consumer value. While the industry is evolving rapidly, it still carries with it some of the bad habits of its core medical insurance roots.
Many organizations are still primarily concerned about plan design and payment on claims. This means that most consumers don’t hear from the benefit provider after enrollment unless there is a claim.
As a result, retention rates are poor, costing benefit companies unnecessary and substantial investments in customer acquisition — and the missed opportunity of creating a “lifetime customer” through ongoing consumer engagement.
However, a few benefits providers and distributors are beginning to move away from the transactional nature of their business model and focus on customer retention rather than customer acquisition. This requires an emphasis on ongoing customer engagement rather than transactional outreach.
From a simple investment perspective, this makes sense. Studies have shown re-enrollment rates increase by double-digit percentage points when engagement replaces transactional outreach.
Customer engagement is becoming a buzzword in the benefits industry. However, more often than not, it is thrown around without the necessary strategic shift and operational wherewithal of an actual engagement plan. True customer engagement requires building a meaningful dialogue with the customer that increases their commitment to the benefit brand and eventually builds brand loyalty.
This, in turn, creates the “lifetime customer” and can drive social network advocacy and word of mouth, increasing both member retention and acquisition. But to achieve this aim, engagement must be achieved through meaningful efforts supported by the right infrastructure and approach.
A changing benefits landscape creates new engagement opportunities
While the need for a focus on member retention has been recognized relatively late in the benefits industry, emerging trends are beginning to drive change within this market. These include:
The rapid growth of voluntary benefits, which also have some of the lowest retention rates in the industry today
An exponential increase in out-of-pocket cost shares for consumers, which has reduced the perceived value of many health coverage options
The expansion of workplace and voluntary benefits beyond just health, dental and disability plans. For consumers, these benefits are not only about protection any longer but are also seen as a means to enhance their lifestyle
The potential retooling of the Affordable Care Act, which may boost interest in health coverage outside of traditional major medical plans
A general lack of ongoing dialogue between the benefits consumer and product provider, which in turn negatively impacts member loyalty
Using engagement as a tool to increase consumer lifetime value
The last of these opportunities represents an area where engagement can deliver significant ROI. Ongoing, active engagement is a cost-effective way to improve customer loyalty while increasing each member’s lifetime value. As with any business model, the cost of retaining a member is substantially less than the cost of replacing one.
Yet many carriers, benefit providers and brokers still ignore the importance of maintaining an ongoing dialogue with their customers. Consider the following scenario which is all-too-common in the benefits industry today.
A member enrolls in a voluntary product because of a particular pain point at that time in his or her life. This individual may then go for months — or even years — without hearing more about these benefits. The individual’s perceived value of this product will diminish over time, which means they are not likely to renew.
Or perhaps the individual leaves their workplace and has no idea that they could continue to enroll in this voluntary benefit after they make this transition. As a result, this customer is lost — probably for life.
It’s a fact that many product providers and carriers spend big money to acquire their customers only to largely ignore them after enrollment takes place. In fact, studies show that two thirds of consumers say they don’t have a relationship with their benefit provider. Yet ongoing engagement efforts can reverse this trend.
As an added benefit, engagement marketing is generally a low-cost strategy that can complement an organization’s existing member communication efforts.
How to implement proven engagement best practices
When carriers, product providers and brokers do not easily turn towards member engagement, it is not just because this shift requires a new mindset entirely, but also because operationalizing customer engagement seems like a daunting task.
One company has decided to take on this challenge, building an entire engagement infrastructure for benefit providers and carriers. Genius Avenue uses research, industry data and advanced analytics to provide consumer engagement on behalf of its customers and help them focus on the customer experience.
Through its history working with leading carriers of all types of voluntary and workplace benefits, the company has developed and refined the following engagement best practices:
Use business intelligence to understand your audience. In order to perform the proper data analysis, you’ll need to collect demographic and sociographic information about your members from a variety of sources. This will help you assess each member’s baseline engagement level and their unique needs, preferences and lifestyle.
Segment your membership. Once you have all of the information detailed above, you can then segment your member population to prepare for implementation of personalized outreach. For example, engagement efforts to promote a disability plan to older, self-employed individuals is a very different process compared to encouraging a millennial at a tech startup to purchase travel insurance.
Develop your targeted interventions. To start, consider implementing simple drip campaigns using channels like email marketing. However, you’ll also want to collect a member’s communication preferences up front to better understand whether text, email or other outreach is their desired channel.
Show, don’t tell. Engagement outreach should be predominantly visual, as videos, infographics and imagery all receive better response rates than content-heavy methods.
Get interactive. Solicit member feedback through surveys and quizzes to encourage dialogue with the member, while collecting valuable data about their lifestyle and preferences.
Mix it up. Using the same tired messaging and visuals will make your engagement efforts feel stale. Developing unique outreach efforts each time is critical to maintaining engagement over time.
Engage, don’t sell. While there are opportunities to upsell and retain members inherent in the engagement process, always remember that your aim is to build a dialogue and to give members valuable information and resources.
Tracking response rates and refining your approach. For example, Genius Avenue offers a business intelligence dashboard which contains all of the insights collected about a group’s members. This includes age, gender, premium rate, and length of vendor relationships. It also integrates financial, web, census, and Twitter data to provide a full picture of each member.
While there is more to engagement than meets the eye, these principles point to some of the critical steps involved in developing, refining and measuring a consumer engagement model. Research shows that engagement strategies like these can drive increases to member retention, referrals and overall satisfaction.
As a result, organizations looking to compete in an increasingly crowded marketplace can’t afford to ignore the long-term benefits derived from successful member engagement.