I'm giving a speech at the Customer Loyalty and Retention Summit on 24-25th November with the title 'Against All Odds' addressing how to keep customers loyal in the personal insurance markets in the GCC countries, especially in the highly competitive motor insurance segment
Which is actually quite interesting as the exercise made me stop and think and actually define (i.e. put words on) some of the terms and concepts we've been working successfully with over the last years
Our loyalty programs are - needless to say - designed based on the customer renewal journey and currently I feel they are operating quite satisfactory, yielding a renewal rate (customer retention) that is well above the market standards
How I know? Well, I see how many new customers we (Qatar Insurance) get from other insurers and how few we're losing ;-)
Structural disloyalty - an expat concept?
The question (which the top management of QIC often asks) is how can we be sure that our customer retention (typically measured by policy renewal rates) is good enough?
To answer that fully, it's important to understand the GCC market structure and introduce the term structural disloyalty
The GCC countries has several times more expatriate workers and residents than national citizens - these expatriates tend to change their job and - because of legislation - country quite often which means that an insurer offering personal lines must expect a significant loss of customers annually
Furthermore, a large share of a country's car park is changed annually and since many new cars are sold with one or two years of free insurance, customers changing cars are likely to change car insurance at the same time
From a loyalty program perspective, these factors are incidents outside the control of the program which means that the effects of these should be measured and factored in the metrics of the loyalty programs performance
With a structural disloyalty of 30 %, these 30 % of the total customer base will be lost every year due to factors outside any insurers control (unless the customers choose to stay in their job or change their car to brands covered by the insurer, just to keep loyal - which is not very likely ;-)
This also means that your true retention (renewal rate) should be calculated as
True Retention / Loyalty = Structural Disloyalty + Actual Renewal Rate
Using this as a metric for how well your loyalty program is doing will give you a more correct view on your loyalty and retention performance
If you're interested in a copy of the presentation after the conference, send me an e-mail and I'll be happy to share it with you :-)