All too often, businesses operate on strategies that work for the business and not necessarily for the customers. Focusing on your insurance customers and designing your processes around their preferences is better for you and them. Consider these local marketing metrics and discover tools you can use to focus on the consumer and improve each metric.
1. Number of new policies
Definition: The number of new policies you’re selling in a given time period.
Why it matters: After reviewing your customer database, you may notice sales trends and patterns around certain times of the year, month, or week. You can adjust your marketing tactics based on the data of when insurance customers are and are not likely to purchase. This number can also reflect the phase of business you’re in—for example if you’re just starting out as a new agency.
How you can improve it: Make converting easier with mobile payments sent via text message. Whether someone is a brand new customer or simply switching to (or adding) another policy, you can make paying the bill more convenient with text messaging, especially with the initial payment in a policy plan. This can increase your speed-to-payment and cut the frustration and uncertainty of waiting for something in the mail.
2. Retention and policy renewal rates
Definition: The percentage of your customers who renew policies and stay with your insurance brand over an extended period of time.
How to calculate it: Track the number of customers at the beginning and end of a time period, and the number of new customers acquired during the same time frame. The formula should look like this:
Retention Rate = ((CE-CN) / CS))
CE = number of customers at the end of a certain time period
CN = number of new customers acquired during the same time period
CS = number of customers at the start of the time period
Example: In January 2019, an insurance agent had 200 policyholders. In January 2020, they had 150 policyholders. 50 customers were acquired in the year 2019.
((150 – 50) / 200)) = 50% retention rate in 2019.
Why it matters: With all the effort that goes into acquiring new insurance customers, it’s equally important to retain them. Your retention rate is an important indicator of how satisfied customers are with your services and policies. Uncovering the reasons customers leave or stay with your agency will help you adjust your strategies accordingly.
How you can improve it: You can improve retention rates by improving your customer journey. Evaluate which customer touchpoints require an agent and which can be automated via text or mobile app. Using a customer relationship management platform can help you respond to customers faster and more effectively.
3. Lead sources
Definition: The place a customer first hears of or interacts with your brand.
How to calculate it: Ask new customers (in person, via text, or email) how they discovered your agency. If you use a Customer Relationship Management (CRM) platform or customer database, you can also track leads as they come in through referrals, social media, Google Business Profile, or other sources. Review your data to see what your top lead source is (and where you should invest more marketing spend).
Example: In 2020, an insurance company acquired 100 new customers. 20 were referrals from existing customers, 70 found you via Google search, and 10 discovered your business as they passed it on the road. Other leads might stem from pay-per-click ads, impressions on social media content, local ads, or anywhere else you’re marketing.
Why it matters: Consumer behavior is changing. And if you’re not changing your marketing strategies to match customer preferences, you’re getting left behind the competition. Knowing the channels that generate and convert the most leads will help you gauge your spend on marketing programs and ease up on efforts that aren’t bringing in customers.
How you can improve it: Be where your customers are, including social media platforms, Google listings, review sites, texting channels, email, and more. The more opportunities your target audience has to connect with you (and convert) on the platforms they prefer, the better.
4. Net Promoter Score (NPS)
Definition: A metric (ranging from -100 to 100) used to predict growth based on the loyalty of your current policyholders. In 2020, the industry averages for NPS were 41 for auto insurance, 35 for home and contents insurance, 32 for life insurance, and 19 for health insurance.
How to calculate it: Ask your current policyholders on a scale of 1 – 10 how likely they are to recommend your insurance to a friend or colleague.
From there, group customers into three categories:
- Promoters: score 9 – 10 and are likely to be loyal customers that actively recruit others to your insurance company.
- Passives: score 7 – 8 and can be persuaded one way or another toward you or a competitor.
- Detractors: score 0 – 6. These customers had poor experiences with your brand, and very likely to dissuade others from using your services.
Next, calculate the percentage of Promoters and Detractors from your total responses. Subtract the percentage of Detractors from the percentage of the Promoters, and that will give you your Net Promoter Score (NPS).
Example: In your annual customer satisfaction survey, 300 respondents rated 9 – 10, 150 rated 7 – 8, and 50 rated 0 – 6.
Promoter Percentage = 300 / 500 or 60%
Detractor Percentage = 50 / 500 or 10%
60% – 10% = 50 NPS
Why it matters: Satisfied customers are 80% more likely to renew their policies than unsatisfied customers. You need to have a sense of customer satisfaction rates to gauge what’s working for your customers and what’s not. You can leverage the reviews of happy customers to attract more business and consider the feedback of detractors to smooth out points of friction.
How you can improve it: Ask for feedback throughout the customer journey. Evaluating common feedback themes and acting on areas for improvement will improve your customer journey and help you retain and grow your customer base. Collecting this feedback via text is even more likely to please customers.
5. Revenue per policyholder
Definition: The revenue a customer generates in a specific time period.
How to calculate it: Calculate your total revenue and divide it by the number of policyholders in that time frame.
Example: In 2020, an insurance company brought in $500,000 of revenue with 1,000 customers.
$500,000 / 1,000 = $500 per policy holder
Why it matters: This number can also be used to calculate the lifetime value of a policyholder and help you estimate how much to spend in acquisition and retention efforts.
How you can improve it: Customers with bundled insurance coverage (home and auto, for example) are less likely to shop around with competitors. The longer your customers stay with your brand, the more revenue you can expect. Send periodic customer surveys to determine what’s pleasing customers and what could be improved. This is an important step to maintaining positive relationships with your customers.
6. Cost per acquisition
Definition: The total average cost spent to acquire a new customer, including all spend for ads, quote deliveries, and other marketing tactics, salaries, and overhead.
How to calculate it: Take your annual expenditure on marketing (ads, salaries, overhead, cost of quotes, etc.) and divide it by the number of new policies you sold in that year (or in the time frame you want to measure).
Example: In one year, an insurance company spent $400,000 on ads, salaries, overhead, and other marketing tactics. They acquired 400 new customers.
$400,000 / 200 = $2,000 per customer
Why it matters: This number tells you how effective your marketing efforts are and how much you should set aside to reach your acquisition goals. If you’re overspending, evaluate your marketing strategies to see which costs are not bringing in new customers.
How you can improve it: Utilize your listings on free platforms such as Google Business Profile, social media, blogs, and review sites before spending money there. Establishing a solid presence and connecting with customers on these platforms now will greatly enhance paid advertising efforts down the road.
7. Quote-to-bind rates
Definition: The percent of customers who request a quote and then convert.
How to calculate it: For the time frame you’d like to measure (weekly, monthly, quarterly, etc.), calculate how many of your new customers requested a quote before converting.
Example: You acquired 150 new policyholders in 2020. 75 of those requested a quote before converting.
75 / 150 = 50%
Why it matters: Quote submissions are a useful tool for customers in the purchasing funnel. Because they’re both common and influential, spending the appropriate amount of time calculating a quote and communicating with a potential customer is crucial to perfect. The quote-to-bind rate will help you get a feel for how helpful this service is (relative to the cost) and evaluate your prices overall.
How you can improve it: Streamline the process with text messaging. A customer can begin the quote submission on your website, filling in forms with relevant information, and then receive updates, results, and further instructions via text. 90% of customers prefer text messaging to communicate with businesses—it’s more convenient, personal, and modern than traditional channels. When more of your interactions are managed via text, customers are happy, call volumes are down, and conversion rates increase.
8. Google ratings
Definition: The number of reviews and the average star rating of your Google Business Profile listing.
Example: In this example, this insurance agent has 193 Google reviews and a 4.9 average star rating.
Why it matters: Leads often originate from Google searches like “best insurance 2021” or “insurance near me.” Your ranking in these search results depends on the quality and quantity of your Google reviews. Improve your reputation on Google and you’ll improve your ranking, relevance, and revenue.
How you can improve it: Send review requests via text. Texting has nearly a 100% open rate and is customers’ preferred communication channel. With Podium, you can automate review requests to be sent at specific steps in the customer journey and manage your responses from one central inbox.
Discover how texting can transform your customer journey and improve your marketing results. Check out our free eBook today: The Modern Customer Journey: 10 Surprising Ways You Can Use Text Messaging.
Ready to master your marketing metrics? See how Podium’s centralized inbox can help. Respond to leads, capture feedback, and manage customer interactions with ease. Watch a free demonstration today.