It is a well-known business concept that retaining customers is less expensive and less time-consuming than bringing new ones into the fold. Those customers a business manages to retain over many years are considered legacy customers. They may be taken for granted, though they should not be – especially in a few key industries, like health insurance.
Insurance brokers and carriers have both benefited from the reality that buying new insurance is a hassle. So much so that consumers hate doing it. And yet, there is compelling evidence suggesting that consumers are willing to change health insurance plans if they have a valid reason for doing so. This suggests that insurance brokers cannot rely on legacy customers to keep their businesses afloat.
To be fair, health insurance brokers work more with employers than their employees. Employers are more or less their customers. Still, employers try to offer health insurance benefits their employees actually want. So if employees are clamoring for something new, employers are likely to demand their brokers produce.
A New Plan Every Three Years
A Finn Partners study released in 2016 revealed that the average American employee changes health plans every three years. That is remarkable when you consider how long people stay with the same auto and home policies. Changing health insurance so frequently seems to indicate that consumers are pretty discontent.
What does that mean to brokers? It means that their customers want and need new products to keep them on board. There is no point to an employer continuing to work with the same broker if that broker cannot produce health insurance benefits employees find attractive.
A broker relying on legacy customers may not have the foresight to try new things. They may not have enough motivation to find better ways to serve clients. But if those legacy customers start drying up, things change. A wise broker doesn’t wait for that to happen. They stay ahead of the game, thereby keeping legacy customers happy and simultaneously landing new customers.
Better Ways to Serve Customers
Everything this post has discussed thus far relates mainly to taking legacy customers for granted. Avoiding that trap only starts with continually looking for better products from better carriers. The smartest brokers take it one step further by searching for better ways to serve their customers.
In that regard, BenefitMall encourages insurance brokers to concentrate on a limiting pain points. They point to streamlining open enrollment as a good avenue to improve client relationships. That makes sense, given how complicated and time-consuming open enrollment can be.
Taking open enrollment into the digital realm is a big step up. Imagine a broker offering clients an online portal through which they can obtain quotes. Imagine that same portal facilitating employer sign-up, followed by giving employees a dedicated online space where they can choose their health insurance benefits and enroll at their convenience.
Health Insurance Is Changing
Insurance brokers and carriers have gotten away with relying on legacy customers due to the nature of health insurance itself. But health insurance is changing. Thanks to the ACA and the introduction of high deductible health plans, health savings accounts and other options, employees no longer have to just accept whatever plan their employer’s offer.
This has employers on notice. Likewise, they are letting their brokers know that they want better products and better service. The broker that ignores the changing tide and takes legacy customers for granted is one who will probably not be in business a decade from now. Only those willing to change with the times will keep up with them.