How to create profitable upgrade offers for your existing insurance customers – with little or no product development

At Riverside, we help insurance companies around the world make additional sales to their existing customers – in a way that also measurably reduces lapse rates on existing policies held.

This boosts profits for the insurers we work with and delivers valuable additional protection to their customers.

We’ve been doing this since we started in 2005, working with over 130 insurance companies in 39 countries – including 15 of the world’s top 20 life insurers. And we’ve learned a great deal about the factors that are critical to success.

One of these, unsurprisingly, is understanding exactly what you should offer to your customers to maximise sales uptake and value.

Build on what your customers have already bought

The simple first step is to understand each customer’s precise product holding with you and the benefits that apply.

Then, we usually propose that you should create an offer that is a logical upgrade on those benefits.

This doesn’t necessarily mean “more of the same”. For a term life customer, for example, an upgrade offer of accidental death cover could be more effective than a simple top-up term life policy.

As another example, a simple critical illness or disability offer might also work very successfully as an upgrade offer to an existing life customer – depending on the customer’s age. In some markets, cancer-specific cover has a particularly strong appeal.

And obviously, the simpler the application process for the upgrade offer, the better. This includes medical underwriting, which should ideally be reduced to “guaranteed acceptance” for all customers where possible.

Find a match within your existing product range

We find that most insurers already have products available within their existing range which they can use to deliver highly effective upgrade offers. This means that there is little, if any, need for any further product development – especially in the early stages.

And at Riverside, we have in-house actuarial and technical resources to help any of the insurers we work with to “fine tune” any existing product specifications, if needed.

Make the premium uplift comfortable for the customer

This is a critical consideration. Any upgrade offer should require a considerably lower outlay from the customer than the “base” product they already hold.

As a rule, we find that an upgrade premium level of 5% to 10% of the base premium delivers the best results. Customers tend to see this as a fair price for a worthwhile increase in their existing benefits.

If the total premium increase reaches as high as 25% to 35%, we believe that the offer is now seen as a completely new purchase decision. Conversion rates may drop significantly – even if the additional outlay is still very manageable for the customer.

What’s more, it’s highly important to offer the same payment method and frequency for the upgrade as for the base product. And ideally, to add the upgrade premium to the base premium in a single regular amount rather than two separate payments.

Channel choice and delivery style are also key success factors

Everything I’ve covered so far in this article is focused on making the upgrade offer logical and comfortable for the customer – ensuring that it makes total sense to them, without any surprises.

This approach also applies to the delivery channels you should use for the offer – and to the general style and “look and feel” of the communication.

At Riverside, we’ve consistently found that the best results come from the channels and tone of voice that your customers would normally expect you to use for admin and service messages. And certainly not for marketing!

Furthermore, your choice of channels could also affect the actual product and premium levels that you choose for the upgrade offer.

If you use channels that allow for active real-time dialogue, such as telephone or face-to-face (involving an agent), you can offer upgrade products that are more complex and higher in premium than the products that work best for other channels.  But of course, you also have additional costs to consider.

At Riverside, we can advise you, without any obligation, on the best approach for you to take in building a successful upgrade programme for your particular insurance business.

The results really do speak for themselves

Successful upgrade marketing depends on a range of factors, in addition to the product offer itself – all of which I’d be delighted to tell you more about.

And by managing all these success factors well, insurers can enjoy outstanding results.

For life insurance companies, we typically deliver converted sales to 10% -30% of customers receiving an offer.

In addition, we see lapse rate reductions of 12%-30% on existing products held, across all customers included – even those who don’t take up the upgrade offer.

On top of all this, upgrade marketing can delight agents and intermediaries and improve their loyalty to the insurance company. That’s because they enjoy increased earnings for little or no additional effort – plus other valuable benefits, which I’d be pleased to share with you.

For more information…

If you have any questions on this article, or you’d like to know more about how the Riverside approach to upgrade marketing could work for your insurance business…

…please call me on +31 6 5047 9647 or contact Riverside today.