So You're a Private Health Insurer, Are You Using Programmatic to Retain Your Customers?

Today the words “programmatic advertising” and “cost per acquisition” never seem to stray far from one another. Any marketer worth their salt will be able to tell you just how much it costs them to acquire a new customer from their programmatic campaign. For private health insurance this is no exception.

However, what if I was to ask you what your “cost of retention” or “average lifetime value” was? Can you tell me how much it costs you to retain a customer for an additional month? What about an additional 12 months? What is retaining this customer worth to you?

Why is customer retention so important?

Since 2010, member retention across the private health insurance industry has fallen by close to 5%. With an average premium increase of 4.84% coming into effect this coming Sunday April 2, most insurers (particularly non-restricted funds) are relentlessly pursuing those who are looking to make a switch from the competition.

Unfortunately, it is only after the dust settles that it becomes clear just how many seemingly happy customers walked out the backdoor over this same period. Despite the deluge of new members, some insurers might even end up with a net loss in customers. It might be easy to lay the blame on an annual price increase, yet perhaps this is merely a catalyst which sets in motion an evaluation of alternative options. With 34 Australian insurers offering an average of 200 different policies there is certainly no lack of choice for customers.

Just because your customers “set & forget” doesn’t mean you can.

So if the annual premium increase isn’t the root cause of customer churn, what is?

Well first of all, there is a large range of disparate market segments in the private health insurance industry. Some examples include young people coming off family policies, young singles, expecting couples, older couples with children and ageing Australians.

One thing that ties these radically different customers together is that when it comes to choosing a policy, they all tend to exhibit a “set & forget” mentality. As an insurer it is all too easy to be fooled into the same sense of complacency.

Unfortunately, despite their “set & forget” mindset, customers move through these life stages frighteningly quickly. This can lead to a strong disconnect between a customer’s needs and the policy that they hold. A realisation that tends to be triggered with every premium increase.

So, how can programmatic advertising help?

As an insurer you have more data on your customers than ever before. Programmatic advertising gives you the ability to communicate with your customers across channels such as display, video, native & social media where perhaps in the past you were restricted to mail outs and EDMs.

Programmatic also gives you the ability to overlay behavioural and psychographic data on top of this audience. This opens up an entire new world of possibilities when it comes to increasing customer retention and lifetime value.

To give you an example of such possibilities, let’s imagine your happy customer with “young single” cover is soon to be married. What if you could target them with an advertisement outlining your “young family” cover before they could even call you to ask about waiting periods & alternative policies? Or even better, before they find their way to a competitor’s website.

Action speaks louder than words.

So, are you using programmatic to retain your customers? Or come this Sunday will you find that despite a fantastic acquisition campaign you are no closer to increasing your market share than you were this time last year?


Written by Mike McGarry