As AMP Personal Insurance churn rates increased in 2014 from that experienced in 2013, it was identified that there were no proactive measures in place to attempt to retain customers.
During this time, Advisers were keenly shifting their book of business to appease their own needs and to top it all off, AMP had limited contact with customers outside their annual renewal notice – which wasn’t usually good news!
The Retention Experiment was developed to see whether a different reward could be as effective, if not more, in decreasing AMP’s customer churn rate.
Testing over two phases and with a very limited budget per customer, all expectations were completely blown!
In phase one overall churn was significantly reduced for the test group compared with the control group. This meant retaining a significant sum in the test group, just for sending the reward. Better yet, the trial was most effective in the 41-55 age band where churn was reduced by almost half in the control group.
To select the incentive for phase two, the attributes of the chosen customer base (41 – 55 age band) were matched to mosaic profiling. It showed that these customers are likely to own their own home, enjoy food/dining and are at the age where they can relax a little. Based on this, it was decided that a 6-month subscription to either Cuisine, NZ Gardener and House and Garden would be a suitable reward vs the two movie tickets offered in phase one.
In phase two, churn was again significantly reduced in the 41-55 segment which meant retaining even more in premiums.
The power of giving “thanks!” was strong – overall reducing churn and saving AMP several millions in premiums walking out the door.