Yes, predicting customer behavior is possible. You don’t even need a crystal ball to do it.
Predicting behavior, including predicting customer behavior, sounds like something out of a futuristic television show. There’s some untouchable entity pulling strings or a magician with a crystal ball watching people from a distance. Or maybe a police detective is setting a trap for a criminal based on a psychologist’s knowledge of human behavior.
The thing is, predicting what people might do in a given situation doesn’t always require magical entities or crystal balls. While there are always exceptions, psychological research tells us that most people will act a certain way when confronted with particular circumstances or information.
At a basic level, that’s why we have chants at ball games or why, if someone is standing in a crowd and looking up, you’ll see other people look up, as well. And when it comes to predicting customer behavior, there’s a reason all those candy bars, magazines, and other treats at the grocery store checkout line are called impulse purchases. Store managers know that shoppers will add these items to their basket if they are inexpensive enough and easy to grab.
Now then, how can you use this knowledge to your benefit and increase your insurance sales? Let’s take a look.
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Predicting customer behavior: How to do it and what it means for your success
There are numerous methods of predicting customer behavior, from in-depth data analysis to customer surveys and questionnaires, plus dozens of methods that fall somewhere between those two. Perhaps the most challenging part of exploring this topic, however, is that countless factors influence consumer and customer behavior.
For example, it’s probably safe to say that most people like the idea of saving money on their insurance policies. Based on that, the “sensible” thing for insurance customers to do would be to shop around and find the least expensive policy they can. And yet, you probably have customers with low deductibles and high coverage, with correspondingly higher price tags than they could get by switching to higher deductibles and minimal coverage.
The truth is, most people are looking for a balance. They want excellent customer service, good value for their money, and a level of coverage that they are comfortable with, all at a reasonable price point. Add to that the fact that your customers may have drastically different financial circumstances that impact the policy they can afford, and you are starting to scratch the surface of the factors that influence their choices and behavior.
That might seem like it would make predicting customer behavior nearly impossible. But it’s not impossible at all. One study noted that “Customer loyalty is determined by attitude and belief about the context in which the products or services are offered.”
In fact, you may already have the information you need to understand how your prospects and customers will behave. Before we jump in, it’s important to note that there are very extensive types of data analysis that can give you detailed insight into your customers.
Right now, we want information that you can start using right away to increase your insurance sales. So the first method in the line up here is churn rate.
1. Churn rate: How many customers leave at the end of a policy period? When it comes to predicting customer behavior, churn rate gives you important insights. A high churn rate means something is going on that your customers aren’t happy about. It’s up to you to find out what that is. There are a few ways to do this. You can send out an anonymous survey, look at any reviews they’ve left online, review your contacts with them, or pick up the phone and call them. The point is that a high churn rate, especially over time, is predictive of future customer behavior. So it’s vital to find out why your customers are leaving and make necessary changes.
2. A/B Testing: A/B Testing is a simple way of predicting customer behavior. You start with two cold-calling scripts, for instance. You divide your calls into those with script A and those with script B. Once you have enough data, you can start to see which script your prospects respond better to, and can then predict to some degree what future behaviors will be. You can do the same thing with policies, follow-up emails, insurance bundles, cross-selling to current clients, and pretty much any other factor you can think of.
3. Customer history. Here we have what may be the ultimate predictor of future behavior. There is a lot of data and information in your customer histories. This information can help you target your sales campaigns to the right people at the right time. For example, do you have customers who call asking about reduced rates every time their auto policy comes up for renewal? Let’s dig a bit deeper: do these customers call and then fail to renew their policies every, say, third policy term? If you notice patterns like this, it might behoove you to get the jump on things. Pick up the phone and check in with them before they start looking around. Let them know you appreciate their business and trust. Find out what they need from you. Can you offer them bundled coverage? A safe-driver discount? A loyal customer discount? An award-winning claims process? Whatever your value proposition, use the historical knowledge you have on hand to predict and even change customer behavior.
Predicting customer behavior isn’t that hard when you have the information you need to understand past behavior. And once you have that, the future is yours to enjoy.
Predict the future with Call Logic. From campaign reports to recorded calls, we’ve got you covered in every aspect of your business. Call for your free consultation today to learn more!