P&C Insurers Dominate Customer Advocacy Rankings

Property/casualty insurers dominated Forrester’s annual customer advocacy rankings. Of the top 10 spots in this year’s rankings, six belong to P&C firms including USAA, State Farm, Progressive and GEICO. Overall, it was a tough year for financial services firms, as angry customers responded to the global recession and collapse of major financial institutions with lower customer advocacy scores.

Every year, Forrester’s Bill Doyle surveys approximately 5,000 U.S. financial consumers about their attitudes toward their financial providers. Our most recent customer advocacy survey was conducted in the second half of 2008. It showed that insurers, overall, rank better on customer advocacy than retail banks and investment firms.

We define customer advocacy as the perception on the part of customers that financial services firms do what’s best for them, not just the firm’s own bottom line. We rank leading U.S. banks, insurers and investment firms along with other firms such as credit unions and independent advisers and agents.

Bill’s research proved again that high customer advocacy scores leads to higher retention scores and deepens customer relationships. Consumers who rate their insurance firm high with regard to customer advocacy are more likely to buy other products from that firm, and are less likely to switch to another financial services company.

This is critical as the recession continues to apply pressure on consumers’ budgets. Many consumers are evaluating their monthly budget and trying to trim costs by cutting insurance premiums for auto, home and other lines. Auto insurance, in particular, was already hypercompetitive based on the insurance spend of leaders such as State Farm, GEICO, Allstate and Progressive. Insurers that rank high in customer advocacy can leverage brand awareness to capture market share from firms with lower customer advocacy rankings.
 

P&C insurers fair well annually in our rankings due in part to their massive advertising spend. Advertising can affect perceptions, at least in the short term.

Two P&C insurers whose ratings rose significantly in the last year—Progressive and Liberty Mutual Insurance—have been heavy advertisers with messaging that stressed elements of customer advocacy. Progressive touts rate comparisons, and Liberty Mutual’s “Responsibility” campaign evokes the same “golden rule” promise as customer advocacy: Treat others the way you would like to be treated, and good things will happen.

Insurers should emulate leaders such as USAA, State Farm and Progressive by building customer-centric cultures. Firms should hire, train and foster a culture of customer advocacy for every employee. Our data proves insurers will have happier customers that buy more, and are less likely to switch.

What do you think?

Chad Mitchell is a senior analyst with Forrester Research. He covers trends in global insurance; eBusiness and channel strategy; emerging Web and call center technologies; consumer trends in researching and buying insurance; and best practices and rankings of leading insurers. He can be reached at cmitchell@forrester.com.

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