Friday, December 4, 2009

Mistaking a Habit for Brand Loyalty

These days, brands are looking for loyalty wherever they can find it. With consumers increasingly careful about spending, and even health insurance being seen by some as discretionary, brands need to hold onto as many customers as possible. Our recent work for a health care client suggests that what seem like automatic renewals may lull brands into a false sense of customer loyalty.

Think about it. When it comes to health insurance, most Americans still get their insurance through their job. Every year, Open Enrollment is the one time everyone can change health plans or coverage, no matter how dissatisfied they become with their situation. The rest of the year, people are locked into their health plan and coverage barring life events (e.g., birth, marriage, divorce).

Back in the day when people rarely changed jobs, it was also rare to change insurance providers. In fact, in our recent research with consumers who get their insurance through work, over a third have had the same insurance coverage (and the same job) for 10+ years, and over half have had the same insurance through work for over 5 years. However, job longevity is quickly becoming a thing of the past.

When it comes to changing health insurance coverage, just the thought of it can make people anxious. Consumers are skeptical of the motives of most players in the category (insurance companies, drug companies, employers), find it difficult to understand the total costs of treatment under different plans, and prefer anonymity for fear of repercussions on-the-job at renewal time.

By identifying life events that cause people to take stock of their situation – like getting married or starting a family or by providing or publicizing coverage options consumers really do care about (e.g., wellness and preventative care) -- shrewd marketers will have an opportunity to take share in the health insurance category. And as people who have been unemployed and unable to afford coverage hopefully find jobs and begin to enjoy coverage again, health plans will have a unique opportunity to increase enrollment.

Health care is not generally known for brand innovation, and customer has clearly been taken for granted, historically. That might change if a competitor found a way to get consumers' attention and make it easy for them to act on their dissatisfaction with incumbents during open enrollment or when life events occur.

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