What’s the true cost of customer acquisition?
Nicolas Bruchet, Marketing Director at Leoo, spoke with Efma about measuring how much it really costs banks to bring in new customers and the importance of well-designed referral systems.
What is the average acquisition cost of a customer in insurance and in banking?
Most benchmarks say that the average customer acquisition cost (CAC) for the bank and insurance sector is slightly above $300. But this is an average figure - the higher the price of the service/product, the higher the CAC. For instance, the CAC for a life insurance policy is likely to be much higher than for the subscription to a home insurance policy.
Besides, the CAC varies depending on the acquisition channel. If you purchase ads on Google or on a display network, it will depend on the competition of other companies for your audience. If you rely on a customer mentoring program, the CAC will almost entirely depend on the reward you give to the sponsor and to the sponsored customer: it means that you have better control over the cost.
The experience of Leoo with referral programs show that a well-balanced (cost / efficiency) CAC is around 100$ for retail banks and 50$ for an insurance company.
Beyond the CAC, the return on investment (ROI) of a referral system is higher than most acquisition leverages. Indeed, it also increases the Customer Lifetime Value as sponsored customers are usually more loyal than average customers and rewarding the sponsors strengthens their relationship to the brand.
How efficient is a mentoring program in terms of customer acquisition in insurance and in banking?
The principle of mentoring fits perfectly with the customer experience in the insurance and banking sectors. Indeed, the choice of a new bank or insurance service if often guided by the experience of friends or colleagues. Customers can compare rates online, but the quality of the advice, support and of customer applications must be “experienced” ; choosing a bank or an insurance is not an impulse purchase.
That being said, there are a few points that will make a mentoring program more efficient.
· You should be able to segment and target satisfied customers: referral works only with satisfied customers!
· The mentoring program should be seamlessly integrated with your customer journey, across all touch points (website / personal account online, mobile application, and through the advisor)
· The mentoring program should work network-wide: a customer must be able to refer a friend in another bank/insurance agency of the same network.
· Use marketing automation to reactive mentors and to incite new customers to become mentors themselves.
What is your offer for banks and insurance companies?
Leoo creates customer relationship programs: referral, loyalty, and engagement programs, as well as incentive programs for the networks of insurance and banking agents.
We design and roll out complete programs that are designed for the specific customer journeys in this sector. The platform allows institutions to leverage the potential of customers’ data to create effective scenarios to animate and activate customers, in full compliance with GDPR and high security standards of this sector.
Our platform also offers the possibility to fully integrate with the digital ecosystem of banks and insurance companies, both on the back-end side (CRM, ERP) as well as on the front end side (website, mobile applications).
Along with the platform, we are a strategic partner for our customers and we help banks and insurance companies create programs that enhance their marketing strategy and are based on a sound business model.
Finally, we help run the relationship program operationally, from reward management to marketing animation, to customer service and performance monitoring.
Could you tell me about a successful collaboration you have with a bank or an insurance company?
We have run Allianz’s referral program in France for 10 years, and it has been a great success since the beginning, accounting for a high share of their acquisition of new customers. To do so, we helped reunify several networks of agents in a common program.
We have also designed and run various relationship programs for BNP Paribas for several years: from their valuable customers advantage program (Priority) to the referral program. These are major marketing tools for the bank, which are promoted across all their touch points (including ATM’s!). We have integrated the reward platform seamlessly into their customer interfaces (website and mobile application).