How to Effectively Trap Your Customers
2024-06-29
You own an insurance company well-known and widely used in Denmark. Your insurance company is also the parent company of a smaller insurance company.
The smaller company is known for being affordable (especially for students), having a user-friendly app, being transparent about pricing, and clearly showing what injuries and damages are covered. Customers can cancel their insurance at any time directly from the app. The customer support is friendly and responds quickly. Customers love and respect the transparency as well as the ease of use.
It doesn't seem practical to have two separate insurance companies, so your parent company decides to take ownership of the smaller company and merge them together.
Your parent company has higher pricing, so all customers of the smaller company will be moved to this higher price, which means some customers will pay more than twice what they did before. As the systems need to be merged, the new coverage plans will start for transferred customers on July 1st. This merger incurs some costs and technically involves registering with a new insurance company, so customers will be charged a bit more in the first month, like a registration fee.
Not all customers were aware of the price increase or the registration fee. Some customers want to cancel their insurance plan. While this can be done from the website, it isn't possible to cancel before July 1st because the insurance hasn't technically started yet, so the first month's payment is required.
Customers are unhappy, but since they can cancel after the first payment, it's not the worst situation. However, this isn't very profitable for your company, so you'll require a cancellation fee, which will be quite high for newer customers who haven't had the insurance for at least a year.
This fee may seem high, especially to students and people on welfare, but to mitigate this, you notified customers about the increased price. Some of them received this message more than a month before the increase, while others received it only a couple of days before. Some customers may still want to avoid the increased price, registration fee, and cancellation fee; they can do so by calling customer support.
Due to the dissatisfaction, the queue for customer support might be very long, with over 100 or 200 customers. The wait time can be impractical for students or working people, who will likely call in the afternoon. Some customers may wait around two hours, dropping from 180th to 65th in the queue. Due to common cellphone carrier behavior, some customers are disconnected automatically after two hours. When the customers call back, their spot in the queue isn't saved, so they end up at the back of the line again, unable to reach customer support before it closes.
Luckily, it is possible to contact customer support on Saturdays. Some customers will try to do this, but for reasons unknown, they'll remain the first person in the queue for more than 30 minutes, wondering if there's a problem with the system. Not to worry, though, you've planned for inconveniences like this and made the system tell the customers to press 1 if they want to be called back, so they don't have to wait. It just so happens that some customers wait for several hours without being called at all. This is worrying to some of them, as this is the last day they have to cancel before the insurance becomes active on Monday. So they call again. The system lets them know that their phone number is already registered and that they'll be called back soon, so the customer decides to hang up and wait some more. Now it's getting late, and time is running out, so the customer decides to call again, becoming number 14 in the queue. If they're lucky, it'll take them about about 70 minutes of waiting, to get through to a kind service worker, where they request to have their insurance plan cancelled. The worker, having taken many calls from the transferring customers, cancels immediately without any cancellation fee. This conversation takes less than a minute.
All the negative press made you nervous. However, after a bit of thinking, you weren't so worried anymore because you realized that your insurance company, Tryg, would be just fine.