Retention Project

LSI partnered with a leading insurer operating through bank and adviser distribution channels to review the effectiveness of current retention activities and identify opportunities to strengthen customer loyalty and reduce lapse rates. The objective was to shift from a reactive to a proactive retention model supported by data, segmentation, and performance measurement, building a more customer-focused and commercially effective approach.

The Challenge

Strong acquisition, limited retention focus.

Customer acquisition performance was strong, but retention lacked coordination and accountability. Sales teams were focused on new business, with limited emphasis on relationship management beyond the initial sale. Retention activity was largely reactive, triggered by arrears or cancellation risks rather than proactive engagement.

Untapped commercial opportunity.

Research shows that acquiring a new customer can cost up to ten times more than retaining an existing one. Analysis highlighted a material level of annual premium loss, revealing significant opportunity to improve performance. Modelling showed that modest gains in retention rates of 5 to 10 percent could deliver strong financial uplift alongside longer customer tenure and lifetime value.

Disconnected approach.

Retention outcomes were not clearly linked to broader sales, product, or customer strategies. Activities lacked ownership and consistency across channels. LSI was engaged to diagnose current state, identify barriers, and provide a clear framework for embedding retention as a strategic capability.

What We Found

Four themes limiting retention performance:

1. Lack of a coordinated approach

No defined retention strategy or guiding principles. Retention activity was inconsistent across teams and viewed as secondary to acquisition.

2. Reactive focus on arrears and cancellations

Engagement occurred mainly when customers were already at risk of lapsing. Activity lacked segmentation or prioritisation of high-value customers.

3. Limited use of analytics

Data and insights were not used to predict lapse risk or measure retention ROI. Customer characteristics and behaviours were underutilised in planning.

4. Unclear strategic alignment

Retention was not embedded in supporting strategies such as product, sales, or customer experience. Communication throughout the customer lifecycle was inconsistent.

These themes shaped the basis for a future operating model designed to strengthen retention effectiveness and consistency across the organisation.

Our Approach

Data-led diagnosis and design.

Using our Diagnose | Design | Deliver methodology, LSI conducted a structured review of retention activity across bank and adviser channels, combining stakeholder engagement, process mapping, and data analysis.

Stakeholder Engagement – One-to-one discussions with managers and frontline staff explored current practices, challenges, and cultural attitudes toward retention.
Workflow Mapping – Cross-functional workshops visualised retention processes from cancellation through to follow-up, identifying duplication, decision gaps, and areas for standardisation.
Data Analysis – Retention performance data was analysed to identify lapse trends, policy characteristics, and channel variations. A Power BI model was developed to assess customer profiles and inform segmentation.
ROI Modelling – Modelling demonstrated the financial impact of improved retention, reinforcing the commercial case for change.

Designing The Future State

Building blocks for a retention operating model.

Based on the findings, LSI designed a set of operating model concepts for consideration:

1.

Defined Retention Strategy

Establish clear scope, inclusions, and principles supported by tailored product offerings.

2.

Customer Segmentation

Prioritise customer groups based on value and flight risk to enable targeted activity.

3.

Data & Analytics

Use insights to predict lapse risk, measure ROI, and monitor effectiveness over time.

4.

Capability & Structure

Define roles, responsibilities, and required skills to support proactive retention.

5.

Market Intelligence

Regular competitor and industry analysis to inform product and engagement strategy.

6.

Customer Experience Design

Define engagement standards from onboarding to renewal to ensure consistent, positive interactions.

Retention ROI as a core performance measure.

ROI was positioned as the key indicator of retention success. Tracking ROI allows for performance assessment across channels and alignment of effort to value.

LSI recommended measuring ROI through reduction in lapse rates as a percentage of total in-force policies, offset against resource costs. Regular quarterly reporting would enable the business to scale activities and demonstrate tangible outcomes.

From Design To Delivery

An implementation roadmap for sustainable change:

To operationalise the new retention model, LSI developed a phased implementation roadmap aligned to business priorities and planning cycles.

Short Term (0 – 3 months)
Confirm scope of retention strategy and customer segments.
Define roles, responsibilities, and required skill sets.
Identify and prioritise target customer groups.

Medium Term (3 – 6 months)
Implement retention strategy and embed metrics.
Consolidate and communicate product offerings.
Develop retention dashboard and commence ROI reporting.

Long Term (12+ months)
Review ROI outcomes annually to refine strategy.
Maintain competitor and market analysis.
Address ongoing skill gaps and integrate retention performance into development plans.

This roadmap provided a structured sequence of actions to embed proactive retention management and ensure sustained performance improvement.

The Results

Clear, measurable improvement potential.

Streamlined Quoting and Prioritisation

The introduction of BID/NO BID and budget estimates reduces wasted design effort and focuses resources on viable opportunities.

Increased Capacity and Workflow Visibility

Workflow and capacity planning tools improve workload transparency and resource use with potential to increase design capacity by up to 15 percent.

Technology Enablement

System enhancements, a dedicated pricing tool, and a searchable job database support better decision-making and reduce duplication.

Reduced Errors and Rework

Standard naming conventions, defined accountabilities, and consistent quality checks reduce drawing revisions and improve reliability.

Improved Workforce Resilience

Upskilling, succession planning, and reclassification of repeat work strengthen continuity and support scalable growth.

The Impact

Embedding retention as a strategic capability.

The review identified a clear commercial and cultural opportunity to reposition retention as a performance driver. Aligning sales, product, and customer strategies around proactive retention enables a shift from reactive management to insight-led engagement that builds trust and long-term value.

Achieving even a modest improvement in retention rates would deliver a strong financial return while enhancing customer relationships and loyalty.

The result: a robust foundation for developing a comprehensive, data-driven retention strategy with clear principles, measurable outcomes, and enduring customer focus.