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experience with the product, customer service, and the insurer has been satisfactory thus far and she has a higher disposable income than she did earlier, she can be contacted again for buying life insurance for her family.

Advantages
* Increased cross and up selling opportunities

* Increased customer retention

* Decreased customer defection

Customer Perception of the Life Insurance Industry
Life insurance products are considered by many as complex yet much needed to minimize risk. Organizations have come up with products that meet the needs of the individual customer, however because the insurance contracts are fraught with complex legal terms, the customer ends up perceiving the life insurance industry as one that is not transparent and “user-friendly”. Furthermore, customers consider insurers as organizations that are only interested in ensuring that their customers pay their policy premiums on time; however when it's time for the insurer to resolve a claim or a dispute the turnaround time is slow resulting in frustration and anxiety for the customer. To cite an example of customer perception towards the insurance industry, an insurance survey by IBM and University of St. Gallen in Switzerland revealed that roughly 60% of the participants[7] did not completely trust their insurance company.

Because of such negative perceptions the insurer faces a high rate of customer defection. As the cost of acquiring a new customer are much more than the cost involved in retaining an existing one, insurers are coming up with innovative methods to build and foster a long term relationship with their valuable customers:

Creating trust and reliability: More than 80% of the participants in the IBM and University of St. Gallen insurance survey placed a high value to honesty and trustworthiness and building a solid reputation in the market has become ever so more important for an insurer. Organizations are taking actions to build trust and credibility by:

o Modifying the legal jargon in insurance contracts to simple, brief and layman terms.

o Remodeling the direct selling agent's compensation package to include commissions based on parameters such as repeat sales and customer retention, thereby encouraging them to act more customer oriented.

o Establishing social communities such as interactive web portals, blogs and chat forums, thereby fostering communication with the customer. This strategy has also given insurers with invaluable information about the customers evolving needs.

Creating an ensemble of touch-points: This strategy involves personalizing the approach to customers and making meaningful touch points available to generate a positive and rewarding experience for customers and the organization. For instance, price sensitive customers rely on the Internet when shopping for a life insurance policy, whereas relationship oriented customers seek advice from insurance agents / brokers and banks. Various touch-points available for customers of a life insurer can be bucketed as depicted in Figure 6.

Therefore, it is essential for an organization to plan carefully before deploying or cutting back on any of the above touch points.

For instance, in the first quarter of 2009 tied agency channels contributed to 59%[8] of total new business generated in Singapore.