Keeping Customers Is Hot: Web Broker to Wall Street

A health insurance web broker, eHealth, is promising Wall Street that it will work harder to please and keep customers, not just record new sales.

EHealth executives emphasized their focus on renewals last week, when it went over its results for the third quarter with securities analysts.

The Santa Clara, California-based company sells Medicare Advantage plans through the web and through call centers. It also sells individual and major medical insurance, Medicare supplement insurance, and related products and services, such as dental insurance and short-term health insurance.

Scott Flanders, the company’s chief executive officer, said the company has tried to improve customer retention rates by tying a percentage of agents’ compensation to enrollment persistency, and by creating a team of about 200 customer care employees.

Resources

• Links to eHealth earnings resources are available here.
• An earlier article about eHealth’s earnings is available here.

The new team “will include enrollment specialists and a dedicated retention team comprised of agents who will handle inbound inquiries from our existing members, and outbound agents, who will target policies ranked at higher risk for churn based on our data analytics,” Flanders said.

Tim Hannan, eHealth’s chief revenue officer, said that, in the past, eHealth managed to keep only about 10% of the customers and said they wanted to cancel or change their coverage.

Since eHealth deployed the new customer care team, eHealth has been keeping about 90% of the eHealth customers who call to cancel or change coverage, Hannan said.

(Related: Renewals, Renewals, Renewals)

Hannan said eHealth is always using proprietary methods to focus more on customers who seem likely to stick with eHealth, not simply on converting prospects into customers. “We can now see there unprofitable pockets of customers, customer types that we should avoid and certainly not prioritize,” he said.

EHealth has de-emphasized efforts to market individual and family major medical insurance in recent years, because the rules governing that market have changed frequently and commissions per enrollee have been below.

But the financial performance of eHealth’s individual major medical coverage business has improved, in part because the purchasers of major medical policies are keep their coverage longer, Hannan said.

Because the major medical customers’ policy durations are getting longer, eHealth can recognize more total revenue per major medical customer, Hannan said.

Hannan said that he thinks agents are accepting new customer retention efforts, partly because the new retention programs are giving agents a chance to earn more.

The Big Retention Picture

Retention may be on securities analysts’ minds partly because some investors who invested in an eHealth competitor, GoHealth, say GoHealth should have given them more information about the effects of customer churn on a web brokers’ results.