Insurance agency owners are always looking for ways to generate more income and grow their business. This typically involves spending a lot of time, effort, and money on marketing and selling to new prospects. As acquisition brokers and consultants to insurance agents, we frequently discuss the value of and help agencies create a true sales culture in their offices.
This includes things like goal setting, standardizing quote scripts, measuring every aspect of the sales process, and diversifying sources of income with additional lines and products. However, what many agency owners fail to realize is that the real growth in their agencies won’t come just from creating a new business sales culture, but also from creating a client retention culture.
For decades text books and seminars about business have pointed out how costly it is to attract a new customer versus keeping an existing customer happy enough to stay with you. But insurance agencies almost always focus on writing new business and ignore the fact that their real money is coming from their existing book of business. There is only one way to increase revenue and that is to grow the total number of clients. Yet, most agencies barely write enough new business every month to replace the business they lost. So at best, they are maintaining the exact same level of revenue they always had, with no growth.
The interesting part is that agency owners usually only attack one side of this problem; the sales side. Why not also look at the other side and try to answer the question, “Why are we losing so many existing clients?”
It’s because client retention is hard. Let’s face it, the chase and excitement of quoting and closing a new deal is what keeps producers walking into the office each morning. The rush of adrenaline when the prospect says “okay, let’s do it” and the feel of that fat down payment when it hits the bank account…there’s nothing like it. Do you get that feeling after you’ve helped a longtime client change their mailing address in a polite and timely manner? No. Do you get that feeling when you answer every service phone call in a professional manner such that the client can almost hear the smile on your face as you patiently respond to every question they ask even though you’ve already explained it several times? No, of course not. But those mundane things, handled the right way, help create a retention culture and keep your existing clients on your books.
And friendly, fast, consistent service is just the beginning of how you create a retention culture. Agents need to reach out and stay in communication with their clients, the perfect time being at renewal. The fact is, after a new piece of business is written, agencies don’t do a very good job of keeping in touch with their clients, especially in a direct bill situation. If you asked 10 of your friends to name their insurance agent or broker in less than 5-seconds, maybe one of them could. Why? Because after their policy was written, they didn’t hear from their agent again. If the only contact your client has is with the carrier, and they haven’t heard from you since you wrote the deal, then that client has no loyalty to your agency whatsoever. So the next time they see that commercial on TV to “Call the General”, or hear on the radio, “$20 a month, no down payment”, why wouldn’t they look into it if they don’t even remember who their current agent is?
The secret to increasing your revenue and growing your business is that you don’t have to keep impressing new clients to come on board, if you just spend an equal amount of time satisfying the clients you already impressed once. Then you are building a Retention Culture.