Boosting Sales Efficiency

The easiest money your agency can make

Numbers prove that adding a few points
in retention can be worth millions

by Michael Jans

Most people think of marketing as the “sexy” part of business.… So let’s “do the math” on retention.

Let’s talk about getting the easy money for your agency. Let’s start by looking at how much money this topic really means to you.

Most people think of marketing as the “sexy” part of business. Bold headlines, creative ideas, clever strategies, and so forth. And while those elements have their place, boring old arithmetic is at least as important in the marketing cycle.

So let’s “do the math” on retention. (Now if you’re thinking, “This really IS going to be boring,” let me urge you to hang with me. These numbers should get your juices going.)

Now, let’s look at how many successful agents are grabbing that easy extra million or two.

It usually starts with a wake-up call

Generally, it’s either an unexpected price shock or that the agency principal (finally) takes the time to measure retention—and gets his or her own shock. Sometimes I run a retention spreadsheet for them and that gets them motivated before they have a problem. That’s rare, but it’s good.

Here’s a common scenario in my business with new clients:

Client: “Michael, all of a sudden I’m losing a lot of clients in ________ class of business.”

Me: “Really? What’s your Retention Strategy?”

Client: “Huh?! Retention Strategy? Well, we really take good care of our people, and I think it shows.”

And that’s the problem. More often than not, an agency’s Retention Strategy is nonexistent or passive and, at best, little more than hopeful platitudes. If you’re wondering if your agency has a Retention Strategy, ask yourself:
• Is it written down?
• Does everyone know his or her role?
• Does someone with authority monitor its implementation?
• Does someone with authority measure its effectiveness?
• Is it periodically evaluated and adjusted?

At a minimum, you know it’s not a strategy if it’s not planned ahead of time.

Your Retention Strategy needs three prongs

Research overwhelmingly indicates that people continue to do business with a company when three things happen. A powerful retention strategy needs to employ all three of these principles.

• Sell them more insurance. That’s right; people do more business with companies they buy more from. Direct marketers like Lands’ End know that the second purchase is more important than the first one because it’s the one that moves the buyer into a relationship with the company. The customer who buys two policies from you is much more likely to buy more than the customer who buys one. And the higher your policy-per-customer count, the higher your retention is going to be.

• Wow them with amazing customer service. When was the last time you “mystery shopped” your own agency? Do you know whether or not your CSRs exceed customer expectations? Your customers are comparing your service to every other agency they do business with. They’re also comparing your service with every other business they do business with. Unless you constantly test and measure your own service, you are statistically likely to be over-rating the service you give your customers. More than likely it’s average—even if you think it’s better than that. And for half of you reading these words, it’s below average. (That should be a sobering thought.)

• Nurture your customers. Most agency principals would agree that their staff “cares” about their clients. But how do you show it? How many times a year do you communicate your relationship with your clients … and how many times is it not about their premium? Let’s explore that more below.

Exploit the value of the “relationship”

In many ways, this is the luckiest industry in the world. Most people need insurance—and recognize that fact. And many are required to have it by law. Combine that with the fact that buying it flies “under the radar” of many clients and that shopping for it is not much fun … and you’ve got a natural client retention that would be the envy of almost any other industry. (Therefore, I’m afraid, it’s easy to be lazy about it.)

Here are three important principles behind this concept:

• People hate to break relationships. Most people will agree that the most difficult situations in their life often have to do with a broken relationship. The problem is that most agencies don’t create a relationship with their clients. They take them for granted.

• Relationships can be “automated” just like other aspects of marketing. At least, they can be supported by automation. For example, many of my clients use newsletters: short, faxed newsletters to commercial lines clients and even “newsletters on a postcard.” They also use e-mailed newsletters, with virtually free delivery. A small effort in relationship creation can have a huge impact. These efforts work as well as they do because they look and feel like they’re coming from the agency … not some Madison Avenue advertising company. But if they’re not turned into an automatic routine, they’ll invariably disappear.

• Take a unique position. If your business relationship revolves around price, you’ve become a commodity. If, on the other hand, you’re in the business of protecting your clients and giving them unique and powerful information that they won’t get anywhere else, you’ve become a trusted advisor … a genuine consumer advocate. It’s rare for consumers to feel that insurance agents are “on their side of the table.” A thoughtful Retention Strategy can quickly change that.

Our industry is lucky to have a “natural retention” that other industries would love to have. But that doesn’t mean we should be lazy about it. As the numbers above prove, a few points in retention can be worth millions to your agency over time. That should serve as plenty of motivation to design a Retention Strategy that keeps your customers with you. *

The author
Michael Jans is the president of Insurance Profit Systems and creator of the Quantum Club Coaching Program for P&C Insurance Agents. To help you discover the value of increased retention for your agency, an automated retention spreadsheet is available on Michael’s Web site, www.growyouragency.com. As always, Michael welcomes letters, calls and e-mail and will do his best to see that you get answers to your questions. You may e-mail him at support@quantumclub.com, phone him at (800) 606-0477 or visit his Web site at www.growyouragency.com.