Customer retention in the insurance industry – particularly insurance agency retention – is one of the most effective areas that you can focus on to grow your firm. Customer acquisition cost for the insurance industry is notoriously high: “The insurance industry has the highest customer acquisition costs of any industry. It costs seven to nine times more for an insurance agency to attract a new customer than to retain one.”(See Lowering Costs of Customer Acquisition)
Yet in talking to many principals, the focus is on producing new leads and new clients. It’s not that they don’t consider retention, but perhaps don’t give it the attention that it deserves considering that a sustained 5% improvement in an insurance agency retention rate can double profits in five years. There’s no good reason that customer retention in the insurance industry should lag other industry sectors, yet it does: “In any industry, the top five companies have a 93%-95% customer retention rate, in contrast to the average customer retention rate within the insurance industry of 84%. This 10% difference between the top agencies and the norm represents a major loss of potential profits.” Source.
Why not make it a goal to increase retention by 5% this year? Just as you set production goals for sales each year, you should set retention goals and back them up with bonuses or other incentives for success.
Insurance Agency Retention Strategies
Here are 9 insurance agency retention strategies to get you started.
- Sell value not price. If you want to retain customers, make sure that you acquire the right customers. Find clients who choose you for your expertise and the value that you offer, not simply for the lowest price. Low price shoppers are bottom feeders who aren’t noted for loyalty. Being the cheapest has never been a good marketing strategy because there is always someone who will undercut you. Get comfortable selling premiere coverage from premiere carriers to clients who value quality.
- Focus on niches. Become a topic expert in a niche industry or in a niche product. This will allow you to develop and leverage deep expertise and become a true consultative business partner. A niche focus also allows you to build helpful connections and stake out a presence in industry events and publications. Clients who see, recognize, and appreciate your knowledgeability and credibility on display in their industry feel a pride of association and a confidence in your counsel that strengthens the relationship.
- Start things off with a “wow.” Spruce up your client onboarding process because first impressions count and set the trajectory for the relationship that follows. Prepare a polished, branded digital or video presentation that introduces the client to their service team, outlines the essentials of their coverage, informs them of optional services and products such as risk management, loss control, or complementary coverages. Set the expectation for follow-up meetings, check-ins for satisfaction, and ways that you’ll keep them informed.
- Stay in front of your customers. In building the relationship with your client, there’s no such thing as too much communication, provided it’s substantive, varied, and delivered over a range of channels. Provide expert communication that educates and engages your clients about risk management and loss control related to their industry. Communicate via a planned mix of email, traditional mail, phone calls, texting, webinars, website content and blogs, social media channels, industry events, and industry publications. Personalize and target communications as much as possible. Be sure to follow and engage with your clients on social media. Be the conduit to alert them about services and tools related to their industry that may be available from the insurer.
- Check the relationship pulse at regular intervals. Build in an account workflow that includes numerous touchpoints in the policy year. Check in 30-60 days after onboarding and seek feedback at regular intervals. Make it easy for them to provide feedback. The goal is to resolve any issues and ascertain satisfaction well before the 90-day pre-renewal cycle.
- Overdeliver on service. Anticipate needs. Follow-up when you say you will. Beat deadlines on deliverables. Be honest and frank with bad news or tough issues and take ownership if you make a mistake. While you don’t want to get in the way of your insurer, follow-up on claims and other potential crisis points when your client needs support. Display a genuine interest in the client’s business. Use every interaction to learn more about their operations and their industry developments. All business owners like talking about their businesses and how to improve them and get a competitive edge – you should stake out the role as a partner in that effort in your area of expertise.
- Mind your metrics. If you really want to get value from your retention metrics, don’t take them at face value – dig behind the retention rate to discover what’s really happening because not all clients are created equal. (See Is Retention Rate Deceiving Your Insurance Agency?) Also, track the reasons why customers leave and use the data to improve performance. Know the customer lifetime value for your agency.
- Grow your product offerings. Track emerging risks and offer solutions before your client experiences a loss or a competitor offers it first. Provide information about coverage that would expand or strengthen their asset protection, such as cybersecurity products, climate-related coverages, and niche insurance coverages.
- Upsell and cross sell. The more ties you have, the deeper the relationship with the client, the more inconvenient it is for a client to move the business and the harder it is for a competitor to get a foot in the door. Plus, maximizing your client potential means that your entire book is more valuable. Work with your account management team to learn how to upsell and cross sell as a service.
To discover more about achieving greater success in your business insurance practice, contact our qualified professionals at NIP Group by calling (866) 281-4793.
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