A good insurance referral system is one of the most important marketing elements for independent insurance agencies & brokerages to grow their business. Take care of your clients and they can offer a nearly endless supply of referral leads. Whether it’s through distributing referral emails with an automated platform like Fuse™, offering incentives to current clients, or taking advantage of community outreach opportunities, your insurance referral program is the lifeblood of your business.
Let’s take a look at some of the top reasons referrals can help you grow your agency or brokerage.
Insurance Referrals Consistently Deliver a High ROI
Most agents and brokers evaluate a particular marketing strategy based on its effectiveness, ease of use, and, of course, the projected ROI. Dollar for dollar, investing in a comprehensive referral program for insurance agents can be the best way to put your advertising budget to work. Referrals are some of the most viable leads you can generate—here’s the proof from Forbes:
- Referral program generates excellent leads, according to 78% of B2B marketers.
- Referral programs generate a high volume of leads, says 60% of marketers.
- More than half (54%) of B2B marketers say that referral programs have a lower cost-per-lead than other channels.
- Marketers rate referrals as the second highest source of quality leads.
If you don’t have a referral marketing strategy, you’re missing one of the best opportunities for growing your agency. Referral marketing tools like lead forms, email, social media, and other communication mediums are readily available and have been proven to be effective.
According to SCORE, a successful insurance referral program strategy can produce some impressive results. Here are some results of a recent study to guide your marketing efforts:
- While most business owners in the study reported social media as the most productive channel for referrals, the conversion of these referrals was as low as 1%.
- Verbal referrals account for about half of these companies’ flows of new business, with about a third of those referrals resulting in a conversion.
- Email and printed materials average a conversion rate of around 15%, yet these businesses reported using email almost 4 times more often than print cards.
To get the most out of your referral marketing efforts, it’s important to know what channels work best and which referrals are most likely to convert. But maybe the most important thing you can do for your agency is to get started. According to a recent study, more than 8 in 10 clients are willing to make a referral, but only 29% do. The difference comes from the low percentage of agencies and brokerages using an aggressive and effective insurance referral strategy.
Referrals Are Ready to Close
Referrals come to you already “warmed up” by their friends and family. A lot of people don’t like feeling “sold to.” When you’re talking to a referral, you’re talking to someone that is not only seeking the kinds of services you offer — you’re talking to someone who already has a level of confidence that you’re the solution to their insurance needs.
As an independent insurance agent or broker, you understand the importance of referrals for generating promising leads. According to the National Association of Insurance Commissioners, as high as 79% of insurance shoppers ask family and friends for recommendations, while 65% turn to work and social acquaintances.
When you introduce your products and services to a referral, you face fewer sales objections than you do with other leads.
As savvy referral marketers know, one of the main reasons why referrals are important is that the closing ratio for referrals can be as high as 70%, while the closing rate for non-referred leads can be as low as 10%. A healthy flow of referrals for independent agents can be the difference between a successful agency and one that gets lost in the shuffle.
Referrals Often Become Ideal Clients
Referred customers are more loyal than non-referred customers because they have a relationship with fellow customers. Referred customers can get reliable guidance about your offerings from someone they trust. This relationship strengthens the referral’s trust, loyalty, and satisfaction with your agency or brokerage.
Think about how powerful that is: Every time you close an insurance referral, they’re more likely to become a long-term client that also refers others. With a well-designed referral lead generation system, it’s like you have an automatic feed of viable leads.
One thing to keep in mind is that loyalty is a two-way street. If the referrer leaves you, the referred customer may not stick around because of their loyalty to the referrer. The best way to combat this trend is to nurture your relationships with referrals to create a stronger bond with you and your business.
Referring Clients Become More Loyal
Dr. Robert Cialdini spent a lot of time documenting and writing about this interesting psychological phenomenon: When someone reaffirms their decision to do business with you (by referring a friend or family member to your services, for example), the referring client becomes even more committed to your agency. Not only that, but by reaching out to them and telling them that their help mattered to you and your business, you deepen the relationship and remind them they’re “not just a customer.”
A successful referral strategy means showing gratitude to your customers for promoting your insurance brand. Never underestimate the power of a sincere thank you. The people who refer clients typically don’t expect too much in the way of gratitude and an acknowledgment of their contribution can strengthen your relationship with them. Another way to show your appreciation is by sending referrals to the people who send them to you.
Approach your reciprocal referral efforts with a bit of selectivity and focus on quality, not quantity. Your reputation, and your referring clients’ loyalty, depend on the quality and value of the businesses you recommend.
Referral Programs Create Stories Worth Sharing
Referral programs are a fun way to engage your customers. If you do it right, you create excitement and turn your happy customers into ambassadors who help you grow your brand.
Every time you hand out an incentive or recognize your referrers, see if they’re willing to swing by for a photo. Announce it. Share that experience on your website. Better yet, share it on social media. You just created and documented a fun experience! Be proud. Have fun.
Show your community that you aren’t just another company. You’re a local business full of real people that get excited when their clients are happy — the perfect story for sharing! Stories are powerful, and if your customer is compelled to share their experience, prospects will listen.
Your Number of Referrals is a Reflection of Your Current Relationships
A well-run referral program is a great way to keep your finger on the pulse of your relationships with your customers. If you’re asking for referrals, but you’re not receiving an appropriate number for the size of your agency, that could be a sign of deeper issues. It may be time to take a look at how your agency or brokerage is nurturing customer relationships.
It’s Easier Than Ever to Build a Referral Program for Insurance Agents
Thanks to modern technology like Agency Revolution’s Attract™, running a good referral program for insurance agents has never been so easy! Our suite of tools makes automating email messages or sharing on social media and your website an effortless experience. Not only that, Attract™ even comes with a ready-made referral rewards campaign that you can use as-is, or modify to fit your agency or brokerage personality! You have every reason to build a referral program. Referrals have a high closing rate and usually become some of your best clients. And these days, running a great referral campaign is easier than it has ever been! A rewards program is a fun way to show appreciation to your customers and create great experiences that are worth sharing online. And since you’ve taken such good care of your existing customers, referrals are a well-earned reward.