Solving the Insurance Agency’s Greatest Problem


Solving the Insurance Agency's Greatest Problem

Insurance agencies have a communication problem. The problem isn’t that agents aren’t doing a good job communicating what they want in an effective matter; it’s that they aren’t communicating at all! That infamous study from Deloitte that showed 60% of insurance customers don’t feel like they get any communication or value from their agent after they buy a policy didn’t come from nowhere… in fact, they specifically surveyed customers of small business insurance agencies. If independent agencies can’t differentiate themselves with great service and a personal touch, why would anyone choose them over a cheaper policy from a direct carrier?

If you want to keep your customers for the long haul, then they need to know that you’re there for them! You cannot let your agency fall into the trap of believing that a few extra points in retention rate aren’t worth the investment needed to achieve it. Safeco’s Director of Agency Capabilities and Programs, Chuck Blondino, had some words of wisdom to share on this very subject during a Live Webinar Roundtable Agency Revolution hosted recently:

“Everybody’s so tight on profit and revenue, moving 3 points from 88 to 91 – and everybody can do the math on their own – just think of no sales. No additional sale, no new endorsements, no new business, no cross-sell, no up-sell. Just what happens to my million dollar revenue – not premium but revenue commission to my agency – after 1 year at 88 percent, it’s 880,000. After 1 year at 91 percent, moving the needle 3 points, you’re going to 910,000. Looks simple, it’s a 30,000 dollar difference. But at over 10 years that compounds. So it’s not 10 times 30 or 300,000. That compounding difference of just 3 points on a million dollar revenue book is 880,000 dollars worth of revenue, not premium – revenue to the agency. Moving it 6 points from 88 to 94 the one year difference is 60,000. But the 10 year difference is 1.9 million on a million dollar revenue book of business.”

When you take the time to look at the real world math of customer retention, the impact it has on your agency or brokerage is staggering. (If you want to see what a few points difference makes for your agency specifically, check out our free Growth Analyzer). Insurance agency owners have every reason to invest in bringing their retention rate to the highest level possible.

How do I take my retention to that ‘next level’?

It all comes back to communication. When agents are top-of-mind for their customers, everyone in the relationship wins. It might seem counter-intuitive, but you just can’t expect insurance customers to approach you when they’re uncertain or curious about how they are or want to be protected. It’s up to the agency to establish channels of discussion and make their customers comfortable letting their agents know what they really want – and that’s not going to happen simply because they have a policy with you. Most insurance consumers only have a surface understanding of how you can help, much less the complexities of insurance.

What if your agency already holds a respectable retention rate of around 88% or 89%? What if you’re already actively reaching out to customers, but are struggling to take that rate to the same level as the best-of-the-best agencies in the marketplace? Once again I must defer to the excellent advice Chuck Blondino delivered in that masterclass of a Live Webinar Roundtable:

“If [your client communication is] not personalized, if you’re not talking about what you’re doing in the community, in the community service. If you’re not talking about what you do outside of work or tell people five things that are important to you about your world that are personal and having nothing to do with business, you’re not connecting. You’re just another business person to them. You look like the rest of the marketplace. When we see retention start inching up form 89, 90 for the people that are already doing all the normal things well. Great service, annual reviews, all these different things. When they begin to communicate, it’s like the lid comes off and they start going 91, 92, 93, they start pushing 94 and 95.”

In short, it’s not enough to communicate. You need to demonstrate that you’re a real person that is part of your customers’ community; that you’re going to be their friendly neighborhood advisor when they’re curious or uncertain about something. If they just wanted a policy, why would they choose you over a direct seller? They chose you because they want the peace-of-mind that only a real human relationship can offer. It’s up to you to prove them right.

The good news: You don’t have to do it alone

Now, not to toot our own horn, but this is the exact kind of problem that Agency Revolution lives to solve. Our products were designed to make the relationship-oriented agency scaleable. And our world-class copy-writing, design, and coaching services are perfect for agents that need a helping hand getting started with the modern standards for selling insurance.

However you decide to improve your agencies communication, what matters is that you establish a sense of connection with your customers. For most agencies, achieving this means investing in marketing resources to maintain regular outreach at a consistent quality. I followed-up with Chuck Blondino after the webinar and asked him to expand on the advice he offered, and he shared a statistic from Safeco’s recent survey of Safeco agencies that illustrates exactly why this is a worthy investment:

“If you’re more personable, you become someone a prospect (finally) feels comfortable working with. The hard part is, most agents feel they’re too busy to do this. So they don’t. What happens next? In the absence of a better option in a world where most agents are saying price and service are their differentiators, why wouldn’t a customer go direct and make buying insurance as brief as possible with people they don’t enjoy? 55% of the fastest growing agents we surveyed recently had someone on staff doing their marketing. Every agent should have at least a part-time marketer spending a minimum of 2 to 4 hours per week. Share your creativity about who you are and what you care about, then watch relationships change for the better, retention increase, and more referrals come in.”

If this type of communication is working for the majority of the fastest growing insurance agencies, it can work for yours as well. Don’t let your agency fall by the wayside because you’re anxious over a new investment or lack certainty over how to get started. The math supports it. The fastest growing agencies work for it. Agency Revolution can help you achieve it.