The Independent Insurance Agents of Dallas (IIAD) report that the average customer retention rate in the insurance industry is 84 percent. But the best in the business boast rates of 90-95 percent. IIAD also found insurance has higher customer acquisition costs than any other industry, and insurance agents spend seven to nine times more money acquiring a new customer than retaining an old one. Clearly, finding ways to make your customers stick with you is money well spent.
Since it’s far less expensive for independent insurance agencies to retain a customer than to land a new one, customer retention is a more profitable priority. And those that do it right, know cross-selling is an effective way to show you understand your client’s needs and grow your book of business. That’s why a retention strategy should rely heavily on cross-selling to your clients:
- Pick your spots. Cross selling at the close of the first policy sale or during the renewal period are when clients are most open to considering a new policy. Remember, cross selling might not lead to an immediate sale. Educate your clients on insurance products that will meet their genuine and immediate needs, and be sure to check in at least twice before their policy renewal period to gauge their interest.
- Offer multiple policies. Positioning yourself as a one-stop shop for all your client’s insurance needs diminishes the possibility they’ll look elsewhere. From the client perspective, you are a trusted advisor who is saving them time. Arrange one policy review period to identify coverage gaps or changes, saving more time and improving their experience. When possible, you can also pass on valuable savings when clients buy multiple policies.
- Get sticky. Clients stick with those who establish deep relationships, so give clients reasons to rely on you. The path to a sticky client starts with a great sales experience and deepens with ongoing engagement personalized to their needs. Understand who your clients are, what risks need mitigating and key life or business events that could change or adjust their insurance product needs. Then educate rather than sell them on these issues.
- Stay in touch. One key to developing deep relationships and finding cross-selling opportunities is communication. In addition to newsletters and emails, thoughtful phone calls at key times outside of renewal periods (i.e., birthdays, graduations, etc.) not only furthers the relationship, but better informs you of their potential needs, and presents opportunities to educate clients about important products.
Another path to client retention is specialization. While some may think narrowing your target audience doesn’t make sense, independent agents who become experts in a chosen niche find benefits. It reduces the number of competitors, so rather than being one of a dozen agents in your area, you’re one of a select few with a specific focus. And once you become an expert in a specific niche, you are able to understand your clients’ needs at a nuanced level and position yourself as a far more credible resource than generalists who lack experience in the space.
This type of deep knowledge builds trust with clients, increasing your ability to retain your clients and cross sell products when opportunities are available.
Building a client retention strategy that focuses on building long-lasting relationships and cross-selling — perhaps enhanced by a specialization — is a sound investment for any independent insurance agency.