According to a Deloitte study, 60% of insurance consumers feel like their insurance agents don’t offer any value after the initial policy purchase.
…but the average Independent Agency writes only 1.3 policies per client.
On average, single-policy accounts stay with an agency for only three years.
…but change that to two policies and they stick around for seven years.
Accounts with three policies last an average of 11 years.
…but when you know that the average consumer has four insurance policies, while the average Independent Agency writes only 1.3 policies per client,
you know you’re leaving both money and customer longevity on the table!
How to change that scenario? Implement an account rounding strategy in your agency. It’s a sales and marketing tactic you can’t be without.
Why? Because it’s your best equity building strategy. It’s also the most cost effective. Look at the alternatives:
- Add customers by bringing on new “books of business” by acquiring another broker. This is costly, time consuming and can be hit and miss.
- Add Producers to your sales team. What with recruitment costs (and challenges), plus training time, this is also a costly and hit and miss endeavor.
- Acquire new customers using various marketing tactics like search and social media marketing. While the lifetime value may be there, the cost of acquisition can be high.
So, back to using account rounding. It’s a tactic that will expand your revenues through present client growth. Not only is it the lowest cost growth method, it’s a tactic that will result in these valuable, additional benefits:
- Increase your book of business – that’s money in the bank now and in the future
- Extend the lifetime value of your customer – the more they’re buying from you the deeper the relationships
- Demonstrate your interest in your customers well-being and deter them from considering an alternate proposal from your competition
So I ask you this rhetorical question: when you compare the high cost of customer acquisition to the low cost of implementing an account rounding program – not to mention the valuable additional benefits account rounding delivers – why not make it the primary method with which to grow your business?
Where to begin?
First, understand the Lifetime Value of your customer (CLV). Use our CLV calculator to make working out the details that much easier.
Next, apply customer segmentation. One segmentation method is to apply the 80/20 rule to your customer base. The 80/20 rule means that roughly 80% of the consequences come from 20% of the causes, i.e., customers, (roughly 20% of your customers make up 80% of your revenues), products, (roughly 20% of your products are used by 80% of your customers), individuals and teams, (roughly 20% of your people make up to to 80% of your production), and so on.
Does applying the 80/20 rule to your business make sense? Yes. I can tell you that we have successfully applied the 80/20 rule to businesses of all types and all sizes. The rule always works.
Based on past experience, I can assure you that understanding and applying this powerful principle in your business can generate the type of understanding necessary to make important changes and implement the types of programs that can produce eye-popping results.
Now that you’ve identified your most important customers, look more deeply at the product/s they are using. If they have an auto policy do they have homeowners, or vice versa. If they have a business package does it include cyber. If they’re a commercial lines customer are they also buying a personal line product, or vice versa. The idea is to identify the missing elements in each of your best customers’ portfolio.
Another approach is to segment your book of business into those customers where a particular product is missing. For instance, take all your commercial lines customers and create a database of those who don’t have cyber liability.
Whatever method, or combination of methods you use, it’s really all about understanding your customer’s present portfolio, identifying the missing opportunities, and attempting to add the missing element/s.
Now that you’ve figured out your target audience and associated product/s, it’s time to implement an account rounding program to take the business to a new level.
A serious account rounding program requires a professional, well-timed series of events. Here’s a brief look at each area:
- Select the target audience and appropriate product you wish to introduce.
- You are now a sales manager…generate a quantitative sales goal for a set period of time.
- Select the members of your team who will be entrusted with the success of your account rounding program.
- Together with your team develop the right “approach” they should make to your target customer. This should result in a loose script for them to follow on a call.
- Introduce a sales incentive of some sort to team members predicated on quantitative results. It doesn’t have to be huge, but make it meaningful.
- Get a marketing program in place to get out with a series of messages to your target audience. We generally implement a 3-part email program deployed during a one-month time period. The results of each email are available for the sales team to place emphasis on those recipients who are showing the greatest level of interest.
- Track and measure the ongoing success of your team. If possible erect an in-office display that tracks and measures where individuals stand.
- Keep measuring and tweaking the program to get it perfect for your environment. The words your Producers are using on a follow up call. The method you are using to add some extra motivation.
- Celebrate the success of the program to encourage your team to aspire to greater heights and build a culture of achievement. Have a party, open a bottle of wine…it’s your call.
If you’re still wondering whether account rounding can be the best growth strategy for your agency, consider this…every agency we have worked with has achieved excellent results by using an account rounding program. The results vary between 6.7% and (hold your breath)…19.7% conversions! And by conversions, we mean ACTUAL SALES INCREASES!
Now you know why account rounding is one of the most profitable sales tactics an agency can implement. In addition to generating sales, it builds the client into a Customer for Life, increasing sales in the short term and overall retention in the longer term.
Contact us and let us help you craft a marketing strategy that improves your bottom line.