Insurance agents have edge in acquiring referral business

Most independent insurance agents are always exploring new ways to increase revenue. Drip marketing, online lead generation, social media, SEO, etc. But as agents focus on strategies to land new business many continue to look outward rather than leveraging their existing customer base.

Beginning at ground zero when prospecting business is expensive and labor intensive. Reaching new audiences requires a traditional advertising budget and increasingly a robust inbound marketing strategy. The advantage is had by direct writers and exclusive agency writers – it sure isn’t a secret that they have the commercials and the budget for online advertising.

Independent agents have a distinct advantage in their ability to leverage existing customers for new business. The edge is their ability to manifest strong, personal relationships with clients. Therefore, agents should pay close attention to their strategy of looking internally to write more premiums – rather than only looking externally for new clients.

An internal strategy should have two components – both referrals and cross-sales. The most effective agents at realizing new business from existing clients have a consistent and long term strategy of doing so. Fortunately, there are methods of increasing referrals and cross-sales that run parallel to one another.

It starts by identifying your customers that are likely to refer. This is done by implementing Net Promoter Score (NPS) survey. It’s easy to implement and has a very high response rate. This quick metric is used by many of the nation’s top companies including Southwest Airlines, Intuit, and Apple to name a few. It will give you an instant picture of who your promoters are – those that are willing to give you an A+ recommendation.

When agents know who is willing to recommend them they can tailor content to encourage them to do so. The NPS allows you to personalize and send high quality communication, such as handwritten notes, while remaining cost effective.

There is also a significant opportunity for writing new business with existing clients. According to a market review published in February of this year by Independent Insurance Agents and Brokers of America, Inc., Opportunities & Competitive Challenges for Independent Agents & Brokers the overwhelming majority of customers who shop for car insurance online need homeowners or renters, and millions need umbrellas, in‐home business, watercraft, and other lines. Many also own businesses.

Independent agents have a natural edge over direct writers for writing multiple policies for customers. In the same market review direct response carriers write 18% of personal auto premiums, but only generate 5%, or $4.4 billion, of the $77 billion homeowners market. Today more people are willing to establish the relationship with an agent to act as an advisor to help them understand overall risk and relevant protection.

The Net Promoter Score also allows agents to more effectively cross sell their existing customers. If agents are aware who their loyal clients are they have more confidence in contacting them about new products. The customer already established that they are satisfied and willing to refer so a followup phone call or email is likely to be well received.

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