As an insurance agent, you probably have a solid idea of how your clients feel about your agency. Right? After all, you are working with them day in and day out, so certainly you have a good understanding of how you are performing in regard to customer loyalty.
Probably not. Unfortunately, most agents are bleeding clients by not focusing on client retention. Here’s why:
1. They are laser-focused on acquiring new clients
2. They don’t invest much time with clients outside of renewals and claims
3. They believe retention is a natural byproduct of good customer service
I agree: zeroing in on new clients is important for new and mature agencies alike. After all, if you do not bring in new blood the only way to increase commissions is through cross-sales. It’s a no brainer. But, if your existing clients are dropping like flies it makes it even more difficult to grow an agency and increase commissions.
Finding new clients versus client retention
To be fair, most agencies receive higher commissions for new policies than renewals. But research shows that, on average, it costs 6 to 7 times more to acquire a new client than retain an existing one. So, when the cost of acquisition is accounted for, existing clients are actually netting higher profits for the agency over the long-term.
Why are your clients really leaving your agency?
But there is a very important thing to keep in mind. Most clients are actually leaving your agency – not because of price, or competitors, or even holes in satisfaction – but because they feel like their agency doesn’t genuinely care about them.
In fact, this is by far the number one reason why clients leave their insurance providers/ agencies. The American Society for Quality references a study which indicates that 68% of customers defect through perceived indifference. The next closest reason at 14% left because they were dissatisfied with some aspect of the service.
For many agencies, this will turn the notion of client retention upside down. Great service only prevents 14% of those clients that would defect from doing so. The perceived indifference that accounts for an astounding 68% of client loyalty is due to the lack of regular meaningful communication from the agency.
Honestly, I did not fully believe this data until we saw it for ourselves at Rocket Referrals. We work with hundreds of insurance agents and have collected thousands of negative and positive comments from their clients using the Net Promoter Score.
What’s the number one reason clients are upset with their insurance agency?
We were able to analyze over a thousand negative responses from clients across many different insurance agencies. Comments were provided from clients which outlined the reasons they were unlikely to refer their insurance agency to others. This feedback focuses specifically on client loyalty but also indicates precursors for specific reasons why clients are leaving their insurance agency and searching elsewhere for coverage.
Our data was very much in line with the study referenced above. The number one reason clients were upset with their insurance agency was that they never hear from their agent outside of claims and renewals. This accounted for a total of 44% of the responses we collected with comments like:
“There is no personal contact. No callbacks. No customer care with questions that would give us better coverage.”
Issues with high prices ranked second at 21%. Not returning phone calls and other various service-related problems both came in at 18% and 17% respectively.
When you combine the lack of personal communication with never returning phone calls you get a total of 62%. This number is very close to the 68% mentioned above due to perceived indifference.
The proof is in the pudding. By and large, your clients are not leaving because of price – a factor generally out of your control. The number one reason your clients are upset with you is that you are not communicating with them regularly in a meaningful way. This is well within your control.