Focus On Relationships, Agents Urged

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Sometimes the best advice is the simplest. Like the Golden Rule.It is so simple that it we take it for granted.

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So what is my best sales advice for todays insurance salesprofessional? Easy. First, understand your customer. Second,communicate with that customer often to build trust.

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Sounds easy, doesnt it? Well, it is and it isnt. Let meexplain.

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Most sales professionals claim to be expert customerrelationship managers. But to see just how good they perform wemust examine the core ingredients of an effective relationship.

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We have conducted surveys to determine how insurance buyersdefine a desired relationship. Most say that a relationship doesntexist until they feel some type of an emotional bond with you oryour agency. In other words, an effective relationship has a senseof connection, often expressed by the simple term “my agent” or “myagency.”

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A customer will rank the effectiveness of a relationship by howwell you deliver value. The value, they tell us, is not theeffectiveness of your pricing or the breadth of your product. Lessthan 20 percent of the reason your customer stays with you is basedon these facts.

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More important to the relationship is how well your customerfeels that you understand them in the context of their business andpersonal life. (Note that relationships always tie to people, notto the account.)

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Most of us feel that we do a pretty effective job assessing therisk exposures of our client. But how many of us conduct an equallyimportant analysis of our clients business goals, financial goals,behavior, values, relationships and more?

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The key to effective relationship creation and sustainedcustomer loyalty is finding out what truly motivates a customer,then customizing the product, distribution or service offering todeliver true value.

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An agency only has a true relationship with about 40 percent oftheir customers. The remaining 60 percent are transactionalcustomers who stick with the agency out of habit or due to thefrictional costs associated with a change. Transactional customersare typically those who have one product line with the agency, and,outside of a billing or claim event, have one-or-lesscommunications with the agency annually.

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Transaction customers are important. They pay the bills, theyprovide critical mass, and they enable us to satisfy the volumecommitments of our carriers. But we probably dont make much moneyon these customers. In fact, because we only have one line ofbusiness with them, nearly half also have another transactionalrelationship with another agency, just like yours.

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What I call the “40 percenters” are key. These customers have atrue relationship with you or your agency. Somebody knows thempersonally. These are the individuals who call you and ask foradvice when they are thinking about buying a house or opening a newbusiness location or buying out a partner.

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These customers generally buy what you recommend. They typicallydont haggle over price, and they are far more likely to forgive youwhen you make the occasional mistake.

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So how do we build a client relationship? Here are ourrecommendations for the professional agent or broker who is willingto listen to their customer.

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“I Want a Local Relationship!”

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What your customer is looking for when they say they want to dobusiness locally is more intimacy. They want to see you and hearfrom you often. About 51 percent of all businesses we surveyedclaim to have heard from their agent one time or less over thepreceding year. These same businesses say that to have arelationship with them they expect communication at least quarterlyand, for some industries, as often as monthly.

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Believe it or not, just being on the holiday mailing list is asimple way for showing you remembered. Your customer wantsdialogue. They not only want you to know them, they want to knowyou. They want you to know what they think, but they also want tohear what you think as well.

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The customer who says they want to do business locally also istelling you something about his/her community values, which shouldalso tell you something about yours. Are you visible in yourcommunity? Does your community contribution reveal anything aboutyour values to your clients or prospects you would like to have asclients?

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What does your customer find valuable about you or yourbusiness? Most of us arent really sure. As a result, we guess.Instead of guessing, ask! Quantify what the customer is looking forand whether they find the values they seek repeatedly andconsistently in their relationship with you. When is the last timeyou asked what the customer values about their relationship withyou?

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“I Want Choice!”

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This claim is your customer crying for help in finding solutionsthat deal specifically with the problems or issues they faceday-by-day. Your client is looking for recommendations that dealspecifically with those issues–or, at least, put your product orservices recommendations in the context of these challenges andopportunities.

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Many sales professionals call this “understanding the wholecustomer.” Yet few of us do. Some 81 percent of the businessownerswe surveyed would like to find one place to have all of theirinsurance needs met.

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Typically, an independent agency concentrates products andservices around property-casualty products. Yet when tested, mostbusinesses claim that better product guidance (finding a“navigator”), one-stop shopping, and finding solutions to humanresources/employee benefits worries are far more top-of-mind thanfinding improvements to p-c challenges.

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“I Want To Do Business with Someone I Trust!”

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We have found that trust is the single most importantingredient in a true relationship. Trust demands a level of risk,for implying a willingness to fulfill expectations that have notbeen yet stated. Trust demands an investment in getting to knowsomeone (trust is always personal) and then using that intimateknowledge to provide increasingly customized, personalizedresponses.

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Dont confuse product quality, breadth of coverage or price withtrust. These attributes are essential to your business “product,”but they have little to do with trust. Trust is doing what you saidyou would do. Trust is demonstrating how much you know about me,such as my age (and how that might affect products or serviceneeds), my goals, the size of my business, something about mycompetitors, my financial situation, and my interests–and thenweaving all of these factors into a product or service context.

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In other words, your true client is not looking for a product somuch as theyre looking for an advisor. Somebody to bounce ideasoff. Somebody who has the courage to render an opinion or challengea decision that may not even relate to a purchase.

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Jack McMahan is CEO of Baetis Inc., a Boulder, Colo.-basedfirm specializing in customer relationship management tools andservices for insurance agents. He can be reached via e-mail at[email protected].


Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, June 24, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.


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