During my 35 years in the insurance industry I have repeatedly heard independent agents say that this is typically a slow period in their business. Several agencies have gone so far as to say that they could probably close their doors for the last four-to-six weeks of the year without it having an appreciable impact on their operations.
If that's the case, this "slow time" is the perfect time for agency owners and managers to take a page out of Santa's playbook and start making a few lists of their own.
Agencies that take advantage of this downtime will find themselves well poised for a productive start to the New Year.
With increased competition in the marketplace and the numerous changes taking place in our industry, many agencies are trying to reinvent how they conduct business.
Yet in spite of shifting sands, one thing remains the same–the large majority of independent agents are still focused on growing their revenue and client base.
In my experience, these are the top-five areas that require attention and improvement in order for an agency to grow:
o Account rounding
o Cross-selling
o Referrals
o Electronic Funds Transfer/lump-sum payment clients
o Retention
What is interesting about the first four areas of improvement is the considerable impact they have on the fifth–retention.
Specifically, agencies that make a concerted effort to increase account rounding and cross-sell percentages as well as the number of referrals and EFT clients almost always naturally benefit from a better retention rate.
If the latter part of the year provides a little additional time, why not take advantage and be proactive in addressing these five significant areas? Let's take a look at how to capitalize on growth strategies during this slower period.
ACCOUNT ROUNDING
This would be a great time to get into your agency management system and run the listings of auto-only and home-only clients. Most agency management systems are capable of displaying this information.
However, I have encountered a number of agencies that cannot easily access this data. If running an in-house listing isn't an option in your agency, carrier representatives can supply these reports.
Once an agency has the monoline lists, they can develop a letter to send to clients they are looking to round out. These letters should be ready to go right after the New Year.
If this sounds like a strategy worth pursuing, make sure to set up a way to measure results. You cannot manage what you don't measure.
CROSS-SELLING
Another good use of time is to run a report of all commercial or financial services clients who don't have any personal insurance within the agency. The agency would again develop a letter to be followed up by a call from the personal insurance staff person.
The probability of retaining more customers increases as the agency writes more lines of coverage with each client.
This can be a great opportunity for many agencies since cross-sell percentages are usually much lower than account round percentages.
REFERRAL NUMBERS
As I travel the country working with independent agents, they unanimously acknowledge that their number-one source of new business is referrals.
However, less than 20 percent of these agencies have a written, documented strategy for attracting referrals.
A substantial number of principals and owners believe they're not getting as many referrals as they'd like simply because their staff isn't asking for them.
This is a great time to put pencil to paper and establish a proactive strategy for increasing referrals.
Keep in mind, account rounding and cross-selling are positive customer interactions, so when agency staff asks for referrals at these times, clients are often forthcoming. Think of it this way–what better time to ask for referrals than after educating a client and addressing their needs?
INCREASE EFT CLIENTS
As agencies increase their percentage of electronic funds transfer clients, they begin to experience a dual benefit. First, it enhances retention by decreasing the number of non-pay situations. Second, it also decreases the number of billing questions. This provides the staff additional time to sell.
A number of agencies have shared that their personal insurance staff isn't comfortable offering and selling EFT. If that's the case, now might also be a good time to explain EFT process and procedures and to develop a script to assist staff in this effort.
During my agency visits, I have observed staff ending a sale by offering to have installments taken directly from the customer's checking or savings account. When offered in that manner, some clients may decline.
Many agencies experience success when they try a different approach. Instead, suggest to customers that the carrier can simply bill their bank. It's a subtle change but it sounds much more pleasant than telling a customer that money will be taken directly from their account.
RETENTION
By addressing the aforementioned areas, an agency is well on its way to retaining more of its business. I have seen countless examples of improved retention when agencies proactively address account-rounding, cross-selling, referral solicitation and EFT numbers.
However, the retention effort does not end there. It is very important for an agency to track lost business to understand which customers are leaving and why. It is critical to pinpoint if it's customer satisfaction, claims concerns or a competitive position that's causing clients to leave.
The end of the year would be a good time to set up a simple "lost business log" that CSRs and account managers can start using on day one of the New Year.
A lost business log might include the following:
o Named Insured
o Date Lost
o Policy Type
o Other Policies at Risk
o Payment Type
o Deductible
o Lost to who
o Reason for loss
Many agencies track their lost business and identify those clients they would like to re-solicit. This might also be an ideal time to develop a "win back" letter.
There are two significant benefits to going after lost clients. First, there is no additional expense incurred by the agency to identify potential new clients. Second, many agents say that when you write a client for the second time, they tend to stay with the agency.
A solid agency growth plan should always include these five areas of improvement but so often the impediment to improving in these areas is simply the lack of time to develop and implement a strategy.
If that rings true, why not seize that small window of opportunity at the end of this year to gear up for a productive 2010?
You might find it's what you do now that influences your agency's growth in the New Year.
Dan King is a Director of Agency Development for Travelers Personal Insurance, working with independent agents countrywide on business planning and strategy and other agency development areas to help agents achieve their growth objectives. You may reach him at dking@travelers.com
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