10 strategies for acquiring small-business clients

In the age of direct marketing, the collapse of channel conflict, the reduction of commissions and the growth of alternative distribution channels, it has become imperative that local independent agents identify and focus on the correct channels their business model supports and operate within.

Without a $6 billion budget to attract buyer attention, the industry requires a targeted effort on revenue per account and the selling of every possible line of coverage per account. The other factor that has significantly impacted the industry is the fact that regional and national brokers are raising the bar on the size of accounts that they view as important. Overhead has made the small business sector an “untouchable.” Local independent agents living in communities and daily interacting with local friends and family have a significant opportunity to grow their small commercial lines books.

Carriers are rewarding agencies with higher commissions, bonuses, and educational assistance when they commit to focusing on their local small-business opportunities.

Small business represents $81 billion, which is 20% of the P&C marketplace nationwide. There are more than 28 million small businesses with an expected growth rate of 8.4% in the next five years.

If we don't reach out and capture this market, that instead creates an opportunity for a direct writer or direct marketing initiative to take this space. Now is the time to create an effective strategy for marketing and writing small businesses in your community. As a local independent agent, the opportunities are endless. An effective strategy for a successful campaign would include these 10 strategies:

• Create a list of the businesses in your community that fit your definition of small business. This may come from personal lines accounts that own small businesses, members of the Chamber of Commerce or civic organization in which you are an active member or from a qualified list purchased from an outside vendor.

• Create a list of potential local business owners that might serve as a mentor to you for learning and understanding the challenges of owning a small business. Mentors can teach you specific industries, help you become familiar with their typical hazards and challenges, and develop the proper business acumen needed to have intelligent conversations with the local business owners in various industries.

• Ask the loss control or claims representatives of the carriers you represent about the top 10 claims they see or the top recommendations that consistently appear on the loss control recommendations report. This prepares you to be very specific in your probing, questioning and qualifying as you have initial conversations with buyers and establishes your expertise in the field.

• Contact the local offices of the carriers you represent. We are finding a renewed interest in small business because the larger agencies have all but forgotten the segment, and the larger regional players have attempted to penetrate this market through technology and over the phone with no local representation. Another tremendous opportunity lies in the renewed interest on the part of the carriers. We are seeing the availability of numerous instructional classes offered on the various small-business coverage topics. Cyber, Workers' Comp, Business Auto, Business Owner Policy, Employment Practices Liability, Data Breach and even industry-specific training are becoming more available. One carrier even has a Small Business Coverage Specialist designation!

• From your preparation and pre-qualified list create another list of 250 to 500 businesses within a 100-mile radius of your office. Carriers have been helpful in providing lists and marketing support materials. Having a list of prospects in your area is crucial to your success.

• Consider an automation product that will provide a seamless marketing effort with postcards, text, e-mails, letters, and in-person visit reminders. With today's technology the effective and efficient agencies have automated their marketing function. You'll be more cost effective, efficient, consistent, and create the positive results you're looking for.

• Study local demographics. More than 50% of business in the U.S. have fewer than 50 employees. Of those surveyed almost 60% do less than $10 million in sales. Nearly 81% of those surveyed have no Cyber Liability coverage. That is certainly the basis for a conversation that the regional and national brokers don't even pay their employees to write.

• Have a conversation with your small-business units. Many have dedicated underwriters to partner with you in the small-business arena. Dedicated marketing teams and underwriting units for small business ensure streamlined underwriting, marketing support and competitive product offerings. Dedicated support from carriers will make the process more efficient in capturing and retaining this business segment. In small business you must be efficient and fast moving to maintain profit margins.

• Consider a dedicated small business team in your agency. It's similar to the VIP units set up for higher end personal lines accounts and high-net-worth clients. These dedicated small business units can include writing personal lines for your business owners. In many cases we see personal lines accounts that have larger premiums than their commercial lines counterparts. This requires a new dynamic thinking approach on cross selling.

• Focus on revenue per account. If the small business unit in your agency includes the personal lines for the business owner, you're looking at around $3,000 average commission per account. Add life insurance and you are at $5,000. And you're under the radar of almost every other larger agency because they are looking in silos where the commercial P&C revenues alone are $5,000 and higher. Go deeper with fewer. Deeper relationships with your clients writing every possible line of business and working with a lower total number of insureds will guarantee that your agency has higher efficiencies, lower overhead, higher retention and more profitability.

Good luck and good selling!