In today’s competitive insurance market, customer retention is a critical aspect of maintaining your business. Considering that insurance has the highest customer acquisition costs of any industry, keeping your clients happy and loyal is a solid strategy for maintaining a high profit.
Retention rate is what separates struggling agencies from thriving ones. The average retention rate for agencies is 84%, but the industry’s top agencies maintain a retention rate of 93-95%. A sustained 5% improvement in your agency’s customer retention doubles your profit in five years.
Improving your retention rate doesn’t have to be overly complicated. We compiled data from Agentero’s agents to highlight the metrics and processes that support higher retention and provided tips to help you efficiently keep more clients and increase profit.
Read on to find out how you can increase your profits with better retention skills.
Improving your retention rate starts with the first impression of a new client. First impressions are powerful. It shapes your customer’s view of you and your agency. Even the smallest issue after a bad first-time experience can make customers run for the door.
The graph above shows the growth drivers within different insurance agencies on the Agentero platform. It shows how important new clients are, as most of the new policies sold at the agencies come from net-new clients (blue portion of the histograms).
Take some time to review your current onboarding process. Is your process easy, modern, and frictionless? Or, do you have an outdated and complicated process that needs some work? Ask friends or family members that are not familiar with insurance to go through the process for honest feedback. Come up with ways to make your onboarding process as easy as possible.
Our research shows that more policies a customer has with an agency lead to a higher retention rate.
Most agents try to sell an additional policy to their current policyholders. What they may not realize is that the value of the second policy is larger than the additional revenue from that policy. When people own two (or more) policies, they are more loyal than if they own just one. In fact, our data shows that increasing average policies per customer across the whole book to more than 1.8 (policies/client) reduces annual churn rates to 5% (95% retention).
Find different and better products (carriers, lines of insurance, etc.) that add value to make your customers more loyal. Customers appreciate agents that do their homework to help meet their needs and look out for their well-being.
Leverage data to see if there is a better policy to meet your customer’s needs and concerns. Offer them policies at multiple price-points so that they can choose which one works best for them. Also, offer adjacent policies that would also benefit your customer.
Find the average number of policies per client in your book. This average will give you a sense of how many cross-selling opportunities you have.
Proactive communication throughout the year helps build goodwill and loyalty with your customers. Don’t wait for your customer to reach out to you with a request or issue to communicate.
Our research shows that churn is at its highest one year after a customer purchases their first policy. On the other hand, it decreases significantly after four years. This data highlights the importance of great customer experience and constant communications have on the customer relationship.
How often you reach out to your customers depends on the individual client and your unique relationship with them. You should be proactive to reach out when there is news that will affect the client or when you can add value to the relationship. A policy change or upcoming renewal date are good examples for positive and proactive touchpoints.
Take advantage of ways that you can keep in regular contact with your customers. Be proactive in your communication to build your customer relationships and increase loyalty.
When possible, send something to acknowledge your customers when they renew with you. It lets them know that they are appreciated and encourages future loyalty. Consider sending a personalized card or a nice swag thanking your customers for their business.
Depending on where you live, you can also send small gifts to show your appreciation for your biggest customers. Send a gift basket, for example, and encourage them to share at their office or with family and friends. It’s another way to reward loyalty and make your business visible to new customers. However, be sure to check the laws in your area first. Some have limits on the monetary amount you can give, and others prohibit all gifts.
In the modern era, customers have come to expect the convenience of technology. Utilizing the right technology not only ensures that they have a better customer experience, but also makes your business more efficient.
If you don’t have it already, consider offering do-it-yourself servicing tools for your customers, such as a mobile app. There they can quickly and efficiently handle basic functions, such as checking their policy or making a payment. Your customers will likely prefer the convenience, and it will save you time.
Data can also significantly improve your services. Analyze your data and find insights that allow you to anticipate your client’s desires and make better-informed decisions.
Improving retention is a great way to increase your revenue and profitability. Look for ways to create a better experience for your customers, leverage data to look for coverage gaps and client needs, and use technology to encourage loyalty to your agency.
Agentero provides an agency growth engine that converts existing client data into actionable insights, enabling independent insurance agents to maximize revenue, save time, and increase customer satisfaction. In addition, Agentero provides integrated market access to a panel of digital carriers and partners to close more business faster. Policyholders also gain access to a streamlined mobile app to manage their insurance policies. Check out our website to learn more.
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