“The best offense is a good defense”
If you’ve ever played or followed sports, you’ve heard that championships are won with defense. Even if you don’t follow sports, logically speaking, if you hold your opponents to zero points, how many points would you have to score to win the game? Conversely, if you allow them to score 100 points, how many would you need to score to win?
So why am I talking about defense and sports?
Many times when we plan for growth, we discuss strategies and tactics to add more clients. We focus on increasing our sales funnel, increasing conversions and closing more sales. Don’t get me wrong; getting new sales is absolutely the to key growing your agency.
We all know selling more policies every month is how your agency will continue to grow over time. However, what if your clients leak out the backdoor as fast as you can bring them in? One critical fact that is often not discussed is the plan to keep clients in the door.
Client retention is similar to defense in sports. The better it is, the easier it is for you to win.
For starters, you need to track and measure your retention rate. I’ve once asked an agency owner what his client retention rate was. His answer back to me was, “pretty good.” The fact of the matter was he didn’t know the answer. He knew overall that they did a good job retaining business, but never measured it.
Why is retention rate important? For starters, you can’t plan growth, without first knowing your retention rate.
For example, if your revenue is $1,000,000, and you want to grow 20% next year, you’d take,
$1,000,000 x 20% = $200,000.
You need to add $200,000 in new business to get to 20%, or $1,200,000 overall by yearend. This works the same if you use policy count or client count, instead of revenue. Simple right?
Unfortunately, this would be incorrect. If you plan growth using these figures, you would most likely miss your growth target. The important element that’s missing here is the retention rate.
For example, the same agency wants to grow 20% from their yearend close of $1,000,000. But they retain clients at 80%.
$1,000,000 x 20% = $200,000 or a revenue target of $1,200,000 for next year.
However, since their retention rate is 80%, they will lose clients next year and need to account for that.
$1,000,000 x 80% = $800,000
So if their revenue goal is $1,200,000 for next year, instead of just adding $200,000 new business next year to hit their goal, they actually need to hit $400,000 new business, to account for the current clients they lose during the year.
This paints a very different picture doesn’t it? If we didn’t factor in retention rate, our planning numbers would be way off.
Let’s take a look now at what the numbers look like if our sample agency retained at a higher rate? What if our sample agency retained at 90% instead of 80%?
If you work through the math, they need to add only $300,000 new business vs. the $400,000 if they retained at 80%.
Due to a higher retention rate, this agency doesn’t need to sell as much new business to hit its growth target. This is why a good defense, or client retention strategy will help you win. You don’t have to work as hard to get new clients in order to grow your agency. You will also be more profitable because the cost of acquiring a new client is much higher than retaining an existing client.
If you don’t have a client retention strategy or are looking to augment your existing plan, consider some of the following tactics:
1. Make it a mission: Retaining clients doesn’t happen by chance. It needs to be a mission of the agency. It starts top down and believed by everyone in the agency. The mission statement is only important if everyone on the staff believes in it and executes it.
2. Resolve problems: Don’t let problems drag on. Be proactive and resolve the issue. Agents and CSRs often think that being friendly is the key to client retention. Unfortunately, that’s not enough. Friendly service is a given. How you resolve and handle problems is the true mark of service. Even if the outcome or answer isn’t great for the customer, the problem needs to be dealt with quickly and professionally. Often times your clients appreciate you for your assistance, even if the outcome is negative.
I once had an issue with a coverage issue on my auto policy. I had one simple request for my agent, “Please look into this and call me back so I know how to proceed.” I did not hear back for a week. I called the carrier and got my answer within an hour. The agent actually never called me back on this issue. As you can imagine, she didn’t stay my agent for very long.
3. Personal touch: When was the last time you received a handwritten thank you card? Sending personalized thank you cards, happy birthdays, happy holidays, etc., will make you stick out with your clients. If you have the time, write a simple note with the card. Don’t just sign it. This will go a long way with your clients.
4. Cross-sell: How many products do you have with your clients? Not only are your existing clients the best prospects for other lines of insurance, the more products they have with you, the stickier a client becomes. Utilize communication opportunities to cross-sell other products.
5. Surveys: Send out surveys to new clients and your current client base every 6 to 12 months. Surveys can provide insight into client satisfaction, problem areas, and cross-selling opportunities. Survey programs like Survey Monkey and Survey Gizmo can handle this easily. If you are on a tight budget, you can also build this out using Google Forms.
6. Value add: Can you provide additional value to your clients beyond the policies you’ve sold them? When a client sees you as more than just another insurance agent/broker, that’s when your retention rate will dramatically increase.
Can you provide valuable information that can help your clients better manage their business or lives? For example, if you are a life and health agent, do you provide education or tips on healthy eating, wellness, or on ways to manage their benefits?
Do you have other professionals you can recommend for other areas of need, like CPAs or attorneys? Do you provide value added services through partnerships, like payroll services?
7. Develop a communication calendar: A communication calendar helps you organize communication with your clients and sets a regular frequency for contact. Whether it’s monthly or quarterly, or another frequency, regular communications with your clients will allow you to achieve the above objectives. Remember, speaking with them only once a year during renewal isn’t enough.
8. Leverage various communication methods, based on your client profiles and your agency capabilities
a. In person – Set up in person meetings with clients at your office or their office during renewal and other important dates. This allows you to gain quality face to face time with your clients
b. Phone – Phone calls are still paramount to successful client communications. For clients you can’t get to, or afford to get to, a regular check in call with your clients, show that you are dedicated and care about their business. It allows you to enhance your relationship while identifying their additional needs.
c. Email – Email goes beyond emailing your clients their renewal. Email marketing to existing clients is a great way to stay in front of your clients, and may trigger them to reach out to you.
A word of caution: Don’t just spam your clients with sales and promotional emails. That’s a good recipe for them to opt-out or not read your emails. Provide them with important, relevant, and educational content like those discussed in tactic number five. Mix in you cross-selling messages as part of these emails.
Email marketing services like GetResponse allows you to manage your email campaigns easily.
d. Get social: Utilize social media to connect with your clients. Post content, engage and follow your clients.
e. Mail: As discussed in tactic number three, personal cards or a great touch that goes a long way. Consider mixing in letters, physical invitations, and updates by mail to help get your message through.
Regardless of what tactics you use, developing and executing a client retention strategy will help grow your agency at a faster rate and increase profitability. Remember, defense wins championships.
What tactics have you used to retain clients? We’d love to hear your stories and client retention. Please share below.