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Retention Focused Acquisition in Insurance - Work Smarter, Not Harder

Because of increasing acquisition costs in the insurance industry, it can take as many as 7 new policies sold to cover the value of only 1 tenured policy. (LexisNexis)

Lexis Nexis research also finds that one-third of insurance policyholders change carriers before the end of their first term - which is often too soon for the agency to recoup acquisition costs, let alone make a profit.

If that’s true, selling and onboarding a new client is far from the end of the battle.

That client must stay in your book long enough for your agency to see any profit from them.

Align Acquisition with Retention

If you still see acquisition and retention as two separate functions in your agency, it’s time to look at how much further your acquisition efforts can go when doing so with retention in mind.

When you acquire with retention in mind, you set up your customers to stay with your agency longer, purchase more policies, and give you more referrals than those obtained for quick sales.

insurance agency meeting/discussion on lead acquisition

In this post, I’ll share 6 things you can do to better align your acquisition efforts with your retention strategy - working smarter, not harder.

1 - Define Your Ideal Customer Profile

Casting a wide net is tempting - you want to get as many customers as possible, right?

Not exactly.

While casting a wide net might result in short-term success from the new policies you write, if the new customer is not a good fit for your agency, chances are, they’ll cancel before you can make much of a profit.

Regarding prospects who fit your ideal profile, Jacob Rodriguez, (Director of Sales, Auto and Home Insurance at Active Prospect) says, “They’re going to retain a lot better on your books. And retention is a huge factor for growth within this vertical.” (Convoso)

So, how do you define your ideal customer profile?

Take a look at your most profitable customers.

  • What do they have in common?

  • How were they found?

  • Consider demographics like age, marital status, occupation, location, income, etc.

  • Compare risk profiles.

What other commonalities can you find?

IMPORTANT: Keep an open mind as you do this research!

Defining your most profitable customers doesn’t mean you should only sell to millionaires with seemingly limitless assets to protect.

Your most profitable customers might have started with just an auto or renters policy (gen z, we're looking at you).

Millennials and Gen Z, according to Global Payments, have a combined spending power of $350 billion in the U.S.

happy family

That number is expected to grow as they purchase homes and start having children.

Your agency’s future profitability depends on having customers from these generations.

Market to Your Target Customer

Once you’ve defined the ideal customer profile for your agency, identify the most effective ways to market to them.

Digital Insurance gives some questions you should ask to identify the best marketing channel(s):

  • What problem are prospects trying to solve?

  • When do they need your product or service?

  • Where can you reach them?

  • What messaging will motivate them?

2 - Consider Your Niche

This one goes hand in hand with defining your ideal customer profile.

Only this time, take a look at all the products you offer, and take note:

  • Which products do you sell the most of?

  • Which products bring in the most revenue?

  • And which products are most competitively priced?

It’s simple, but knowing which products you’re most likely to sell to your target customer will help you write more policies and retain more clients. (EverQuote)

3 - Lead Scoring

I’m willing to bet that all insurance agents know that not all leads are created equal.

So why do so many agencies spend their time on leads with little chance to convert and stay?

Chances are, they’re not focusing on the leads with the highest intent simply because they don’t know which leads those are.

insurance staff member scores leads based on their intent

At the very least, 50% of your leads aren’t a good fit for your agency, while others who could be a good fit aren’t ready to purchase immediately. (Ease)

Lead scoring helps your team spend time with the right leads (those who are a good fit AND ready to purchase).

Lead scoring: assigning a numerical value to leads to indicate whether they are ready to buy, need more nurturing, or shouldn’t be contacted at all. (Ease)

There are a variety of ways you can do this (and this Ease article will go into more detail for you), but here are a couple of questions you should ask to help determine a lead-scoring model:

  • Are these leads a good fit?

  • Are these leads engaged with my agency? (indicating higher intent)

Along with those questions, score your leads based on your ideal customer profile and other criteria, including demographics, risk profile, industry, online behavior, email behavior, etc.

A lead scoring system empowers your agency to spend the time, resources, and energy on the leads most likely to convert and stay with you for the long haul.

Remember, we’re working smarter, not harder.

Quality over quantity!

4 - Focus on Referrals

If you’re a regular reader of our blog, you might feel like we're beating a dead horse by talking about referrals YET AGAIN.

The truth is that referrals are one of the least expensive lead types.

They’re 4x more likely to convert. (Nielsen)

They spend up to 25% more on the initial purchase than non-referred customers. (Go Nectar)

And their lifetime value is 16% higher than non-referred customers. (Review 42)

Needless to say, if you’re not utilizing a referral program in your agency, it’s time to reconsider.

If you need a little nudge in the right direction, read our blog post:

insurance agent networking on the phone

5 - Networking (more referral sources)

Do a little research in your area to pinpoint realtors, lenders, financial advisors, high-end auto salespeople, etc. Once you have a list, contact them to build a business relationship. (Advisor Evolved)

Better yet, search out your auto salesman customer to deepen the relationship and receive referrals that way.

Networking is one of the least expensive ways to create new referral sources.

6 - Thrive Leads

“Thrive Lead” is a term we’ve coined at Engagex to describe new sales opportunities that are already within your current book of business.

These are cross-selling or up-selling opportunities from your existing clients.

The more policies a household has with you, the longer they will stay with your agency.

While Thrive Leads don’t entirely fall under the “acquisition” category, they’re crucial to increase retention. The better your relationship with your customers, the more referrals you’ll get from them!

Some of the nation’s largest and most successful insurance companies implement structured training to teach their agents to conduct customer insurance review meetings with their existing clients.

They constantly urge their agents to conduct these meetings because they know that regularly meeting with existing clients will consistently uncover what we call "Thrive Leads."

Sales opportunities within your book have an 85% close rate because of the natural environment created by insurance review meetings.

How to find Thrive Leads:

Obtaining thrive leads is simple: invite every client in your book of business to meet with you annually to review their current policies compared to their life circumstances.

couple visits with their insurance agent

Having simple conversations about their life will naturally uncover new sales opportunities.

You can then take note of upcoming milestones when you can follow up and close more sales.

Since your clients’ lives are constantly changing, you have a never-ending flow of new insurance leads - you just need to work them!

To get in-depth training to conduct customer insurance review meetings, check out our FREE Agency Thrive Program.

As we’ve established, there are many ways to align acquisition and retention, and it might seem overwhelming.

Remember this: when you acquire with retention in mind, you’re working smarter - not harder, and your agency and valued customers will thrive.

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