The Profitable Power Of Cross-Selling And Up-Selling

With all the information that’s available on the benefits of account rounding, it’s amazing that agencies still have the number of mono-line accounts that they do. It’s not economically logical. It costs these agencies money to keep the stand-alone policies on the books for the first four to nine years. Simply put, it is unprofitable business. Yet the pattern persists. Why?

What can you do to change the pattern? How can you increase revenue per relationship?

Let’s look at banking for an example of how cross-selling can improve customer retention. If a customer has seven products with a bank, no matter what occurs, he or she will not leave. The most powerful product is a safety deposit box. When I worked in private banking in the 1980s, we knew that a customer who had a safety deposit box with us wouldn’t leave the bank. Think about yourself. How often do you move your safety deposit box? Unless going to that bank becomes inconvenient for some reason - for instance, you move - I know the answer is “infrequently.”

What insurance product has that same “super glue” power? I think there are some ancillary services that could make a customer stick. I haven’t been able to find a parallel number of products and services for the insurance industry, although I would bet that it’s close to the seven in banking.

The bottom line is you want your clients, especially your most profitable ones, to be so tied to your agency, so intertwined, so involved with your agency, that for them to move their business would consume a lot of time and effort and produce headaches and problems for them. Thus, your goal is to create multiple exit barriers that will make it difficult for them to leave.

Sounds good, but how do you create these barriers? The key is to cross-sell and up-sell your clients. The more they depend on you for their insurance, the more difficult it is for them to recreate that relationship with another agency. Who has the time to do that anyway? No one has the time to recreate strong relationships anywhere in our lives. Time is on your side. Here are 10 key ground rules if you are serious and want to play and win this cross-selling and up-selling game.

The 10 ground rules of the cross-selling game

1. Decide to be a proactive, rather than a reactive, agency. Be willing to proactively nurture and manage your relationships with your clients.
2. Create a written cross-selling and up-selling plan and stick with it for a minimum of two to three years.
3. Engage both sales and service staff. Cross-selling and up-selling is everyone’s job. Everyone!
4. Track and measure results.
5. Give sales and service staff incentives that are meaningful to them. Refer to 1001 Ways to Reward Employees, by Bob Nelson.
6. Make it fun. Refer to The Fun Factor, by Carolyn Greenwich.
7. Don’t accept Commercial or Personal mono-line clients unless they meet your criteria for an A or B client (see the article “Customer Loyalty and Retention Primer”).
8. Create a generic, written relationship management plan for all of your B and C clients who can become your A and B clients.
9. Have sales and service staff customize at least two or three of the proactive nurturing activities.
10. Make sure that the relationship management plan includes specific proactive activities that will create opportunities to sell additional services and products to become an A or B client.

New Rules
To expand on the tenth ground rule, here are some proactive nurturing activities that will create selling opportunities.

• A “Welcome Aboard!” package that will answer many of your clients’ questions before they occur, welcomes them, and proactively accelerates their loyalty process into your agency.
• An annual or biannual review of the client’s insurance needs. This is the perfect time to discuss additional needs and can be a relatively easy sale. This has been one of the most formidable competitive advantages I have with many of my clients.
• A handwritten thank-you note. This is a rarity in today’s modern computerized world. Many will call to thank you for the note, and this provides an opportunity for the service staff to have a discussion about the client’s needs.
• Keep a record of critical dates in the clients’ lives that might trigger the need for a change in their insurance needs. Proactively call them within two or three weeks of these dates. They will be impressed that you remembered.
• Train sales and service staff to know when to seize the opportunity to tell a client about new products and/or markets that your agency is offering.
• Provide an “on hold” message that tells callers about all the products and services your agency offers. Based on my experience with hundreds of agencies, more than 60% of your clients aren’t aware of all of the products and services that your agency offers.
• To ensure that your clients know what your agency offers, regularly send newsletters and mailings which include a list of all those products and services. Repetition is how we remember and is the key to marketing and advertising. Once or twice is not enough. It never will be enough.

Feel free to add rules of your own.

Make a commitment to the process and you’ll enjoy handsome rewards. To maximize your response rate, make it easy for clients to respond, and be sure to provide an incentive. Include a fax-back option or an 800 telephone number as well as your e-mail or Web page address. For the incentive, offer the first 20 who respond a coupon for a free ice cream at a local ice cream parlor in the summer months, a tour of a building of local interest, or delivery of a bouquet of balloons to the children’s ward of a nearby hospital.

A Long-Term Commitment
You now have the basics to start a highly focused, thorough, and profitable cross-selling and up-selling program. Remember this is not a one-day or one-week or one-month effort - it’s a long-term commitment. Create many threads, each representing a product or service that connects your agency and its clients. You can’t have too many. Weave thick ropes that are too intertwined for your clients to sever. In other words, the cost of severing these ties will far exceed the difficulties of working through any problems with your agency.

Finally, you must be and stay proactive. Stay on top of this program. The days of being a reactive agency and expecting to grow and become profitable are gone. They’re history. Relationships today require proactive nurturing and management to thrive. Retention is the name of the profit game.