Every agency has three types of customers. First are those who will leave for a lower price. Second are those on the fence; they're not true price shoppers, but they don't have strong ties to an agency, either. Third are those willing to pay more just to maintain a relationship. If you treat the customers in this third group well, they'll stay with your agency even if they have to pay a little more.
Your time and energy are limited. Do you want to spend time on customers who'll stay or the ones who'll leave? Many agents spend precious time on those who'll go. For example, the same clients create late payment problems month after month, year after year. The agency derives no benefit from rewriting, reinstating, collecting, and following up on these policies. Yet every time I've suggested that an agency not rewrite such customers more than once, the agency always protests that it doesn't want to lose the accounts. But these clients cost the agency money.
On the other hand, your agency can significantly increase its profits by concentrating on profitable accounts. The average agency has a 7% profit margin. If 50% of your customers are already satisfied and your agency increases its percentage of satisfied customers by 25%, you could ostensibly have prices 10% higher than the market on 75% of your book with no extra cost. On a book of $100,000 commissions, that equals $7,500, or a doubling of profits.
What with the Internet, banks, accountants, and increased competition from direct writers and captives, independent agencies are going to lose customers. This isn't a bad thing. When someone else offers options that better suit certain customers' needs, some will leave their agents. The key is to accept this and make sure your agency isn't stuck with unprofitable customers. Rise and meet the challenge of the competition. Let them have the low-margin accounts, and make sure you do whatever is necessary to keep the high margin customers - those who'll pay extra for the professional advice provided by an agency that represents multiple companies and works for the customer!