Millions of Americans operate businesses from their homes. This document by Jack Burke offers recommendations for using cross-selling to tap into this lucrative source of sales and earnings.
Don’t laugh too hard. My clients already know that most days will find me sitting at the computer or in front of the microphone in my bathing suit. To understand the magnitude of this transition to informality, consider that when I moved from New York to Southern California in 1982, I didn’t even own a pair of jeans. Informal meant a sport coat and tie. Year by year, the warm weather and casual attitudes gradually loosened me up.
The watershed event came in 1995. After much soul-searching, we moved our offices and studios into a wing of our house. The pool quickly became my “stress-buster” during the course of the day. The restorative factor of several 10-minute breaks to swim a few laps is better than a good night’s sleep. Today I’d be hard-pressed to ever return to a normal office routine.
So what does all this have to do with insurance? Recently our UPS driver arrived for the daily pickup looking as if he’d been through the wringer. As he explained, “If one more home business opens up, they’re going to have to declare this a commercial route!” Apparently more than 50% of the regular delivery and pickup stops on his suburban route are home-based businesses. Combine this with media reports and the increase in Web sites catering to home businesses, and you get a significant groundswell of opportunity for independent agents.
Your Personal Lines department probably already insures the Home and Auto risks of these entrepreneurs. Unfortunately, many of these clients never hear from you on a regular basis. They get their direct billing statements and pay their premiums. They call you in case of a claim or a change in coverage. But when was the last time you called them? When’s the last time you “caught up” on the circumstances of their lives? When’s the last time you sat down and reviewed their coverages with them?
Some home-based businesses, like our company, might have tens of thousands of dollars worth of equipment on the premises. Some might have clients coming to their residences as we do. Few understand that their standard Homeowners policy isn’t likely to cover their business operation and equipment.
Many of you might be thinking that the idea is good, but that it’s an awful lot of work for a Personal Lines account, or even a small BOP. Let’s look at it for a moment. Obviously, you have the normal Home, Auto, and Boat coverages. So let’s say your client is running a business from their home. Some might be fairly significant operations, but let’s say the average business policy premium is $1,000. If you insure 3,000 individuals and 10% of them need Home-Based Business coverage, this would amount to an extra $300,000 in premium volume.
But set that aside for the moment. Think about the entrepreneur owner of this home-based business. As a self-employed person, don’t you think that their Life insurance needs might be increasing dramatically? What about Disability coverage, Health insurance, and maybe even Long-Term Care? All of these could add to your book of business substantially.
For aggressive agencies that offer financial services, here’s another kicker: The greatest amount of individual wealth is accumulated by people who own businesses, not those who work for businesses. Financial advisors spend millions of dollars trying to attract affluent clients — people with whom you might have pre-existing relationships.
Logic dictates that there’s a lot of money on the table when it comes to the insurance and financial needs of home-based businesses. Also, unlike our company, many of these operations will eventually be moving out of their houses into larger facilities. Wouldn’t it be nice to already have that business in hand?
Assuming that 10% of your clients operate businesses from home, what about the other 90%? By contacting these clients, you’ll probably increase their premium expenditures. The great majority of the American public hasn’t had a formal review of their risks and exposures in years. From home valuation to jewelry and artwork, they need your expertise to help them protect their assets. This would provide a perfect door-opener to discuss their Long-Term Care, Estate Planning, and other needs.
CONCLUSION
Manufacturing uses the term “vertical integration” to describe making money by controlling all stages of production. It’s time for independent agents to think of “vertically integrating” their clients by controlling all aspects of client needs.
I’d venture to say that a concerted effort by a medium-sized agency to contact all of its Personal Lines customers for a needs analysis could boost premium volume by $1 million within 12 months. You’ll also solidify your relationship and improve client retention — all of which means more revenue for the agency.
Can you afford to ignore this potential? Can you afford to lose these home-based business clients when an aggressive competitor comes their way? Think about it.