Why don't agencies invest more energy in cross marketing additional policies to existing customers? In an increasingly competitive world, success requires you to maximize the potential value of every client to your agency. Jack Burke uses his own experiences to illustrate the lack of cross-selling on the part of some agents.
During the past year, I've been working with a “legend” in the Personal Lines arena — Cosmo Conte. As a State Farm agent/agency owner, Cosmo climbed to the pinnacle of success in my hometown of Cleveland. About 25 years ago, he moved to San Diego and did it all over again in California. The secret to Cosmo's success was simple: Multi-line selling! Recently we updated and repackaged a combination book and audio program that he originally created in 1989. Although I knew that the basic truths it contained still hold true today, I've been amazed at the quantities that have been sold. Agents nationwide seem to be looking for the magic formula: The key to growing their agencies successfully.
The reason I was so surprised at the demand for this product was simple: Saturation. After all, every sales and marketing guru from George Nordhaus on has been extremely vocal about the need for agents to sell more than one policy to their clients. For years, the statistics revealed that the average American had 7.2 insurance policies — but agencies were only averaging a little better than one policy per customer. Whether you called it cross-selling, account-rounding, or multi-line marketing, the message has always been the same: More policies per client means lower acquisition costs, higher client retention, and greater profits.
All that being said, the question remains: Why don't agencies invest more energy in cross marketing additional policies to existing customers? Are we afraid of the success it might engender — or do we fear failure? Now, before the members of the choir (those who are cross-selling) rise up to say that I'm wrong, let's take a look at just one consumer: Me.
When we arrived in California in 1984, one of our first culture shocks was the cost of Auto insurance. As a Farmers insured, we contacted a local agent to make the address change and learned that the premium was nearly three times higher than it had been back East. We paid the difference and chalked it up to the price of living in California — until the locals explained that anyone in the know with a good driving record was getting their insurance from 20th Century (now 21st Century). I made the call and moved the insurance to cut my premium by more than 50% — no agent, just an 800 number. During this period, we were never approached about additional insurance by either 20th Century or the Farmers agent.
Our second moment of culture shock came when we bought a house — this is still the case today for any new California resident. We purchased from a developer who recommended both a mortgage company and an insurance agent. We used both. Other than annual bills, we never heard from the agent providing our Homeowners insurance.
Our third moment of culture shock arrived when the children started hitting 16. Twentieth Century really wasn't interested in insuring teenage drivers, and indicated this with skyrocketing premiums. That's when a Mercury agent came to the rescue and kept our insurance as reasonable as possible. We now had a real, live agent to represent us, and he's done a great job over the years.
In the meantime, we started Sound Marketing and needed Business insurance. Since we didn't have a meaningful relationship with anyone other than our Auto agent, we followed the recommendation of our attorney and got the insurance through a local independent broker. Acknowledging that we were a small account, he explained that our primary and only contact would be with their CSR staff — not him.
At the same time, we needed to buy Health insurance. By chance, I called our Auto agent to see if he handled other Personal Lines, such as Health. He did and he wrote the policy — but remember, I had to call him to find out if he represented any Health companies. That's not cross-selling. Some years later, he sold his Health book to another agent, who I haven't met to this day (although he gets his commissions on a regular basis from our premium payments).
As the years progressed, we now had one agent for Business insurance, a second for Homeowners, a third for Auto — and yet a fourth for Health insurance. Not a single one of them has tried to cross sell anything to us! The only extraneous message came from the original Farmers agent who we had long since discarded. His letter explained that because Auto insurance had become too competitive he had sold his agency in order to become a Life agent. To his credit, he was persistent and eventually sold Life coverage to both my wife and myself. He's still our Life agent today — but he's never attempted to sell us any other financial services package or coverage other than those two policies.
So here we were with five basic coverages and five agents. The only anomaly was that they had been retaining our business despite lack of communication or concern about our needs. So when I saw an AARP/Hartford mailer about Homeowners insurance, I contacted them. In one short phone call of about 10 minutes, they quoted a Homeowners policy. When they learned that we had moved our offices into a wing of the house, they quickly requoted for both Homeowners and Home-based BOP coverages. After I told them to write the policies (thus eliminating two agents on the spot), they came right back and asked about my Auto coverage. The only reason I didn't give it to them was because of the nature of my cars; there are some classics involved and I didn't want to go through the hassle of new appraisals, etc.
Companies like The Hartford understand the value of cross-selling. Why can't independent agents follow suit? In an increasingly competitive world, success requires you to maximize the potential value of each and every client to your agency. In the meantime, you can always visit http://www.soundmarketing.com/cosmo.htm and buy Cosmo Conte's workbook and four CDs on “The Magic of Multi-Line Selling.”