Although most agency management systems offer the potential to profile customers, relatively few agents complete, update, or use their customer profiles effectively. Profiling involves the identification and study of individual and group characteristics in order to market products and services tailored to the buyer’s needs. The profiling process begins with knowing your customer to create product focus that leads to account rounding and development. The proper combination and management of these steps will increase both account revenue and account lifetime for insurance agencies.
A study by the University of Texas more than 20 years ago concluded that:
- Single-policy Personal Lines accounts remained with insurance agencies for an average of less than three years.
- Two-policy accounts stayed on the books for five years.
- Accounts with more than three policies had a 10-year average life.
The survey would’ve been even more valuable if it translated into revenue values of single-policy, two-policy, and multiple-policy clients to an agency.
In Customers For Life (Pocket Books, 1991) Carl Sewell determined that a customer will spend an average of $332,000 on cars during their productive life. If a dealer provides them with a great experience the first time they buy a car, they’re worth $332,000 to that dealer. Using this example, how much is a customer worth to an insurance agency? In a Pipeline article 'Customer Value vs. Customer Cost' (August 2000, Vol. 14, Issue 8), we identified a potential lifetime commission of more than $60,000 from a single first-time Personal Lines customer — without cross-selling them a single Commercial Lines policy!
Transforming $125 commission one-year Auto buyers into lifetime, $60,000 clients is a two-step process:
- Treat them like $60,000 clients from the get-go.
- Understand what the customer wants and needs at various stages of their lifetime.
This profile will allow you to understand your customers well enough to provide information and advice on products and services tailored to their individual conditions and needs at every stage of their lives.
Know Your Customer — The profile asks pertinent questions about customers and revises this information as they mature and their conditions change. An 18-year-old college freshman’s needs are far different than those of a 22-year-old getting married and launching a career, a 25-year-old starting a family, a 30-year-old new homeowner, or a 40-year-old building assets for their family’s future. Keep up with these changes by re-asking the questions every few years.
Product Focus — An agent with a large Personal Lines book should identify and understand the products and services that their clientele needs (or will soon need). For example, if most of your clients are couples in their 20s and 30s, you might not market geriatric-care products, but you should certainly be familiar with basic Life coverages. On the other hand, if you insure a lot of baby boomers, you should become an expert in Long-Term Health Care.
Account Rounding and Development - To turn your clients into lifetime customers and maximize your revenue from them offer each customer the products they need at the various stages of their economic lives. Whether you use a preset profile in your agency management system, or create a manual form to identify the information needed from the client, profiling should be a critical process for every agency. The profiling exercise presents the best opportunity for cross-selling as needs are identified. Make profiling routine — a process, not a project — as an ongoing tool for building relationships with your clientele.