As an independent agent, you enjoy a unique potential to cross-sell financial services to your clients. Here’s how to take advantage of this opportunity.
Today’s Property/Casualty agency is no longer in just the P/C business: It’s a segment of the financial services industry. Insurance is no longer a free-standing product or service, but part of a professional package. CPA's are selling insurance, as are stockbrokers, publishers, department stores, gas companies, and of course, banks. What’s more, insurance buyers can use the Internet to educate themselves about coverages, fill out an app online, and pay electronically.
However, these new distribution sources still lack a key characteristic that defines you as an independent agent: The ability to develop your cross-selling potential. No online vendor or non-agency that markets insurance can cross sell its clients as effectively as you can.
CHANGE HAPPENS
Cross selling is not a casual matter. The implications are crucial: Profits, client retention, producer retention, carrier retention - agency survival. To some, “cross selling” means selling another P/C policy to their current clients. To others, it’s broader: Selling Life, Health, or Benefits. To still others, it might mean offering risk management, premium financing, or other services.
All of these and many more are legitimate functions of the P/C agency. But consider the total picture: Today’s insurance buyers have become better educated, more attuned to alternatives, and expect better service. At the same time, insurers have become increasingly demanding, less generous, and more inclined to compete with their own agents (although they might have pressing reasons for these changes, that’s irrelevant). The changes are here, and more are coming.
YOUR MOMENT OF DECISION: HUB OR SPOKE?
You’ll need to decide whether your agency’s goal is to become a hub or a spoke. “Hub” agencies recognize that the most valuable part of a book of P/C business lies not in its profitability but its cross-marketing potential. Just for openers, a commitment to selling Life insurance can double an agency’s bottom line.
Adding such related products as Annuities, Long-Term Care, Critical Illness, and charitable-contribution programs can grow revenues even further. You can also build on the two-legged base of P/C and Life by rounding out your portfolio of programs: Real estate, mortgages, travel, and loss prevention can all come together, each service providing leads to the others in the family. This isn't theory. Plenty of agencies nationwide are using cross selling to fuel their growth.
In a hub agency, although the P/C book produces a smaller percentage of the much larger revenue, its principals control the P/C and overall operations. Being a “spoke” agency, on the other hand, puts control in the hands of non-P/C people. For example, nearly 20 years ago three Life producers decided to buy a P/C agency simply to use its Life leads. It worked so well that they expanded into mortgage banking, followed by stock brokerage, and other financial services. These Life agents recognized what many P/C principals don’t see: The cross-marketing potential in a P/C book.
CROSS-SELLING PROGRAMS THAT WORK
Whether you go the spoke or hub route, you must make a firm commitment to a cross-selling program — now.
Let’s look at just a few ways to go at it.
1. Commit to a full-time, professional, in-house Life/Benefits producer.
2. Establish a lead system for the producer. Just being with a P/C agency is not enough.
3. Take advantage of what’s new, good, and salable in related fields. For example:
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Annuities. Annuities aren’t dull back-page-of-the-ratebook products any more. They provide half the income of Life companies. Your clients are buying lots of them. Have your producers or CSRs ask each client, “When does your next CD mature? Would you like to see a great alternative?” Your Life producer should do well with such leads.
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Critical Illness Survivor. This product has many attractive features and is ideal for professionals, executives, mom-and-pop businesses, and mid- and high-income markets.
4. Pick Up Policies (PUP). You do this routinely in P/C, so why not extend the same professionalism to Life? No one is better positioned than you to pick up Life policies from your clients. Do it! Almost without exception, reviewing a client’s Life programs leads to business and referrals.
5. Use e-mail, mail, and mail stuffers with response cards. Nearly every piece of outgoing mail should carry a compact cross-marketing message or question.
6. Participate in seminars by sponsoring your own or sharing with others. Some examples:
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Travel. “Insurance savings can pay for your trip to Exoticland.”
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Reverse Mortgages. “Now you can put lots of money in your pocket and never pay it back — and here are some important policies you can buy with just a little of the money.” (One possibility: A Life policy to cover the mortgage so that the home can be given to a relative, friend, or charity.)
If you don’t know enough about these specialized products or services, bring in an expert to do the presentations or seminar.
7. Banks represent another major resource for cross-selling — and you needn’t be acquired by a bank to work with them. But that’s a subject for another article.
SUMMARY
Cross-selling remains virtually untouched, with a potential limited only by your creativity. Ignoring it means inviting competitors to sell to — and eventually own — your client base. Once you’ve committed to a cross-selling program, you can use a variety of product lines and marketing methods to implement it.