Search CompleteMarkets

Use Cross-Selling To Increase Client Retention
The more products and services your clients buy from you, the closer your relationship with them. In this document, Lynn Thomas discusses seven proven strategies for using cross-sales to boot your retention rate -- and bottom line. Most agents want their clients, especially their most profitable ones, to be so tied to their agency, so involved, that moving business to another agency would consume a lot of time and effort and produce a multitude of problems and headaches. Therefore, as an agent, your goal is to cross-serve clients so well that you create multiple exit barriers, deterring them from ever leaving your agency. The way to create these barriers is simple: The more products and services your clients buy from you, the more difficult it will be for them to create a similar relationship with someone else. People have less free time today than five years ago. Your clients don’t want to spend their precious, shrinking free time searching for another agency. The more effectively you cross-sell, the more time is on your side. It’s known in the banking industry that if a customer has seven products with a bank, they will almost never leave, no matter what occurs. In the insurance industry, the number is between five and seven. So why don’t most clients buy five to seven products or services from a single agency? Here are three reasons: Most agents don’t know about the power of cross selling and the way that it increases profits. Many salespeople aren’t aware that cross selling is a powerful retention tool. Once you’ve met your clients’ needs on repeated occasions, they won’t even think of leaving. Plain human habit. Most agents see themselves as the hunter, constantly looking for that new big client. They’re accustomed to the adrenaline rush of turning a total stranger into a client. Is this you? The insurance industry reinforces this behavior by measuring new business more diligently than it does cross-selling, referrals, or even revenue per client. Yet these latter three factors reflect your agency’s financial situation more accurately. The “new business” focus is reinforced by Americans’ unquenchable fascination with the new sale and the new client — even at the expense of profitability and higher retention rates. This ingrained pattern is neither logical nor economically sound. The good news is that we can form new habits. The not-so-good news is that the old habits don’t disappear from lack of use. Our old selling strategies can be powerful habits to break, but the rewards for those who have the determination and perseverance to do so are limitless. Here are seven new strategies that will produce more cross-sales: The first step starts with you. Be honest with yourself. Do you really want to take this road? Do you feel the fire in your belly? Is it your burning desire to adopt an easier, more profitable way to do business? Don’t fake it — you’ll fail! You have to want to change your habits to benefit yourself and your client. Establish a firm rule that your agency will not accept any monoline clients. Period. Monoline clients eat up your time and are unprofitable to keep on the books. They’re not part of your road to more growth and profits. Review your reward system. If it doesn’t provide substantial rewards for all employees to cross-sell, change it. Track cross-sales at a visible location in your agency. Ask employees for ideas on fun ways to celebrate when one of them makes a cross-sale. Select the most fun and outrageous ones. The more celebrations, the more momentum there is to keep everyone on the new groove of cross-selling. Create a method to capture your clients’ service preferences (for example, calling them between 7:00 a.m. and 9:00 a.m., before business starts). Awareness of these preferences allows you to provide customized service, which usually “wows” a client — and it’s easier to turn a wowed client into a cross-sale than any other type. Create opportunities to contact your most profitable clients proactively to provide them with value-added services. Create an annual relationship management plan for each client, and follow it. Show the plan to them. Ask for their input. How could it be improved? How can you “wow” them? Have they had an annual review? Do they want one? Do they need loss control? Could a captive reduce their premiums? Bring more and more of these value-added services to the table proactively, and soon your clients will perceive you as an advisor, someone they trust, who’s looking out for their insurance needs. They’ll no longer view you merely as the dispenser of a product. Based on my experience with hundreds of agencies, 80% of your current clients aren’t familiar with all of your products and services. Don’t keep them a secret! Take a lesson from the banking industry: Market your products and services to your clients regularly. Create a marketing plan and stick with it. Time is the test. Repetition is the key. Be innovative and outrageous. Your marketing material doesn’t have to look like it came from an insurance agency. Make it colorful, fun, entertaining, eye-catching, and easy to respond to. CONCLUSION You now have the basics of cross-selling. Remember, this is not a one-day, one-week, or one-month effort. It’s a long-term commitment to be the best agent for your clients -- which, not coincidentally, also means being the best agent for your agency. Cross-selling is about creating a win-win situation. You want to have many threads connecting you to your clients, each thread representing a product or service. You can’t have too many. You want to create thick intertwined ropes from these threads. Your clients will never leave because the costs of severing those ropes will far exceed the benefits of working through any problems with your agency. Be forewarned, though: You must stay proactive. Remain on top of your cross-selling program. Gone are the days when you could be reactive and still grow a profitable agency. Relationships today need value-added services. Retention tools are the name of the game for winning.

...ce and repair Pipe cutting and threading Cutting and ripping lumber Spec...e services (repair benches, cutting/threading, hazardous materials storage), b...

General Agency Advertising
WHAT WE HAVE IN COMMON If there's any one common thread among independent agencies, it is that we are all very independent in the way we do things. For example, a new agency will have a totally different picture of how to advertise and promote its products than a well-established agency that dominates a market in a given community. So this discussion offers you tools and ideas to fit your own advertising needs rather than telling you how to advertise. CONSIDER COST $$$ If you can't come up with all the money to complete a particular advertising job, then starting it wastes the money you do have. Before undertaking a project, you should consider the job you want to accomplish, your resources, and any outside help you can get from companies. 'UNIQUE' IS THE KEY WORD No one, not even an insurance agent, gets excited about buying insurance. People get excited about buying new clothes, a car, or a house. Insurance is definitely not on the list. Since insurance is not something people want,the purpose of agency advertising is to make prospects and customers believe that they need you and your products, and that they should be in touch with you. How you reach that feeling and opinion among prospects and clients depends on your agency. If your competition is using all the normal methods of advertising, then you may have to find newer, exotic methods of reaching the public. For example, a very prominent agent happens to like to race stock cars, so he advertises his agency on the side of a stock car. It's his way of getting the community's attention. KNOW YOUR COMMUNITY You should know the economic facts of your community before advertising. This may sound elementary, but unfortunately, most independent agencies have little or no information available on their community. On the other hand, direct writers have this information down to the zip code. They know the number of homes in a community, the average income level, the number of cars per household, and so on. There are ways of finding out such information, so that you know to whom you are marketing your product. Clubs and franchises have economic data on the community they are serving. If you have a close friend in a service club or a community business that's a franchise (McDonald's, Montgomery Ward), have him or her get some of the data these organizations have on your area. This information might give you some insight into how another company views your community, as well as help you aim your target marketing. This type of information can also give you insight into a community's future long-term growth potential. You might be on the outskirts of an area that you should be pushing into, or perhaps you're already in a hot spot, or in an area that's going downhill. YOUR IMAGE REFLECTS THE COMMUNITY Your advertising should reflect you, your agency, your people, and your markets. If your business is in a small town, anything that is written or printed should not look too slick or too fancy. You're trying to create an image of the local agency-you're one of the folks. So if your advertising is too fancy, you're going to look like an outside expert. Of course, you don't want to appear too cheap either. You don't want to use a mimeograph when everything today is photocopied or computer-printed. You need to fit whatever your market is. One of the national associations released some marvelous advertising material recently, but the material constantly refers to the agent as 'he.' In our particular agency, the chief executive officer is a woman, and virtually all the first-line agency people are women. So the material that refers to an agent as a man does not apply to our situation. The material needs to be rewritten to fit our agency. Also, you shouldn't run pictures furnished by companies or national associations that show everyone in a suit and tie if you don't happen to wear suits and ties. LOOK FOR CREATIVE IDEAS You always want to check other advertisements for ideas. One simple creative idea can catch more attention and do more for you than all the year-round advertising you could dream up. One of the greatest ad programs was done by a Denver man who sells beach towels nationwide.The company that makes the towels sent people to see him to find out what his secret was. He simply took high-quality beach towels and printed 'Beech Aircraft' on them, and then invited people to come see a Beech airplane and pick up a beach towel. No one sells more beach towels than he does, and he's a thousand miles from the nearest ocean. Sometimes ideas like this can hit. If you find something that may work, capitalize on it. Look for a concept. One of the highest forms of intelligence is to take an idea and add to it. RADIO ADS When you're working with a radio station or a newspaper, they immediately try to tell you that you should advertise regularly. They of offer discounts if you do. Negotiate with them. Tell them that you want an annual contract along with the benefit of a lower rate, but you want to spread out the advertising to fit your needs. By having ads air only at the best times, you can get greater impact for the same cost or similar impact for less money. Here is one way you can do this: With the advent of computer billing, most of us are used to paying our bills around the first of the month. Also, most of the renewal bills are issued the first of the month. So if you concentrate your advertising during the last week of the month and the first week of the following month, you will reach a tremendous number of people whose insurance is coming up. People will be looking at the increase in their premiums, and consequently will be open to change. It doesn't do you much good to advertise the rest of the month when people don't have their bills coming in. Also, if you advertise during the hours that your office is open, you will get a better response from your advertising. CALENDARS Another popular form of advertising is calendars. There are two basic types of calendars: wall and desk. The wall calendar is used in many offices today. Good wall calendars cost from $3 to $5 each. You don't need to distribute many, but once you've established a spot in a local office, you tend to own that spot. People expect to see your calendar there. You literally have an obligation to furnish that calendar annually. When purchasing a desk calendar, you should choose the best. Remember, this item is common, and competition is hot. You want a calendar that your client call write on, one that can be used as a diary. This way your clients will save it and use it year after year. When customers receive a cheaper calendar, it usually gets passed down the line to whoever needs another desk calendar. But a good calendar will become an important part of the operations of that desk, and your agency will earn a place on that desk. Be sure to choose a calendar that you can obtain easily every year. You should require a guarantee from the supplier so that you can always get a particular calendar. Recently we chose three striking calendars, only to find out that they were not continued the following year. DIRECT MAIL LETTERS Direct mail can do a number of things. It can tie in with radio ads, newsletters, and newspaper ads. Direct mail can be used to combat competitors and specialty houses, and define your territory. If you've recently moved your office or you are just opening up, a general mailing to everyone in your neighborhood is the best advertising you'll ever do. For example, several years ago we opened a branch office in a growing community that was basically served by agencies bordering the town. We established ourselves and outlined our territory. But an agency from a neighboring town kept moving into our territory. So we sent some direct mail into their town. Our competition left our territory to protect their own turf-they thought we were going to expand into their area. Consequently, they started to concentrate on their territory and gave us the time to establish ourselves. Here are some areas where we have done direct mailing: Neighborhoods where our employees moved Areas where certain coverages may affect the residents a little differently than others An area where fire classes have been lowered (we also ran a newspaper ad) Our agency sends a lot of mail to 'Boxholder-Neighbor,' because we feel that it's a good way of covering every person in a specific geographical area. And next to the word 'Boxholder' we include some information so that when the prospect glances at it, he will get part of the message, whether he wants to read it or not. In addition, sending such mailings in envelopes is not really necessary and adds a cost you can do without. Direct mail can be sent in various ways: You can send it first-class, special delivery, as a mailgram, or bulk mail. Frankly, our agency had better luck with sending letters bulk mail to specific zip codes, specific post offices, and specific neighborhoods. This way we know we are truly saturating an area. Bulk mail costs approximately half the first-class rate, and it's easy and quick to do. In a matter of hours, we had 200 letters printed on a word processor and ready to go. And if your office is not automated, your secretary can type up a letter, photocopy it, and send it out. We never recommend sending a mailing of over 500 at one time. If you send out a mailing that large and a blizzard happens to hit, the impact of the mailing will be totally wiped out. As with radio spots and newspaper ads, direct mail letters should be sent prior to the first of the month, just before your prospects begin receiving bills. Again, if the next insurance bill looks high or the prospects are unhappy with their present service, you will ring a bell with them. We like to do a direct mailing so that it will arrive on Tuesday, which is a very light mail day, or on a weekend so most people will have a chance to read it. We have found that any mailing of any size should be sent over three to five consecutive days. If a particular direct mail doesn't get enough responses in the first few days to pay for it, we don't repeat that concept. If it has a positive response, we feel it was effective. Too often sales letters have dates on them. In my opinion, a letter doesn't need a date (unless there is a due date). All a date does is tell you when you received a letter and when it was written. If your client doesn't happen to see that advertising piece for three weeks, he might discard it, thinking it's outdated. Also, if he sees the letter is three weeks old, he might assume that somebody else did something about it, or that you would have called if it was important. We have found that advertising price in letters is beneficial. Some folks disagree-agents feel stating an insurance premium is not professional. But when you are selling things that people are not familiar with, such as Life insurance, Umbrella policies, and Snowmobile coverage, prospects want to know if the premium is in their ball park. They don't care if it's the lowest price around-the affordability is what matters. You can give the world's greatest selling pitch on low-cost, high-value Term Life insurance, but if your prospects think they can't afford it, nothing is going to happen. NEWSLETTERS A newsletter is a good vehicle for staying in touch with your client. And many types are available (such as those offered by IMMS) that will fit your agency. It is important to select a newsletter that fits what your agency is doing, as well as your clientele. You don't want to send something that is over their heads, nor do you want a newsletter that insults someone's intelligence. Your newsletter should be personalized. Our CPA firm sends out a newsletter with their name rubber-stamped on it. Frankly, it looks cheap. On the other hand, something too flashy may not fit a particular community. Along with the name, a newsletter should have the agency's logo on it. YELLOW PAGE ADS Most studies indicate that the first thing people look for in the Yellow Pages is a tow truck, and the second is an insurance agency. With that kind of impact, every agency should be listed in the phone book. In my opinion, the telephone book is the modern community business directory. It is printed annually and is current. You buy advertising space to tell your message, and if you want to be affiliated with an insurance company, you can list your agency under that company as well. In the Yellow Pages, your agency is easy as pie to find. If a person needs insurance, and you're who they spot, you'll get the call. LETTERHEAD You should never use white paper-it's too commonplace. Color is effective in this youth-oriented, changing world. People are used to seeing color; they look for it. Also, logo design is very important to your advertising. And your logo doesn't necessarily have to go on the top of a page. Putting your name and address at the bottom of the page rather than the top can be quite effective. At the top of the page you can start off talking about your client's needs, and continue with how you can help him. When he finishes reading the letter, he'll come right down to your name. This way, he doesn't keep looking back to the top of the page to see who the letter is from. WITH A LOT OF HELP FROM OUR FRIEND With computers you have the capability of writing and tying-in your specialty letters and direct mail letters, as well as following up on your single-line clients. If you're buying a system that doesn't have this word processing capability, it is already obsolete. With our word processor, we do direct mail, mass marketing with personal letters-sending a similar or repetitive letter to the same accounts every so often. You can keep track of business lists, homeowners lists, auto owners, boxholders, and so on with a computer. BE YOURSELF When advertising your agency, one of the most difficult rules to follow is to be yourself. Don't try to be something different. You must determine within your agency who and what you are and what your staff is. For example, we happen to live in a mountain area, so we bill ourselves as mountain people. We think that's important because that's the kind of folks we deal with. If you're very involved in one type of business, then you should look at yourself in that vein and promote yourself in that vein. When you relate to those people, make it clear that you are people who know that particular business. My favorite sales story is about the two shoe companies that decided to expand into Africa. Both sent salespeople. The first salesperson arrived and wired home: 'Send money for return ticket. No one hear wears shoes.' The second salesperson wired home: 'We hit a bonanza, no one here wears shoes.' Both said exactly the same thing, both had exactly the opposite viewpoints. And both probably did what was in the best interests of their company, considering their perspectives. If you don't think a market is right for you, don't waste time in it. Someone else may think it is perfect for them. Define what you are, see what the opportunity is, and find your degree of uniqueness to go after it.

The Next Generation Of Insurance Agencies
THE NEXT GENERATION OF INSURANCE AGENCIES by Bill Schoeffler The common thread in all the advice given in today's business and management books is that we're going through a period of change. This is especially true for the insurance industry. 'It was the best of times, it was the worst of times. It was the age of wisdom, it was the age of foolishness.' These first lines from Charles Dickens' A Tale of Two Cities could come from any of the numerous management books today. We now need to consider chaos the norm. Commission rate changes, carriers withdrawing from various areas, alternative marketing strategies, and legislative changes are a few of the many challenges facing agents every day. We need to learn how to excel in this turmoil. The service industry, of which insurance is a part, should take a look at the manufacturing industry and learn from their hard-earned lessons. The companies that survived and thrived pay attention to quality and customer service. Today, these are the same thing. Quality is not just theory anymore. It's necessary for survival. If we improve quality, we'll lower costs and improve productivity. We can then lower our prices, which will increase our market potential, allowing us to stay in business and give everyone a return on their investment. OLD WAY VS. NEW WAY Fredrick W. Taylor was the driving force behind the movement known as Scientific Management. This is the foundation for today's managerial practice of separating planning from execution. Assuming that the workers lacked the necessary educational base, planning became the province of managers and engineers. The workers executed plans that management developed. This concept was widely adopted and is a major reason for the United States becoming a world leader in productivity. This culture is still well entrenched in today's society-despite the global competition and information explosion that has made this model obsolete. A paradigm shift must occur to allow businesses to move to the next level and respond to the current trends in consumer needs and demands. The old way focuses on pleasing the managers and controlling the work force; the customers are taken for granted. The new way focuses on pleasing the customer by improving the system processes that deliver goods and services to the customer. When we practice the new way, management becomes secondary. The new way requires us first to understand our customers. Then we can work backward to understand our systems and redesign them to improve our service to customers. THE NEW CONSUMERS The sophistication of the consumer has greatly expanded. The typical insurance customer is demanding higher quality for less. Does this mean it's the worst of times for agencies? It depends. If proactive management is practiced, it will be the best of times. The Chinese character for crisis is the same character for opportunity. We must learn to turn crisis into opportunity. The U.S. auto industry was faced with being almost closed down by the Japanese competition. Instead, their profits have grown each year since this 'crisis.' Agency owners will find that focusing on quality is the road to opportunity. Due to the costs of producing and servicing an account, the average firm needs to retain an account for three to four years before they earn a profit. Firms with great customer service have account renewal virtually guaranteed. Find out not only what the customers need but also what they want. The U.S. inventor of the fax machine considered it to be useless because it didn't fit into any existing category. The Japanese company that bought the rights did not limit its thinking; it let the consumers decide. Agency management should survey their clients annually for feedback on customer service and suggestions. QUALITY AND THE END RESULT The incorporation of quality techniques into the service industry lags behind a similar movement in the manufacturing industry, perhaps because the concept is confusing. Theories tend to be too simple, failing to allow for the complexity of dealing with real-time subordinates, changing needs, and conflicting demands. Other theories are so complex that only an armchair academic could love them. Faced with declining profits and competition from new sources, agency owners are discovering the advantage of quality. But even when the commitment to quality is made, the question remains, 'How do we translate our goal of quality to results?' Quality is not just the process of checking policy forms for errors or documenting feverously to avoid Errors & Omissions claims. Quality is a thought process that everyone must develop. It requires focusing on the end result. Everything we do can have many different purposes. By keeping the end result in mind as we perform a task, we'll open our mind for more innovative approaches to any process. The end result that insurance agencies must focus on is satisfaction of existing clients and attraction of new customers. The decisions and actions made every day must be made with this result in mind. How does this all fit into an insurance agency? Very simple: Chuck out all your old beliefs and tear down the current system-but first finish reading this article! In the old way, managers used deductive thinking (define the problem, then seek the solution). In the new way, managers will think inductively (recognize solutions first then seek out problems to solve). WHO ARE YOUR CUSTOMERS? Let's explore how quality and customer service translate to practical information. At this point, we now need to expand the definition of a customer. A customer is anyone who receives the firm's product. In the case of a CSR, customers include the person purchasing the policy as well as the underwriter who is sent the application. Producers should treat prospects, underwriters, claims people, and CSRs as their customers. This concept does not need to be complicated. Just list the people who receive any of the firm's end products; they're the customers. Service them well and they'll stay satisfied. Employees must believe that they work for their customers, not their bosses. KEEP IT SIMPLE Every firm has five major functions: sales, marketing/placement, service, accounting, and administration. Every procedure and process in each function must be redesigned with the end result in mind: quality customer service and attracting new customers. In the old way, jobs and tasks were to be kept simple. This led to very complex processes and many layers. Today, the goal is to make the processes simple and to combine several jobs into one. The payoff in integrating all processes will be more production and fewer errors-reducing or eliminating the need for reconciliation. For the output to be improved, the system must be improved. To make this successful, address several concepts, including: Development of conditions to allow workers to exercise self-control and inspection Empowerment of employees to handle a wider variety of tasks Development of a team approach to service clients. Communication and training are fundamental to improving systems. Steps in any process should be in a natural rather than linear order. To generalize, the individual tasks for any job can be performed either in parallel or in sequence. The more tasks being performed in parallel (with fewer people), the simpler the process. The interaction of these systems results in quality. All steps within the systems are ultimately interdependent. TEAM UP TO SUCCEED With personnel handling a wider variety of tasks and the use of teams, processes become simplified. In the old way, bosses designed and allocated tasks. Now, teams assume these responsibilities. Quality is a result of teamwork, not individual effort. Teams break down the artificial separation of departmentalization. The organization will succeed only if all employees do their job and share joint responsibility for the end result. Firms that utilize teams need less management. Producer units can be the nucleus of a team. Still, pay attention to ensure the producer units do not become firms within a firm. A CSR's reluctance to help another producer when someone is out sick will destroy team spirit. The new model for an agency is 'a complex job for smart people.' Continued education over the lifetime of a job is now the norm. Producers need to work as if they're underwriters. CSRs need to understand the claims process. Bookkeepers need to think like owners. Everyone must be sales oriented. This doesn't mean that the producers should be doing the filing. Tasks like that should be performed by the least-paid qualified person. Employees however, must be well trained and should know what information is needed to service the client best, even if that information doesn't fall within the scope of their job. Beware of misusing technology to reinforce bad habits. Employees who don't use the computer system fully will actually be less efficient than those using a manual system. The proper use of technology is paramount to success and should be used to create new ways of working. A shared database can compress any process into parallel tasks-for example, when a CSR calculates a client's premium while the producer checks the client's record. The use of expert systems will allow semiskilled workers to operate at a nearly expert level. It may allow anyone to cross-sell or round accounts. With today's wireless technology, sales people can collect and send information from anywhere, including their car, an airplane, or the prospect's office. EMPLOYEE MOTIVATION Understanding what motivates each employee is crucial. The effective use of bonuses means more than promotions. Don't give out Christmas bonuses unless they've been earned. The criteria for evaluating employees are now contribution to the firm and customer-service performance. Develop compensation plans based on an employee's efforts to increase profitability. Institute a CSR incentive program. Give a paid day off to the employee of the month. Take top producers and their spouses to dinner. Everyone wants to be recognized for doing an excellent job; management's job is to find out what forms of recognition employees appreciate most. In Oak & Associates' consultations with hundreds of insurance industry firms across the United States and abroad, we've noticed certain patterns common to high-performing firms: tremendous energy, synergy, and commitment among everyone in the agency. This is more important than the leader doing everything by the book. The group acts as a cohesive team, going beyond just having all-stars. We also notice healthy competition among the employees, especially among the producers and CSRs. Finally, management believes in the abilities and intentions of employees, and creates new opportunities for top performers to advance. SUMMARY Everyone in your agency needs to share the same vision. Employees that understand, at least in a general sense, your firm's operations and goals will tend to act more like owners. They'll be more responsive to clients, leading to improved customer service. If quality is poor, everyone should feel shame. Agency owners should be creative in how they relate to employees. Firms that allow employees to act as entrepreneurs will generate creative thinking, and the staff will know that their efforts will allow them to share in the firm's success and profits. Today, you need wisdom, not foolishness. This may be the worst of times, but you can make them the best of times. Bill Schoeffler can be reached at Oak & Associates, P.O. Box 2047, Glen Ellen, CA 95442, (707) 935-6565, fax (707) 935-6515, E-mail [email protected].