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YOU’RE WORTH MORE THAN YOU THINK

YOU’RE WORTH MORE THAN YOU THINK

YOU’RE WORTH MORE THAN YOU THINK
November 27
09:52 2018

Blasted Myths

By Carl Maerz

YOU’RE WORTH MORE THAN YOU THINK

Understanding the bottom-line value that testimonials bring to your agency

Psychologists and market researchers have long studied the influence that testimonials have on human behavior—specifically, how these written validations cause others to trust a business they barely know—and how the act of giving a testimonial reinforces the commitment a customer has toward a business.

In the independent agency arena, testimonials are created when clients write about a positive experience they’ve had with their agency. Testimonials often are hosted on an agency’s website; this differs from online reviews, which are found on third-party sites like Google. They provide value to an agent by offering social proof, increasing client retention, boosting agency morale, and inspiring personal recommendations.

Written testimonials have long been shown to increase client loyalty and retention. … For the client, it’s a reminder of why they chose to do business with the agency to begin with.

Until recently, it was not known exactly how much testimonials were worth to an insurance agent. People never knew the exact value—and the myth was that they were impossible to quantify. The data simply didn’t exist. And, although they were nice to have, for most agents, collecting written validations was never a priority. At Rocket Referrals, we’ve always believed in the benefit of collecting testimonials. So we set out to blast the “you can’t quantify it” myth and find out exactly how much testimonials impacted an agent’s bottom line.

Testimonials and client retention

We began by analyzing over a million data points from independent insurance agencies. We measured differences in retention rates between different groups of clients. We then placed similar clients into two groups where the only difference between the two was whether or not the client provided a written testimonial. We then compared the retention rates of these two groups over a five-year period and found measurable differences between the two:

  • In year 1, clients are 1.1% more likely to be retained if they gave a testimonial
  • In year 2, clients are 1.6% more likely to be retained if they gave a testimonial
  • In years 3-5, retention rates are equal

It turns out that a 1% to 2% difference in retention can end up having an appreciable impact on an agency’s bottom line. If an initiative is implemented correctly, agents will collect testimonials from an average of 16% of their clients in the first year using the Net Promoter Score® (NPS) survey. To put this in perspective, an agency with 2,000 clients can expect to retain 10 more people over a 12-month period by doing nothing more than getting their clients to say good things about them.

Supported by industry research

Written testimonials have long been shown to increase client loyalty and retention. Studies have proved that people want to feel like—and appear as—consistent people. People are much more likely to live up to a commitment when they’ve written it down. For the client, it’s a reminder of why they chose to do business with the agency to begin with. A testimonial reinforces this internal commitment, so they’re more likely to stand by their decision down the road.

Politicians use a similar strategy by giving yard signs to their supporters during campaigns. The goal is to reinforce their loyalty to the candidate so supporters will vote for them come election day, rather than incur the cognitive dissonance associated with evaluating alternatives. Testimonials that are published online have an even greater impact on client retention, as public commitments are usually lasting commitments. The more public someone’s opinion, the more they care about remaining consistent with it. This is why we encourage our clients not only to collect but also to prominently display their testimonials for both prospects and clients to see.

Measuring social proof

Testimonials displayed publicly on an agency’s website have the added benefit of providing social proof. When prospects look for insurance online they begin—like with anything else—by using a search engine (e.g., Google). This is considered the discovery phase when making an important buying decision.

A recent study conducted by the SEO company BrightLocal looked into how people choose local businesses online. When asked the “typical next step after reading an online review” for a local business, more than half of all respondents said they continued on to the company website—by far the number one answer. We believe that, if the survey focused specifically on professional services (e.g., insurance agencies, dentists), even more people would have indicated that they visit the company website as a next step.

Purchasing insurance is a more important decision than, say, ordering pizza. It requires further investigation, and the website is where that happens. Online reviews are most helpful at getting agencies discovered online, but testimonials are best at persuading online prospects to actually choose the agency. Visiting a website is similar to the second interview when applying for a job. Online reviews get the agency’s foot in the door; testimonials help seal the deal.

Social proof is shown to have the greatest impact on behavior, even when compared to other motivators, like saving money. Displaying several authentic testimonials prominently on a website gives prospects the information they need to make their decision when searching for real, unbiased feedback or comparisons. Direct writers use a similar strategy by providing quotes of other carriers on their website. The goal is for agents to keep prospects on their website until they have enough information to feel comfortable giving the agency a call. Testimonials set expectations, give prospects someone to weigh themselves against, strengthen messaging, and substantiate claims.

For the biggest impact on social proof, agents should continually publish new testimonials on their website. The more testimonials an agency has, the greater the overall impact on social proof. To be seen as credible, testimonials should be authentic, natural, honest, and recent. Prospects can spot the difference between a handful of polished testimonials and the real deal. Similar to online reviews, prospects trust more recent testimonials over those that have been published for several years.

The individual value of each testimonial diminishes after a critical mass has been attained. This critical mass of testimonials is the smallest number needed to give the impression of a diverse range of authentic feedback that a prospect can trust. After this point, additional testimonials continue to add social proof, but less rapidly than before.

Of course, the more visitors an agency has on its website, the greater the overall impact testimonials will have on winning new clients. That’s why agents should also collect online reviews—to get discovered more often with online search, thus sending more prospects to their website to be considered further.

While studying agents who have been consistently tracking their online leads both before and while using Rocket Referrals, we uncovered trends that support the research we conducted on the buying habits of online insurance consumers. Agencies we spoke with that prominently displayed testimonials on their website noticed an almost immediate increase in their online leads.

Other studies, including one reported on at Sumo.com, found that landing/home pages increased their conversion by 34% after including testimonials. Of course, the exact impact depends on several best practices, including: how prominently the testimonials are displayed on the website;  the overall quality and frequency of client testimonials; and the number of prospects visiting the agency website.

Boosting morale and inspiring personal recommendations

In addition to increasing retention and adding social proof, client testimonials add value to an agency by improving employee morale and increasing word-of-mouth referrals. Agency owners tell us about programs they’ve implemented that reward their employees when they receive positive testimonials. Other agencies have tied bonuses directly to a positive NPS score. These types of programs help shift the internal focus to the client experience while regularly providing written validations that reward positive behavior.

Additionally, when a client provides a testimonial, they are reinforcing their internal beliefs, so that when a future opportunity presents itself to refer their agency, they are more likely to follow through.

The author

Carl Maerz is the co-founder of Rocket Referrals, an automated communication strategy that helps agencies improve their referrals, retention, reviews and relationships. He aims to help local agencies leverage their advantages over direct carriers by replacing common industrial myths with relevant and practical advice. Contact Carl at carl@rocketreferrals.com

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