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The Rough Notes Company Inc.



November 07
09:56 2016

Blasted Myths

Make the most of existing clients rather than targeting prospects outside your network

Take a step back in time to your first year as an insurance agent. Where did you turn when looking for quality leads to build the foundation of your agency? Chances are you went straight to your Rolodex and searched for friends and family. People you trust. Those who would vouch for you and introduce you to their inner networks.

This worked because, in this industry particularly, relationships are paramount. Insurance consumers would sooner buy from family than a stranger, especially when there’s not an established agency to point to. But for some agencies, things change in a year or two. After garnering their initial dollop of business, they forget about leveraging relationships for growth. They get too big for their breeches, perhaps. Or maybe they believe their direct network has been exhausted of warm leads. The pond goes dry, so to speak, meaning it’s time to grab a fishing rod and head out to the big blue ocean.

Traditional wisdom says that insurance agencies that exhaust their network of friends and family in their local pond should move to an outbound marketing strategy and try their luck in the open ocean. This couldn’t be further from the truth. In reality, as an agent’s book of business grows, so does the opportunity for referrals and cross-sales. Which is why established agencies should be dialing up efforts to make the most of their existing clients, rather than targeting prospects outside their network.

Consider for a moment direct carriers—their differentiators being promises of lower premiums and the convenience of do-it-yourself smartphone apps and websites. Without client relationships to lean on, they spend billions on establishing brand awareness and highly targeted outreach campaigns. Experts at their game, they’d love for insurance agencies to compete with them on this front. They’re the ones with the gigantic net suited for the ocean, after all.

Unfortunately, it rarely works out well for agents who embody the “salesperson first” mentality as they look outward for new leads and spend on prospecting tools, marketing, advertising, elaborate branding, and other “stuff” linked to client discovery. With this outbound approach they find themselves competing against the multi-billion-dollar budgets inherent in large direct carriers. These insurance agencies may capture a handful of new clients, but they also spend a lot of money doing so. And, when you break it down per client, the return on investment just isn’t economical.

Because of their unique ability to establish a meaningful bond with clients, agents should instead opt for relationship marketing, which focuses chiefly on an existing book of a business (in contrast to prospects). The goal is to send highly personalized touch points that both maintain personal relationships and leverage them to increase profitability via referrals, higher retention, and cross-sales. This is achieved by first evaluating the loyalty of individual clients, and then using psychology-driven content to influence desired behavior. Now if that sounds a bit disingenuous, think of it this way: The referring client feels good because they’ve helped a friend/family member out, and the referred client has an agent who actually knows their needs because of that relationship.


Whatever your opinion of modern society, most insurance consumers would rather take advice from a neighbor than a talking gecko. And any respectable agency has a boatload of loyal clients willing to recommend them to friends and family. Warm leads are just an arm’s length away. In fact, our research shows that on average 55% of an agency’s book is willing to refer it at any given time—that is, if the agency can inspire them to do so. In which case, it’s a whole lot cheaper to energize a loyal client base than persuade strangers to give you a look.

For one, there’s no competition like there is with prospecting. An agent is simply inspiring a willing client to make an introduction—not casting a line into the abyss. Likewise, client referrals reduce costs attributed to the onboarding of new clients. Not all quoted prospects will close. It’s not uncommon that an agent spends several hours reeling in the prospect only to have them fall off the line at the last minute.

It’s not just frustrating, it’s expensive.

Referred clients tend to be a better species of prospects with a much higher conversion ratio and lifetime value—as Joey Hinke, president of Miller, Fidler & Hinke Insurance of Des Moines, notes. “We spend between three and eight hours to acquire each new client, which equals about $120- $320 of time spent. In the P-C world, a warm referral is going to close about 90% of the time. Whereas something from a networking event (even good leads) is more of a coin flip.”

Focusing on referrals is also effective at improving loss ratios, which could mean a larger contingency bonus at year’s end for some agencies. Unlike outbound marketing strategies that result in a mixed bag of prospects, relationship marketing attracts insurance consumers with similar risks and values to the agent’s existing client base. For example, responsible home owners with multiple policies will refer people like them—meaning better (and more profitable) clients for the agency.


As mentioned above, there are significant costs associated with the discovery and onboarding of new clients. Both can be avoided by cross-selling to clients where the trust has already been established. But this should come as no surprise. A study by Axis Consulting revealed that 99% of insurance advisors believe that it’s important, or even critical, to cross-sell effectively. But only 46% consider themselves successful at it. So why aren’t more agencies effective at selling multiple policies to their clients?

Well, it’s because they aren’t making communication with their clients a priority. Lack of customer interaction makes it next to impossible to upsell existing clients. Successful cross-selling requires the agency to be aware of each client’s specific and dynamic needs. All the while, clients should be regularly informed on the range of products and services that the agency provides. Focusing on relationship marketing, with a concerted effort to reach out to clients on a regular basis, can solve both of these issues.


Our research shows that, of those insurance consumers that eventually defect, 81% do so because they lack regular and meaningful communication from the agency. This includes following up on questions or specific issues in a timely manner, periodic checkups, returning phone calls, and the overall access the client has to an actual person. These gaps in communication create a perceived indifference, meaning they start to feel like the business doesn’t care much about them.

Client turnover can be significantly curbed by making clients the focal point of your business. This goes beyond servicing them well during onboarding or while handling claims. It means proactively reaching out to them throughout the year with meaningful communication and avoiding long periods of silence.

As an agent you have the distinguishing ability to leverage your existing client base for growth. When your business expands, so do the opportunities for referrals and cross-sales. Avoid focusing solely on attracting outside leads and instead energize your existing network of friends, family, and now, loyal promoters. Don’t forget: that’s the same strategy that earned you your best clients to begin with.

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 is a contributor to the online educational platform Launch Academy, and is an advocate of local business. 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

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