By Kimberly Paterson
Are your clients fans of your agency? They may buy insurance coverages from you and pay for your risk management expertise, but do they rave about your service to others? Do they recommend your agency to business associates, friends and relatives? Better yet, do they renew year in and year out?
Most agencies have a small core of loyal customers who wouldn't think of shopping their programs. Yet the vast majority of insurance clients is constantly on the lookout for a better offer. In fact, if you objectively analyze the number of clients you are losing each year, it's probably between 10% and 20% of your book of business. Still, many agencies continue to invest much more time and money on new-business initiatives instead of focusing on retaining their existing clients, even though improved customer retention leads directly to increased profits. In fact, a recent Harvard Business School study found that a 5% increase in customer loyalty can result in a 100% increase in profitability. With that in mind, efforts designed to boost retention are well worth the effort.
Customer delight
Customer delight is arguably the most effective way to increase your retention ratio. But what exactly is customer delight? To begin with, it's much more than mere customer satisfaction. While it's important to satisfy your customers, that's only the starting point. Customer delight involves going beyond satisfaction to delivering what can best be described as a pleasurable experience for the client. While cost is always a factor in this process, there is a long list of considerations (service; quality of coverage; attention to detail; convenience; and ease of doing business, just to name a few) that can influence your client's experience with your agency. The key is to determine which factors are most important to your clients and then set your sights on delivering delight in those areas.
Listen up
Before you can implement any services or service features intended to delight, you must first provide an environment that encourages feedback and then listen intently to your clients' comments and concerns. While you may feel as if you do this already, research shows that few businesses actually promote feedback or listen to all that their customers have to say. Overlooking these critical first steps can put delight out of reach.
Begin by keeping a permanent record of all unsolicited client comments (whether good or bad). This will give you a feel for your strengths and weaknesses as an agency and also will help you to identify the areas that concern your clients most. While a useful source of information, these comments will reflect the opinions of the squeaky wheels, and they as such probably are not an accurate representation of your entire clientele.
The majority of your customers won't submit unsolicited complaints or compliments, yet they may still have thoughts and opinions about your agency's performance. In reality, most clients are neither thrilled nor enraged with you (they're somewhere in between). These middle-ground clients are the most important when it comes to customer delight, so it's important to dig deep and determine what they really feel.
One way to learn what your clients are thinking is simply to ask them. Whether on the phone or face to face, consider asking for a candid evaluation of your service and services, as well as what's most important to that individual. To get to their true feelings, you'll have to create an environment that makes clients comfortable talking with you. Two areas can have a significant effect on the outcome of your questioning. The first is body language. When clients begin to open up and criticize, it's human nature to exhibit body language (arms folded across the chest, pained/annoyed facial expressions) that effectively shuts down feedback just as it is becoming useful. If you make a conscious effort to overcome this natural reaction, you'll have a much better chance at discovering your clients' true feelings.
The second roadblock to receiving frank comments and criticisms occurs when people become defensive. The key here is to listen with an open mind, especially when it comes to criticism. Rather than try to explain why a problem exists, accept what that client is saying, analyze it, and think creatively to eliminate the problem.
Perhaps the best way to truly learn the areas and issues that are most important is to conduct a survey. It can be as simple as a business reply card with multiple-choice questions, or a more detailed survey that delves deeply into many areas of client expectation and your performance. Regardless of how you determine your clients' attitudes, it's important that you do it. Because if you don't, you will not know where to focus your energies and efforts, which can make for wasted time and money (as well as a dwindling number of loyal clients).
The elements of delight
When collecting the thoughts and comments of your clients, there are three basic areas you need information on. They are: what clients expect; what clients desire; and what pleasantly surprises clients. Each plays a critical role in your ability to deliver customer delight.
What clients expect translates into the basic business functions clients expect to receive from any agency. While your results may vary, these would most likely be things such as: good coverage from a solid company; competitive pricing; timely issuance of certificates; a choice of payment plans; returned phone calls; and basic consideration and respect. If your performance in these areas is relatively good--acceptable, let's say--your customers will be satisfied. If you improve your performance in these areas, there's a good chance customer pleasure will not increase significantly. If, on the other hand, your performance deteriorates, you can be sure that clients will notice, and satisfaction will plummet quickly. So while it's essential to maintain adequate performance in these areas, any efforts to greatly outshine the competition here would be better spent elsewhere.
What clients desire refers to the functions and qualities of your business that are most important to your particular clients. These functions will vary depending on your marketplace and your customers, but listening to and analyzing customer feedback should make them fairly easy to identify. If you can rise above the competition in several of these areas, or make significant improvements that existing clients will see first-hand, you'll take several giant steps toward delivering customer delight and improving your retention ratio.
The final piece of the customer-delight puzzle involves pleasantly surprising clients with your service and performance. Pleasant surprises are good for instant delight and can help create a special bond between your agency and the client. Just think of situations from your own consumer experience. If you're at a favorite vacation spot somewhere in the islands, for example, and the hotel goes out of its way to get you a daily copy of your favorite newspaper, that's something you won't soon forget. While you probably still would have had a wonderful experience without the paper, that little surprise can make an impression you won't forget when booking next year's trip. If other industries can identify and deliver these pleasant surprises, there is no reason why the insurance industry can't do so as well.
Client loyalty equals profitability
With each desire you fulfill and every pleasant surprise you provide, you will strengthen the bond between your agency and your clients. When you deliver delight, clients become even more attached to your agency, and fewer consider shopping their program at renewal. They also will be more likely to recommend you to others.
Aside from the new-business savings that a loyal client base brings about, there's another profitable advantage you may want to file away for future use. That is, if you have a large contingent of loyal customers, you can charge more for your products and services. In fact, recent studies show that companies with large groups of loyal core clients often succeed with prices up to 7% higher than those of the competition. All this is something to think about the next time you're pondering your retention ratio and looking for a way to bolster your bottom line. *
The author
Kimberly Paterson has been providing marketing and communications services for independent agents and insurance companies for more than 20 years. In that time, she has worked with agents and brokers in all facets of marketing, from developing communications programs and research initiatives to designing advertising campaigns and promotional materials. Her Red Bank, New Jersey, marketing communications firm, Creative Insurance Marketing Company, combines marketing and research/analysis with creative advertising services exclusively for the insurance industry.
©COPYRIGHT: The Rough Notes Magazine, 1997