Winning Strategies

Basic strategies for retention and referrals

Simple steps increase revenue

By Roger Sitkins

A key strategy of The Vertical Growth Experience™ is “The Four R’s Focus”: Results, Relationships, Retention and Referrals. I believe there is a huge connection between retention and referrals. Unfortunately, it’s a missing link at most agencies.

At one of our regular Friday morning improvement workshops amongst the Sitkins coaches, the main topic was retention and referrals. We all know by now that the most profitable client you have is a long-term client. During the workshop we examined various aspects of retention, including: What is the continuation process that is part of the intellectual capital we bring to our members? What results are our members seeing? What things are you, as a coach, doing to help the agency or broker retain clients?

As we reviewed strategies for continuation, I had a personal BFO (Blinding Flash of the Obvious): Producers don’t get enough referrals because they haven’t earned them. So then I posed the question: What does it take for a producer to fully earn a renewal commission? To me, just renewing the account doesn’t fully earn the renewal commission.

Rick Bauman, one of our Canadian coaches, recently said something that really hit home with me. According to Rick, part of the problem is that retention is not really a problem! That’s because the vast majority of agencies and brokers he deals with are retaining 95% or more of their clients, whether they do a great job or a mediocre one. In other words, you can under-deliver and still get the renewal and the commission.

My question is: If your clients are renewing, why aren’t they referring? If they really loved what you did, not only would they write you a premium check, they’d send you referrals. So I began to wonder how a producer could have 30, 50, 100 or more clients and not obtain a single referral in a year.

Studies have shown that every business owner knows at least 150 other people through trade associations, chambers of commerce, service clubs, church, their child’s school, sports leagues, the college they attended, and membership in a sorority/fraternity, to name a few. Those affiliations equal numerous opportunities for referrals.

Thus, if you’re renewing the account, why aren’t you getting a referral? It’s because you haven’t wowed them! You’ve not taken your client relation­ships and what you deliver to them to the point where they say, “Wow! That was an amazing experience!” While great reactive service translates into renewals, it takes great proactive service to generate word-of-mouth advertising and get referrals.

Retention and referral strategies

Ultimately, every relationship comes down to deposits and withdrawals. What’s in your most profitable clients’ “account” that allows you to make a withdrawal (i.e., get a referral or introduction)?

The following is a partial list of strategic items that must be in place if you want to retain your top 20% clients and earn tons of referrals from them.

• Policy delivery meeting. It amazes me that agencies are still mailing policies to clients rather than having a face-to-face delivery/installation meeting with them. First of all, it’s one more chance to have a positive interaction with the client. Further, it’s the perfect opportunity to underscore that you’ve done what you promised you’d do. Last but not least, it allows you to ask questions that could yield referrals.

• Annual calendar. Most top agencies will provide more to clients than just the insurance product. They’ll also provide value-added services that help clients control their total cost of risk and consistently look more attractive to the insurance marketplace. These services must be mapped out on a calendar and implemented on a month-to-month basis. Also, the better agencies will ask their clients to hold them accountable for what’s on the calendar.

• Plan delivery. In addition to presenting the calendar, the policy delivery meeting is your opportunity to deliver an actual plan. This plan should include specific actions the agency will take in the coming year to help control the client’s total cost of risk.

• Client expectations. Also during the policy delivery meeting, producers should ask clients exactly what they expect in the policy year. For example: How often do you want to see me? What’s your expectation on a service request or a claim? Do you prefer to communicate via snail mail or e-mail?

We’ve all heard the cliché: “We’re going to exceed your expectations!” But how will you do that if you’re just guessing what the client expects? The truth is, you can’t exceed expectations without knowing what they are. And in the real world, most clients expect to be happy if the agent delivers as promised and is proactive about servicing the account.

• Thank-you letter. Very few salespeople thank their clients for continuing the relationship. It sounds like a small thing, but it can make a tremendous difference. In today’s world of text messages, e-mail, tweets and other electronic communication, a handwritten note or personal letter makes an extremely positive impression. Besides thanking the client for continuing the relationship, this correspondence should reiterate the client’s expectations and close with an additional word of thanks.

• Regular strategy meetings. While “A” accounts (the top 5% that generate 50% of your revenue) should be seen three or four times a year, “B” accounts (the next 15% that generate 40% of your income) should be seen once or twice a year, excluding policy delivery. The purpose of these appointments is to ensure that you’re meeting or exceeding client expectations and to troubleshoot potential problems. That way, if an issue arises on the account, you can take care of it before it escalates. You do not want a big surprise at renewal time!

Each of these meetings should be followed up with a handwritten thank-you note.

• CEO letter. Once the policy renews and you’ve had your annual policy delivery meeting, the CEO of the agency should write a personal letter thanking the client for continuing the relationship. It’s also a nice idea for the CEO to include a direct (personal) contact number for the client to call with any concerns about the service being provided.

• CEO visit. To help solidify the relationship, someone at the agency’s executive level should visit its best accounts. This informal meeting can be in the office or off site over lunch or drinks. If they’re among the agency’s top clients, the CEO should personally pay a call each year.

• Stewardship reports. “My clients don’t appreciate all we do for them” is a common lament among agents. The reality is, you’re not the center of their universe. In fact, if you’re not properly positioned, you’re just the insurance guy. The stewardship report reminds the client of the services you’ve provided, such as claims paid, money saved by reducing their risk and the educational seminars you’ve held for their team. Reporting back what you’ve done is a way of showing value. But I guarantee you that fewer than 10% of commercial accounts receive an annual stewardship report from their agent or agency.

• Give referrals. I believe that if you give a referral, you get a referral. Do you ask your clients if they need your assistance, such as an introduction from you? Typically, this happens reactively (in the course of casual conversation) rather than proactively (purposely asking clients what they’re looking for). I suggest you make it a proactive strategy. Otherwise, you could lose the opportunity to make a deposit with those clients by helping them.

How about wow?

These are just a few of the basic strategies that you should be employing; there are many more! But let’s ask: If and when you do these things for your clients, have you wowed them? Are they impressed by all that you do for them? Will they tell their friends and associates?

Studies show that 80% of satisfied customers (in any industry) will give a referral, yet only 8% of salespeople ask! So it’s no wonder that the number one problem (the empty pipeline) is still Problem #1.

If you did all of the things described above, would your retention go up? Probably not, which is why most agents won’t even try. Could it go up 1% or 2%? Certainly! That might not be a significant difference in retention, but it could be a huge amount in terms of additional revenue/profit. More important, would you have wowed your clients to the point where they are giving you referrals and word-of-mouth advertising? You bet!

Finally, if you used all of the above strategies, how many hours per year would you (as a producer) be working with each client? Believe it or not, it would take only between 20 and 30 hours a year per client. If you have 50 clients, that’s a total of only 1,000 hours per year spent working with clients. Based on the average work week, most people have about 1,800 hours per year available.

But that’s not the best part. Let’s say you have a client whom you spend 20 hours with and whose business earns you a $10,000 commission. That’s $500 per hour! And that’s more than most top attorneys earn on an hourly basis.

So let’s review why you might want to implement the above strategies. First, to increase retention. Second, to wow your clients and receive word-of-mouth advertising. Third, to get referrals from clients whose expecta­tions you have exceeded. After all, if every one of your clients knows 150 people whom you don’t know, you’re missing a great opportunity.

As always, it’s your choice.

The author
Roger Sitkins is CEO of Sitkins Group, Inc., which offers The Vertical Growth Experience™ exclusively to its member­ship known as Sitkins International. The programs provide strategies that force vertical growth in the critical indicators of closing ratio, revenue per employee, revenue per relationship, and revenue per producer.