By Chris Paradiso
THE IMPORTANCE OF THE CROSS-SELL
A first look at building a strategy around the notion that relationships matter
Conventional wisdom is that, on average, an agency will get 78% of its future profits from 22% of its existing clients. The numbers may be higher or lower due to COVID-19. For example, we have a niche in parcel delivery and, since COVID hit, our book of this business grew by 46% because everyone is shopping online. On the flip side, many cleaners have faced business closures or payrolls being reduced by more than 75%. To capture profits—and retain customers—agencies often look to cross-selling. Of course, cross-selling insurance is tough, in large part because doing so can make customers think that you just want more of their money. As a result, some independent insurance agencies have scaled back their cross-selling strategies. In my opinion, that’s a mistake. Let me tell you why.
[O]nly 6.8% of survey respondents said that their agent ever contacted them about additional coverage or even a coverage review.
A study published by Simon-Kucher and Partners and shared with us shows that the average American customer is and will be willing to pay a slightly higher premium to get more convenience and a better customer service/experience. That’s valuable information, but the most important part of this study in my mind is that only 6.8% of survey respondents said that their agent ever contacted them about additional coverage or even a coverage review. Cross-sell opportunities aren’t happening because we agents are not reaching out to our clients.
First things first
Cross-selling insurance products has many benefits to your agency:
- Marketing to existing clients/customers takes a whole lot less effort and is less expensive.
- With 2.8 policies per household, your agency is delivering more value to your clients which improves satisfaction and retention.
- Your agency increases overall revenues in the cross-sell process.
- You grow your agency’s brand as an insurance agency by expanding your portfolio.
In my opinion, the biggest benefit gain to your agency from cross-selling insurance to existing clients is improving the relationship you have with them. What I am saying is that relationships matter to your bottom line. Let me repeat that: Relationships matter to your bottom line.
Put another way, the long-term benefits your agency can look forward to are greater revenue and profits. But the biggest long-term benefit is that your agency actually did something to encourage loyalty—and it worked. If your agency’s cross-selling strategy (or lack thereof) is standing in your path to growth, it may be time for a reexamination. Look at the incentives and motivations driving your cross-selling strategy. It’s not just about pushing or shoving more products onto your customers. It’s about driving more agency value and creating opportunities for your agency to engage the client. It all starts with a strategy.
Your strategy should include a number of important components.
The “right” customers. An article by Denish Shah and V. Kumar that appeared in the December 2012 Harvard Business Review called “The Dark Side of Cross-Selling” reveals something very interesting to me: In some cases, it can actually be detrimental to cross-sell because it costs more to promote added products than you can gain from the effort. This is why it’s vitally important to analyze client profiles closely and identify who is a good or “right” candidate for cross-selling. The strategy has to be objective, calculated, and targeted; do not just do a blanket cross-sell campaign.
Another way to look at it is, all customers are not clients. Customers are those people who simply buy your products; clients buy—and value—your relationship and the advice and other solutions you offer. It’s extremely important to teach your team how to tell the difference. With the “right” approach, you can save time, money and energy while experiencing greater success in building more fruitful relationships.
Focus on client improvement. After implementing the EOS (Entrepreneurial Operating System®) in our agency, I’ve learned that there is a powerful business case for customer improvement as opposed to just customer service. EOS has helped me realize the difference between customer service and customer improvement.
Customer improvement helps your clients look at their future differently, helping them to see new possibilities, while customer service is focused on the value that they have presently. With this focus, it can be as simple as identifying service gaps and plugging them with new insurance products, such as cyber or EPLI, or perhaps educating commercial clients on what they don’t know about insurance so that they can make an informed decision.
Education is the key to success. Embrace technology. Many independent insurance agents are tired of hearing talk about social media, digital marketing, data, or apps. But the fact is that our clients want to see us in the social media arena and want us agents to be more digital and have an agency app. Our clients are requesting certificates through our mobile app, along with paying their bill. They expect more because of the likes of GEICO and Progressive spending billions of dollars in advertisements targeting your existing clients.
At the end of the day, our clients want convenience when doing their insurance business with us. If we as independent agents don’t meet their needs, there’s a very good chance we won’t have to worry about how to approach cross-selling—because your clients and my clients will move on to more digitally forward competitors. We must put ourselves in our clients’ shoes.
In my opinion, the biggest benefit gain to your agency from cross-selling insurance to existing clients is improving the relationship you have with them.
By embracing technology in the form of a self-service mobile app platform or a data platform, you’re able to empower your clients while opening up many cross-selling opportunities within your agency. Think about this:
- It allows the clients to engage with you and your agency on a more personal level.
- It presents natural opportunities to cross-sell by aggregating diverse insurance products and information. For example, our agency recently had a new business client who only had an auto policy with our agency; seeing the inventory option in our agency’s mobile app, he reached out to us for a renter’s quote.
- The ability to self-serve also empowers our clients. People want what they want when they want it.
- Our agency’s data technology gives us very valuable information such as household income (which helps our Renewal Specialists advise them on umbrella policies) and identifies classic and/or antique cars that we don’t write in our agency. Our data platform hands us the cross-sell opportunities.
- Make no mistake—data platforms and mobile apps work because they align well with the customer experience and client expectations. The better equipped our agencies are, the easier it is to meet our clients’ ever-changing expectations along with giving us the opportunity to succeed at our cross-sell strategy. Technology plays a huge role in our agencies’ success.
A lot goes into leveraging technology and implementing other parts of a cross-sell strategy. Here are some ideas to help as you start—and carry out—your journey:
Educate clients. A data platform or an insurance mobile app self-service platform offers a great opportunity to inform clients about what other insurance policy options are available. Because you operate in an independent agency like I do, you are particularly advantaged by such a platform because of the wealth of options and information on which you can capitalize. You can house those resources in the app, putting them right in your clients’ hands.
I’ve talked a lot about the major benefits of having a data platform and a mobile app for your agency. But many insurance agents still don’t fully understand the value of this technology. Let me sum it up like this: It’s all about bettering our communication and making things more convenient for our clients.
Follow life events. Life events, such as the purchase of a mobile home, new house, car, or motorcycle, or the birth of a first child present opportunities to talk to customers about additional insurance coverages. These also represent the times when people/clients are most open to changing their policy or purchasing additional coverages or policies.
That’s why you and your agency need a community strategy to stay in contact with clients.
First sale. It’s the absolute truth that every agency should do the cross-sell from the first opportunity. But what I find is that many agents are nervous to explore the other policies because “the prospect called me just for auto insurance.” I have to stop you right there—if you really care about the client and their insurance needs, why would you not quote out all of their policies so you can not only give them all of the discounts but make it easier for them if something goes wrong.
That first meeting also holds a lot of potential for cross-selling; there are plenty of “by the way” opportunities that allow you to suggest related policies. For example, when a prospect is purchasing a homeowners insurance policy, simply asking whether they also have comp and collision on their auto coverage can open up avenues to cross-sell.
During our annual renewal reviews, we revisit present homeowners insurance coverages to ensure that clients include contents insurance and off-property liability insurance. There have been so many clients during review asking about very expensive lawn mowers or backhoes and whether they are covered on their home policy.
We at Paradiso Insurance ultimately believe the bundling starts from the first point of contact. Using our data platform, we identify opportunities that the prospect may forget to tell us. Once again, technology is helping us ask the right questions so we can make the proper recommendations.
Explore. Insurance bundling isn’t new but given the billions of dollars being spent on TV/social media ads, bundling is now top of mind. That said, it’s still under-explored and/or under-exploited. It’s important to make customers see how bundling related policies as a group increases the overall value of each because they are all complementary. More often, these bundles are also more affordable together and can be an easy sell. Bundling is not only great for the client but also for the agency’s bottom-line numbers.
Again, here, technology has played a huge role for our agency. One example is how we use our mobile app to push-notify our clients; if their auto policy is renewing in 60 days, we push-notify through the app a message stating we will give them a call next week to review their auto policy because renewal is in 60 days. We’ll then add, “Meanwhile, we noticed that we don’t insure your home, so please have your declaration page out so we can discuss that, too.” In many cases the client will take a picture from within the app and forward it to our agency.
More policies turn customers into clients, which builds loyalty. … [I]t all starts with changing your mindset and your team’s to focus on the cross-sell opportunities.
Technology, if used correctly, makes everyone’s job easier.
Regularly check in. During regular events such as our annual policy review or our six-month check in, our licensed insurance agents have the chance to mention other insurance products that we offer. I have seen many agents so focused on finding new business that they bypass these valuable opportunities (we call them diamonds in our backyard) by not even mentioning alternative insurance policies that they offer. In my personal opinion, this area can use a lot of improvement. Remember, the most important thing you will ever take from this or any other article I write is Relationships Matter!
There’s a lot of potential within all of our existing books of business. Let’s refocus on retention and not on new business. Why would we not want to sell more policies to our existing clients who already trust us?
More policies turn customers into clients, which builds loyalty. For increased client retention and agency growth, it all starts with changing your mindset and your team’s to focus on the cross-sell opportunities.
You just need to focus and train on how to go about it the right way. By embracing new technology, such as an agency-branded app and/or a data platform, you can cross-sell without appearing to do so. Yes, by helping and educating without selling, you can engage your clients in a powerful way and leverage endless opportunities to cross-sell naturally and effectively. Plus, clients will appreciate the education, ease, and convenience it offers. To learn more about our agency’s retention strategy and how we are effectively using technology to assist our teammates, please don’t hesitate to reach out to me.
Chris Paradiso is president of Paradiso Financial & Insurance Services, head-quartered in Stafford Springs, Connecticut. His agency won PIA National’s Excellence in Social Media Award in 2013. He also heads up Paradiso Presents, LLC, which provides social media consulting, seminars and workshops to help agencies thrive in the online marketing world. Contact Chris via email at firstname.lastname@example.org.