Much attention is paid to sales and selling in the insurance industry, yet as much or more money is made, each year, through the enhancement of customer service. Ultimately, customer retention becomes as important as new business sales. I know some of you are skeptical so I am going to walk you through a hypothetical case.
Your agency is composed of 1000 personal lines accounts (I know it is small but it is for illustration purposes only). Each account is comprised of 2 autos and a home (3 pol/ account). Total annualized premium per policy is $1000 (all very conservative numbers). You add about 200 policies a year and your lapse ratio is about 8 percent a year (again very conservative). Average commission on new business is 15% and renewals 10%.
Hypothetical Agency Results New Business Commissions = 0.15 X 200pol/yr X $1000/pol = $30,000 Renewal Commissions = 0.10 X 3,000 pol X $1000 premium= $300,000 Total Income = $330,000 Lost policies @8 % lapse (0.08 X 3200 policies) = 256 OR 256 X 1000 X 10% = Lost Income = $25,600 If that occurs over 20 years total commissions lost = $512,000 |
Point! Saving policies and policyholders is as valuable as getting new ones. The question is; how can you minimize lapses or maximize customer retention?
The GMS 5 Step “Take Your Breath Away” superior customer service model:
1. Know what superior customer service would look like and know why your customers would consider it superior. Remember there are many GOOD Agents/Agencies. You have to be better that them to make a difference.
2. Know what attributes among people would likely characterize superior customer service people. Not everyone is capable of delivering superior customer service. Get this book on Hiring, it will help, Strategic Hiring
3. Develop a system that delivers “Take Your Breath Away” customer service. Have everyone follow it.
4. Give your customer service people what they need to deliver superior customer service. Empower them with expected authority to solve the customer’s problem
5. Give them Lagniappe. Give them something extra. They believe they deserve something for their trouble, give it to them.
Finally, remember customer retention brings advantages to your company in more ways than one. Here are three additional ways your company might benefit from “Take Your Breath Away” customer service:
· Increased cross-selling success and a larger share of the customer
· More agency apostles-more people telling other people about you
· Reduced marketing costs-selling to existing customers is the easiest sale
By making a few small changes you can increase profits by 25 percent, or more. Hire better people, give them a better plan and TAKE YOUR CUSTOMER'S BREATH AWAY !
