Existing client growth is challenging. Here are three ways agencies can better serve their clients and grow revenues.
“We want growth." This statement could be attributed to every sales leader or principal I've spoken to this year. It's the focus of conversations discussing producer training and development—and it's top of mind when agencies think about investing in training services. They know that if they can get producers trained and capable, growth will follow.
Agencies have three ways of growing:
1) Organically: By creating new customers.
2) Through acquisition: By acquiring books of business or other agencies.
3) With existing client growth: By expanding their share of wallet with current accounts.
Producers are primarily focused on organic growth. Agency principals scout for their next acquisition target, which leaves existing client growth to be tossed about like a hot potato. When I ask sales leaders and principals how they are handling existing client growth, the answer is always the same: “We could do better."
New business acquisition comes at a cost. The hyper-focus on new client acquisition is costing agencies millions of dollars. It typically has a long sales cycle and disrupting the incumbent agent is not guaranteed. In fact, retention rates are between 87-92%, which is a clear indication that once an account is written, the likelihood of it moving is very low.
In addition to the long sales cycle, the cost of acquisition is high. Marketing; the cost of quoting, estimated to be between $1,500 and $2,500 per account when you consider time and resources; and the opportunity cost of not focusing on your existing book all take a toll. Overall, if producers spend a majority of their time working on developing new clients, it impacts the time available to grow existing client relationships.
Yes, new client acquisition is the lifeblood of all agencies but why isn't there a bigger focus on growing accounts too?
With few exceptions, producers are rarely held accountable for an existing client growth goal. Looking closely at the policy count per client is a critical but underleveraged key performance indicator (KPI) that indicates how well producers are doing at account rounding.
Existing client growth shouldn't be a challenge, but it is. Whether up-selling or cross-selling, producers often fear selling to existing clients. For some, it's the fear that if they introduce a colleague to one of their accounts and the colleague performs poorly, it will reflect on them and put the relationship at risk. For others, there's a concern that if they go back to their client and try to round out the account, it will put the piece of business they control in jeopardy.
These are emotional reasons for not cross-selling. And while they are representative of legitimate concerns, they can be addressed with training and practice. So, how can agencies better serve their clients and grow revenues?
Begin by looking at the revenue hiding in plain sight. Assess the 20% of accounts that represent 80% of the agency's book of business. Identify the low-hanging fruit and where cross-selling and up-selling opportunities exist. Having done this exercise with numerous agencies, we've identified tens of millions of dollars of opportunity. It's always an eye-opener.
Next, create a cross-selling initiative focused on specific opportunities. Concentrate on risks that require both property-casualty producers and employee benefits producers to work together.
For example, if employee benefits producers are selling level-funded health plans, be sure to incorporate the need to engage with the p-c agents into the sales process to discuss the added fiduciary risks associated with these plans. The goal is not to sell more fiduciary liability insurance. The goal is to build a process for assessing and addressing client risks in a collaborative fashion that grows revenue and protects the client.
Finally, set goals as part of the annual planning process. Include KPIs that reflect the agency's desire to grow the share of wallet and drive team selling initiatives.
Susan Toussaint is vice president, Growth Solutions, U.S. with ReSource Pro. For over a decade, Susan has been training, coaching and developing programs to help insurance professionals overcome barriers to organic growth. In 2006, she started Injury Management Partners, and in 2009, she co-founded Oceanus Partners with her partner, Frank Pennachio. Today, she is a full-time trainer and consultant focused on developing products and training that help clients attract, acquire and retain profitable, right-fit business.