We regularly hear from insurance agencies that they "work mostly on referral," which often translates to: Our salespeople don't put much work into proactively filling their pipelines. They wait for business to find them – any business regardless of size, quality, fit – and then they provide quotes in an effort to earn the business.
While this may sound like an ideal scenario to get paid producer-level commissions and put forth very little effort, it's not a very good way to build your personal business and income, and it's definitely not a good way to grow your agency.
The job of sales organizations, such as independent insurance agencies, is two-fold:
- Bring new clients into the agency. Primarily the job of the producers.
- Keep current clients. Largely the job of the account management team based on the way they manage the account all year round.
If producers accept any referral that comes their way and ask the account management team to go out to market – on behalf of someone else's client – how can those account managers put forth their full effort to keep the current clients?
How much are you willing to sacrifice current business at the prospect of winning new business, which may or may not be profitable, through a bidding war?
Who's really being offended here?
Just because you can write the business, doesn't mean it's good that you do. We hear the same arguments again and again defending the decision to write any business that comes along.
- "My referral source did me a favor giving the referral, and I don't want to offend them."
- "We're a good community partner and don't want to offend the community by not doing business with everyone."
Notice the common thread here? Not wanting to offend.
But what about not doing right by that new client? I think that's a far worse offense.
If, for example, you specialize in larger businesses and "do a favor" by writing a small business, you've placed this new, small company in the hands of people who don't have the expertise, or the time, to give them the type of service they really need.
And what about the reputation that develops when you write that mis-aligned account, but don't provide them quality service? Not only does your reputation suffer, but your referral source has their reputation tied up in this, as well.
Setting your guidelines and taking control
Do everyone a favor by taking control of your referral selling process and stop accepting all referrals as good referrals because they're just not. The best fit for both the agency and the client is one where there is proper alignment between the needs of the client and the expertise of the agency.
- Define what you are best at as an agency. Individual? Small businesses? Medium size businesses? Large businesses? Get specific by defining both the demographics and the values of these ideal businesses.
- Gather your collective knowledge. Look at client data gathered in the agency over the years, compare notes and stories about various clients, study this type of business by reading articles, blogs, books, studies.
- Determine what their greatest needs and problem areas are. Each size category of business faces a unique, yet common, set of challenges. For example, some are not large enough for an HR/Risk manager, while some are large enough to have an HR/Risk manager, but he/she splits time by playing other roles in the business.
- Create marketing and communication efforts around these needs. Talk directly to that type of business in your communications. Let them know you understand their challenges, and you have solutions to help them.
- Communicate what your ideal client looks like. Through your marketing activities and your referral sources, point prospective clients to your resources to see if there is proper alignment between the clients' needs and your expertise.
If your marketing efforts (web site, social media platforms, local advertising, etc.) look like every other generic agency willing to do anything for anyone, then you're not going to attract the types of clients you are best equipped to serve.
Get specific with your message and speak directly to the businesses for which you can provide the greatest impact. Use your marketing efforts as a way to filter the types of prospective clients you spend time trying to acquire. And help your referral sources by giving them guidelines on the types of businesses that you can help, which will, in turn, make them look really good as well.
Photo by Elnur