Tommy McDonald, who serves as a Vice President with Marsh, Berry & Co. Inc., told Insurance Business America that there are 7 ways to grow your insurance agency from an organic perspective.
“In our experience,” said McDonald, “understanding the metrics needed to produce predictable profitable organic growth is number one.” He points out that just 10% of the insurance industry can produce new revenues in excess of 20% of the prior year’s commission and fees.
Using a CRM, which automates the storing and organizing of this data can offer lots of advantages.
You can better maintain existing customer relationships, be more systematic about sales processes, track activities and collaborate more efficiently and make the data you gather and own more valuable.
You can also be more strategic about allocating resources such as marketing dollars and–of course–your time. The right CRM software is an indispensable tool for a modern insurance agency that is looking to grow.
The Insurance Industry Has Become More Competitive
Many insurance products are seeing low levels of market penetration because customer preferences are shifting. In the United States especially, older adults are less interested in creating an inheritance for their children.
The focus has become having a specific standard of living during their retirement years.
To put it simply, the average person is worrying more about living too long instead of dying too early.
Since 1982, the availability of 401(k) plans has shifted the insurance industry as well. McKinsey reports that the industry share of retirement assets under the care of the asset management industry has risen from 36% in 1990 to 70% today.
Even though insurance agencies like yours have structural advantages, such as a smoothing of returns for the policyholder over time and tax-deferred growth, people are more worried about their own future then that of their children or grandchildren.
There are multiple reasons why customers forego the insurance industry today, even if they recognize the benefits of the products being offered.
- The insurance products being offered may be complex, which makes it difficult for the average person to understand them.
- The application and underwriting processes are time-consuming and demanding, since a fully underwritten term-life policy might take up to 8 weeks.
- The distribution systems in many insurance agencies are designed to push products at customers instead of educating them about what each option provides.
- The customer service received during and after a sale is inadequate because there are high levels of employee churn within the industry.
Insurance Business America reports that 25% of the industry’s workforce is expected to retire by the end of 2018 because the average age of an insurance agent in the United States is 59.
By listening to the pain points of today’s customer, you can begin building a stage for growth.
Competition is fierce within the insurance industry today.
The Accenture Independent Agent Survey notes that there are almost 40,000 independent insurance agencies operating in the United States right now.
The average agency generates up to $6 million in annual premiums, which allows for up to 12 FTEs to be hired. 58% of property and casualty premiums in the U.S. are generated by independent insurance agencies.
With that much competition, you must be consistently focused on growth to make your agency stand out.
That means your top priority must be to set a realistic, but still challenging, sales goal each year.
Tommy McDonald, in Insurance Business America, suggests that you have salespeople who actually sell policies. “The answer to the growth question may be as simple as ‘hire, develop, and retain’ great sales people,” he said. That means you must let go of the salespeople who aren’t selling to protect your performance-based culture.
A value proposition which stands out from the competition is also important. “If you have tools and resources that your clients value,” McDonald said, “and it actually creates results for your customer, then growth will come.”
There are several ways to make this happen, including developing and refining your niche, using CRM integration to deliver better support and follow-up for existing clients, and hiring internal resources that help to drive growth initiatives forward.
Then the talent of your resource staff must be evaluated.
“How many of these people can go see your best customer without a salesperson in the room?” McDonald asks. “Who leads your service team? Your sales team is only as strong as the leadership and service team allows them to be.”
The Best Tools to Use for Agency Growth
The insurance agency is facing disruptions from a variety of social and technological phenomenona, according to Aaron Blackledge and John Paul Nettles.
“To manage technological upheaval,” Blackledge and Nettles write,” businesses are thinking creatively about new possibilities presented by new technology.”
That means embracing tools like a CRM.
There are 6 key ways that a CRM could help your insurance agency find new ways to grow.
1. You can grow contacts and sales because you’re able to manage your leads in a way that connects everyone. Your support staff and your salespeople all use the same system to track contacts, document leads, and communicate instantly about new opportunities.
2. Activity tracking provides you with a way to see what the entire team is doing with an experience that is very similar to your typical social network newsfeed. On this one page, you can quickly scroll through new contacts, opportunities, leads, or tasks which require your attention.
3. Email marketing is now part of the modern CRM, providing you with seamless integrations with Outlook and Office 365. Gmail and the G-Suite are included as well. With LoTops, you’re even able to set your templates to keep the look and feel of your messages consistent throughout the agency.
4. Data insights allow you to evaluate where your agency stands at any given moment. You can generate reports with clear visuals that allow you to know what needs to be done or how well you’re meeting the metrics you’ve established for yourself.
5. File sharing within the CRM allows your people to quickly and securely share files in once place. This activity also shows up on your activity tracking, which allows you to stay updated on the activities you’ve assigned.
6. LoTops also provides seamless mobile access to your CRM because for those times when work happens outside of the office. The interface you use feels familiar whether you’re on a tablet, desktop, smartphone, or tablet.
A CRM, however, is not the only tool that can help your insurance agency grow.
There are several excellent insurance-related blogs that you should bookmark to read on a regular basis that can be used as a tool to further your understanding of the industry on multiple levels.
Robyn Sharp provides excellent insurance marketing advice on her blog entitled Mega Agency Marketing.
Chris Langille offers web design solutions through Advisor Revolved for insurance agencies looking to create a modern WordPress site.
If you’re interested in personal or agency branding within the insurance agency, then Carrie Reynolds shares her unique perspective on her blog entitled Insurance Goddess.
Then make sure to catch up with the team at Insurance Thought Leadership every so often. You’ll find numerous ongoing conversations that discuss all of today’s trending issues within the insurance industry.
There are also some need-specific tools that will help your insurance agency to continue growing as well.
Over time, your signage may begin to look tired. Your contact materials may feel dated. Having your website refreshed with new photos of yourself and your staff, along with some signage updates, can make your agency feel like a brand-new business once again.
It is important to be mobile-friendly today as well. That means your website must be responsive to different browsers and devices being used by visitors. You might also consider working with an app developer to create a specific resource for your agency.
Then you can always use your own talents as a tool to grow your agency as well.
“You are your greatest asset,” Tom Hopkins once said. “Put your time, effort, and money into training, grooming, and encouraging your greatest asset.”
One of the easiest ways to win new business is to ask for feedback when someone decides not to buy. Did that person find a policy which served their needs in a better way? Did they decide that insurance wasn’t needed after all? Maybe they’re postponing their decision because money availability is a factor?
If you understand why people are not buying from you, it becomes easier to counter those common objections proactively to create more opportunities for your agency.
With the right tools, your insurance agency can learn how to anticipate trends. You can spot new opportunities because you are constantly learning. It is a process that should be never-ending.
Best Practices for the Insurance Industry to Use
Knowing what the best insurance agencies are doing to create results will help you grow your own agency.
The first step is always preparation. You must arrive at every meeting fully prepared to meet with that individual client.
If you are trying to ad-lib your way through a sale, you’re increasing the risk of losing that customer. A story that is well-prepared, honest, and applicable to that specific lead will feel comfortable and effortless.
As Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.”
Then you must respect your future client.
Most of the time, you will have more knowledge about insurance than the people who want to know about the policies you offer. Even though this may create a technical imbalance, it does not create an intelligence gap between you and the other people involved in the sales conversation.
When your tone of voice strikes a note of superiority, you will lose that prospect.
Kevin Stirtz, an author and digital marketing professional, puts it this way. “Know what your customers want most and what your company does best. Focus on where those two meet.”
Even when a customer is well-researched and believes they know what type of policy they need, be sure to listen to their entire story. Look for gaps that they may not have considered, then mentor them in that direction.
You must also own your sales material. Customers want to work with industry experts. If you are trying to speak on something that you’re not sure about, your presentation is going to smell like a scam.
It is up to you to become the local insurance guru. Be prepared to answer technical questions about your policies.
Then the quality of the product you offer is going to come into play. The real secret to any marketing strategy is to offer a great service or build a great product.
When what you offer fails to be compelling, your results are going to suffer, but making an insurance policy become compelling can be difficult.
The best agencies today are creating compelling engagements with clients by telling meaningful stories about what they offer. Stories are what make the insurance industry real to the average person.
People must be able to appreciate these stories, believe them, and then be inspired by them to purchase a policy from you. That means they must be both relatable and tangible.
Then comes the final and most important best practice of all. Let the product sell itself. Never try to sell it “from the stage.”
To build lifelong customers, you must give without the expectation to receive in return. People will believe in your agency when you prove that you’ve got what it takes to deliver results. Trying to convince people that you will deliver actually tells them that you probably won’t deliver what you’ve been talking about.
You must also develop a bond of respect and trust with each future customer. Trying to sell from a lunch appointment, an introductory meeting, or a public speaking engagement may close a sale here and there, but it will drive people way.
Look to add value. Then keep adding value. You should add so much value to your stories, in fact, that your prospects are left with no choice but to choose your agency.
The Advantages a CRM Brings to Your Agency
Even small-town insurance agencies deal with a competitive market.
To find a way to thrive, you must become customer-centric. You must be able to cater to your informed customers, while creating systems which allow you to improve how much you’re able to accomplish in the limited time you have.
The reality of your situation is this: you are selling a product that your prospects hope they will never need to use.
That means most of your future customers won’t become customers until you reach out to them.
“People have an amazing ability to willingly suspend disbelief when they choose to,” writes Steve Tobak. “But when we suspend disbelief in stuff that really matters, that’s when the trouble starts.”
Ignoring a problem means you don’t need to think about it. If you’re not thinking about it, then the last thing you need is an insurance policy that makes you think about what you’re trying not to think about.
That is why it is up to you to reach out.
With a CRM, you are able to turn every interaction with a customer into a captured moment. This allows you to build a customer profile that makes it easier to tell a story about your services that shows you have the ability to help.
Over time, as you continue to add more value to each interaction, you’re creating attention and awareness for your agency and what you offer.
Only 15% of insurance customers say that they are satisfied with the communication relationship they have with their agent. With a CRM, you are able to implement an agency-wide, customer-centric strategy which helps you to engage each customer in a meaningful way.
You can use the CRM to send out follow-up emails, create assignments to ensure your best customers receive their necessary contacts, and track the times when a customer attempted to contact you.
Because insurance isn’t always sold in the office, a CRM should offer seamless mobile access as well. That is one of the clear advantages of choosing LoTops as your CRM provider.
Then there is the advantage of document management and data collection to consider. You’ve got disclosures, claims, contracts, customer files, policy applications, and numerous other documents and data that must be managed.
You’re exchanging this information between your customer and your agency on a daily basis. Using a CRM lessens the chances of this information becoming misfiled or lost because it can be directly associated with each customer.
You are able to create a powerful workflow which accelerates your sales funnel because your files, reports, and insights are always specific to each contact. Anyone in your agency can have access to this information to close the deal.
With a CRM, your customers are building relationships with your salespeople and your business simultaneously. That process creates loyalty, which the creates more opportunities for you over time.
Important Statistics About the U.S. Insurance Industry
For those unfamiliar with the insurance industry In the United States, coverage is offered to both individuals and companies that protect against a loss being suffered. There are two primary categories of insurance sold: life insurance and everything else.
Suze Orman describes it this way. “If a child, a spouse, a life partner, or a parent depends on you and your income, then you need life insurance.”
Life insurance provides a lump-sum payment to a beneficiary should something happen to the policyholder. Non-life insurance policies then cover every other branch of insurance, from homeowners’ insurance to car insurance to property and casualty.
According to information published by Statista, there are more than 2.54 million employees directly employed by the insurance industry today.
These workers contribute to a global value of insurance premiums totally more than $5 trillion. The U.S. insurance industry is responsible for about 20% of the global insurance premiums which are generated.
Statista also reports that the current underwriting expense ratio of property and casualty insurance in the United States is 27.5%, while the loss ratio of P&C insurance is 58.5%. Net premiums in this insurance sector total more than $533 billion annually.
The Insurance Information institute (III) reports that in 2017, the total of net premiums written in the United States were valued at $1.2 trillion. 52% of the premiums were recorded by life and health insurers.
III also reports that there were over 5,800 insurance companies operating in the United States, including over 2,500 property and casualty companies.
The National Association of Insurance Commissioners reports that net profits for the property and casualty insurance industry fell by 20%, to $18 billion, for the first half of 2017 compared to the year before. This was due to higher catastrophe losses, an 11thstraight quarter when average commercial rates fell, and automobile insurance under-performing as a category.
Ernst and Young report that despite these strong revenue figures, almost 50% of insurance customers say that they have not interacted with their agent within the previous 12 months. That becomes problematic because this survey also reports that 57% of customers want to hear from their insurance agent at least twice per year.
Part of the reason for this dissatisfaction is that Millennials and young graduates have different needs than previous generations.
Maxime Rieman, who works at ValuePenguin, notes in a Forbes report that up to 35% in the recent drop of home ownership rates in the United States can be attributed to student debt. Just 9% of women born in the 1940s were single at age 33, while 47% of women born in the 1990s are projected to be unmarried when they reach that age.
Millennials are also more likely to use different transportation methods to reach their destination, regularly alternating between walking, biking, driving, and public transportation. Since the 1980s, there has been a 47% drop in the number of young teens getting their driver’s license, which changes their insurance needs as well.
About 15% of homeowners in the United States are not carrying some form of homeowner’s insurance, even though the average policy cost is just $1,083 per year. For those who are carrying insurance, 78% of the policies which are sold are HO-3 policies.
50% of people admit that they would be more likely to purchase a life insurance policy if they can do so without having a medical exam first, with almost 75% believing the best benefit that an insurance agency offers is a simplified issue policy.
On a final note, ThinkAdvisor put together a series of statistics regarding life insurance coverage gaps that are important to review:
85% of consumers believe that life insurance is needed, but only 62% say that they actually have a policy.
In 2010, the number of households which had individual life insurance reached a 50-year low, at just 44%.
40% of people in the United States who have life insurance believe their policy doesn’t cover all their needs.
70% of households with children in the U.S. would have trouble meeting their daily living expenses in less than a year if the primary wage earner were to die unexpectedly. 40% of these households would have immediate trouble meeting these needs.
That leaves us with one important question: why aren’t people buying more coverage from their local insurance agencies?
The answer is simple. They don’t have the information.
70% of people failed a 10-question basic life insurance IQ test, with 83% of people not purchasing more because they think it’s too expensive.
If your insurance agency can provide that information, it will have natural opportunities to begin growing.
You Can Control the Future of Your Insurance Agency
The fundamentals of value, service, and expertise–combined with an informed and disciplined sales culture–are the most important elements to growing your insurance agency. And you control those levers.
Show your local prospects why the value proposition you offer is the best one for their needs. Aim to inform and educate in a friendly way at the right moments when they’re receptive. Keep adding value until you cannot be ignored. Then make sure your agency is following up with every customer, not just your best ones, to establish a reputation of strength within your community.
Remember to use all of the tools that are at your disposal to create these outcomes. Whether you choose an interactive app or you implement a CRM, your ability to be consistent will translate into better results for your agency over time.
Then remember to tell your story. Be authentic. Show people how insurance products make their lives better instead of telling them. Offer policies which reflect their personal priorities because that will give your customers a path they can follow which will lead to success.
Growth can happen with a lot of hard work, a little luck, and the right tools by your side.