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As you try to grow your business, it’s normal to focus on insurance lead generation. Yet you don’t want to overemphasize finding new customers while overlooking your existing ones. Instead, insurance agents should also prioritize renewals. You could even make a case that making renewals your top focus, in turn, helps your business grow more overall.
Why? Because your existing customers can be highly valuable. For one, you typically don’t have to incur as many expenses with renewals as you do when trying to drum up new business, such as by spending money on advertising. Plus, your existing customers can lead to revenue growth. They may decide to expand their coverage with you as you build the relationship, and they also might start to refer other business owners looking for commercial insurance policies.
In general, the more successful you are at closing insurance renewals, the more profit you’ll ultimately have. In the related industry of financial services, a 5% increase in retention translates into 25% more profit, according to a classic study by Bain.
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Finding New Customers Drains Resources
If you focus too much on finding new customers, you can quickly run into the problem of draining your resources, which hurts the long-term viability of your business. Redirecting some of your attention toward retaining customers can ultimately save you:
Finding new prospects can be time-intensive. From scouting out potential customers to conducting your initial outreach, to following up with prospects and perhaps even meeting with leads one-on-one, a lot goes into trying to close a deal. And at the end of the day, there’s no guarantee that all that time will lead to selling more policies.
Renewals typically take far less time, especially if you’ve already built some rapport. It could be as simple as sending out an automated renewal notice via email and having an existing customer click a few buttons to complete their renewal. With that revenue booked quickly, you can have more time to focus on other areas, like marketing activities, which help draw in more clients long-term.
Similar to saving time, focusing on insurance renewals also saves you money. Finding leads can be expensive, from having to pay for digital marketing support, to attending ticketed networking events, to investing in educational materials on how to grow your business. This can be money well spent, but you don’t want to drain your profits without at least securing the revenue you’ve already brought in from existing customers.
Completing more renewals will give you a better idea of your budget so that you can set aside a comfortable amount for lead generation. Or, you might decide to simply pocket the extra savings from getting more renewals and spending less on prospecting. Instead, maybe you’ll be able to still find new leads via referrals from renewing customers.
Don’t discount the mental and even physical energy it takes to always be on the hunt for new leads. It can be exhausting trying to learn new prospecting techniques, traveling to events, putting together proposals, etc. Focusing more on insurance renewals saves energy, especially with a tool like Wheelhouse that helps automate the process. That way, you can have a clearer head to determine what growth activities to prioritize next.
Returning Customers Can Be Highly Valuable
Not only does increasing your renewal success save you resources but it can also directly support growth. As a simple example, if you retain 100% of your customers from one year to the next, and meanwhile prices go up by 5%, then that’s 5% growth without adding any customers. Of course, the specifics can differ within insurance, especially if you work on commission. But customer retention can still be more valuable than you think.
One of the ways that improving your renewal success can pay off is when existing customers decide to expand their coverage with you. For example, a business owner may have purchased a general liability policy with you, and the following year, they may decide to also add more specialized property insurance coverage. When that happens, you’ve sold an additional policy without having to find an additional customer.
Gaining Reviews and Referrals
Another important reason to focus on renewals is that your existing customers can be some of your best advocates. If you want reviews to show leads that you’re a good agent to work with, then you need your existing customers to provide these comments. Yet if your existing customers soon become ex-customers because you didn’t focus on renewing them, then you may not have as many opportunities to gain positive reviews.
Likewise, existing customers who renew with you consistently and you form a good relationship with may decide to refer others to you. That makes finding new customers far easier than only doing, say, cold outreach.
On the flip side, if you do not prioritize renewals and your customers feel neglected, you could be putting your business at risk for receiving negative reviews and negative word-of-mouth. Make sure your current customers feel appreciated, e.g., by sending a handwritten thank-you note after they renew, to keep them coming back and to lift your reputation.
Provide a Smooth Renewal Experience
Clearly, prioritizing customer renewals can pay off. But how do you actually turn your intentions in this area into actions that reduce client churn?
Factors like pricing and coverage details certainly play a role, but one area that might require more emphasis than it has received in the past is the renewal experience. In general, try to provide a straightforward renewal process that makes customers feel valued. At times, doing so can feel like playing to opposite sides. On one hand, you want to make renewals efficient, so you might decide to automate the process. But on the other hand, you want customers to feel valued, so you might take the time to set up client meetings, send over relevant materials, and in general take more of a slow and steady approach.
So, how can these two sides coexist? Offer clients the choice, and keep both options open. For example, you might send out an automated renewal notice but then manually follow up with those who do not respond after a week or so. Within your renewal notices, you could also provide the option for clients to schedule a one-on-one meeting with you to discuss their options, so it’s up to them if they want to spend the time.
That way, the process can be smooth on their own terms. Some clients may just want to complete the renewal as quickly as possible. Some might consider a smooth experience to be one where they get all the details carefully explained to them, rather than having to do this research on their own.
You can also follow up after renewals on a more manual basis to show clients you value them, thereby helping with future renewals. As mentioned, you could send thank you notes, and you can also check in from time to time, such as by sending articles you think are relevant to their business. Or, you could simply let them know you’re available for meetings if they want to do, say, a half-yearly check-in to see how their insurance needs may be evolving, rather than trying to make these determinations during a crunch period when their policy is about to expire.
By focusing on these activities, insurance agents can increase their renewal success. In turn, that can lead to more profit, more referrals, and a stronger business overall.