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Is your retention strategy data-driven?

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How data can improve your retention

While generating new business is very important, your customer retention strategy is without question one of the most important areas that impact your agency’s financial health, profitability, and success.

The average retention rate in our industry is 84%-90% according to several industry surveys. That means the average agency has to generate 10% -16% in new business just to break-even. This creates a challenge that is difficult and expensive for an agency to accomplish.

We all know it is far cheaper to keep a customer than to obtain a new one, in fact it is estimated that it costs an insurance agency 7 to 9 times more to acquire a new customer than it does to retain a current customer. That means an agency with a lower retention rate is less profitable than an agency with a higher retention rate and the same overall growth rate – all other things being equal.

Retention is a critically important component of your agency’s overall financial health, profitability, and success. Here are some ways data, that is easily captured inside your agency, can be utilized to build your agency’s retention strategy.

Look in the rearview mirror

The best predictor of the future is the past. By evaluating and learning from your lost accounts you can work to reduce the number of future accounts that are at risk. Looking at things like payment behavior, claims activity, longevity with the agency, rate changes and customer interactions can help you understand some of the signs that were present before you lost those customers. Understanding these signs and identifying customers in your book that may have similar situations will enable you and your staff take a proactive approach to engage with these accounts before they become at risk. Many insights can be identified from your lost accounts and building these lessons into your processes can improve your overall customer experience and retention.

Communicate & Listen

One of the best ways to increase your retention is to gain a deeper understanding of your customers. That means reaching out to them regularly, listening and understanding their situation as it evolves and changes. In order to put this information to use, you will need to capture key information about their needs, situation, business, life, and translate that information into their insurance needs now and in the future. By communicating and listening you will be able to provide content and advice that is timely and relevant to their situation making your customers value your expertise, look to you for the advice they need, and trust you as the expert.

Anticipate your customer's needs

One of the best ways to retain your customers is to anticipate their needs and provide them with information and resources before they realize they need it. This is what some of the best companies in the world do to market their products. It is why a married couple that have owned a house for five years begin receiving information about baby products. Look at the trends that exist in your book of business. For personal lines, you can look at trends that tell you when your customers typically add an umbrella, at what age do your customers typically buy a home, add a second car, have their first child, buy their first life insurance policy, have new drivers in their home, purchase a second home, boat or downsize? These are all trends that will allow you to predict your clients’ needs and begin to share with them the things they should be considering. Providing a customer with content like the best cars to purchase for your teen driver from an insurance perspective is invaluable information that demonstrates you understand their needs and want to be their trusted advisor.

Ask for feedback

The single best way to find out what your customers think of you is to ask them. By regularly surveying your customers, you can identify which of your customers are raving fans as well as those that may be at risk of leaving. By using this data and taking immediate action you can demonstrate to your customers how important they are to you and your agency. Using this data, you will be able to reach out to your customers that are at risk, better understand their concerns, and rectify the situation before they make the decision to leave. In addition, identifying your raving fans and asking them to share their experience in the form of google reviews and referrals will improve your new business opportunities.

Data can be incredibly powerful in building your retention strategy. It does not need to be complicated or expensive to put data to work inside your agency.