Sell Personal Lines Upgrades via Direct Mail

To remain in business, agents need to derive as much revenue as possible from every current insured, at the least possible cost. This is particularly the case now that the structure of the classic contingency commission is coming into question.

The customary way to generate these additional client revenues is to account-round by attempting to sell a missing policy or two. This cross-sell message has been ingrained into virtually every agent from their first day on the job. Furthermore, everyone knows that writing multiple policies for insureds results in better retention and that it’s less costly to keep a current insured than to book a new one. The entire insurance-selling universe knows these homilies. But what everyone may not know is that there is more than one way to generate these essential extra revenues.

Improving the old school methods
Traditional personal lines cross-selling activity involves identifying insureds who carry an auto or homeowners policy, but not both. The drill usually goes something like this.

Uncover the agency’s monoline accounts. Send each monoline insured a cross-sell form letter and an insurance company brochure, either auto or home, that highlights the policy being solicited. The CSR, personal lines producer, or telemarketer follows up with a phone call asking for an X-date. Then 60 days ahead of the person’s renewal date, present a policy quotation and hope for the best.

Over the years, this customary method has worked, but it has its gaps.

First, agencies must recognize that as many as half of their monoline clients won’t buy another policy no matter how aggressively or comprehensively they act. This is primarily because certain ownership conditions simply don’t lend themselves to the traditional account-rounding approach. For instance, some auto-only clients live with their relatives and certain homeowners insureds don’t own vehicles.

Secondly, quoting a premium may require the time and expense of an extended person-to-person meeting. If a sale doesn’t result from this get-together, the office will have invested valuable selling time with nothing to show for it.

And finally, if agents focus their cross-selling efforts exclusively on adding entire policies, they bypass the fresh commissions that could accumulate by trolling for add-ons.

Still, the continuous solicitation of whole auto and home policies is well worth your while. It’s just that there are better ways to go after them than the old school method. Newer techniques include using agency-generated client-focused sales materials instead of preprinted company brochures. For instance, an individualized direct mail marketing tool such as a customized newsletter, where the cross-sell “articles” creatively mention the prospect by name and include data-based facts about them, their property, and their policies, is an imaginative and effective alternative.

Still, the most immediate way to bring in a steady flow of cross-sell or upsell commission dollars is to directly market policy upgrade endorsements, in addition to the solicitation of missing policies.

The upgrade advantage
Upgrades have three sales advantages over their whole policy counterparts. They can be sold to any agency client, including monoline policyholders and insureds who have all of their policies with the agency. They can be sold at any time, regardless of an insured’s policy anniversary date. And many upgrades can be sold to clients by direct mail and e-mail (with an explanatory Web page) with only incidental and low-cost personal contact.

Despite these advantages, the marketing of endorsements is often overlooked due to the relatively low commission per transaction. However, by aggressively and intelligently applying automation, agents can simultaneously and profitably strengthen client relationships, while generating a large quantity of small commissions.

Getting started
The place to start is by recognizing that two distinct types of upgrade endorsements exist. The first is the cross-sell upgrade, which involves adding additional coverages to an existing contract, instead of buying an entirely separate policy. An example is adding an umbrella endorsement to a homeowners policy, instead of selling an entirely separate personal umbrella.

This seemingly minor distinction can dramatically ease the decision for a client and simplify the paperwork for the agency and carrier. Insureds will agree to extend an existing policy far quicker than they will agree to buy what they perceive to be “more insurance.” Plus when it comes to paperwork, it’s simpler to add an endorsement than it is to prepare a whole new policy.

The second type of endorsement is the standard upgrade. It involves buying additional policy limits or extending coverages that can’t otherwise be purchased separately. Examples include upgrading from a broad-form contract to all-risk protection, increasing auto liability limits, and adding replacement cost coverage on contents to a homeowners policy. None of these enhancements is available as a separate policy.

Both cross-sell and standard upgrades can be sold with relative ease through point-of-purchase direct marketing (POPDM). The key feature of POPDM is asking for the sale at the same time the offer is introduced. To use this technique successfully, agency offers must be carefully crafted with specific insureds in mind. However, before initiating this effort, personal lines staffers must first identify enough prospects who can benefit from a specific endorsement to make the campaign worthwhile. Only once an adequate number of potentials are uncovered, should staffers finalize their offer.

Use the profiling capabilities of the firm’s management system to determine exactly how many insureds make realistic prospects for specific upgrades. Seek to uncover at least 100 to 500 per upgrade offer, depending on your agency’s size.

Once enough personal prospects are identified to conduct several marketing campaigns, distinguish and separate these individuals for future solicitation. To make campaigns easier to administer, it may be wise to transfer select client information into specialized sales software like ACT! (www.act.com), Goldmine (www.goldmine.com), or agent Dave Schuppler’s ASP SaleSource (www.aspsalesource.com).

As for crafting the actual upgrade offers, start by checking the junk mail that you received today. Notice how many pieces include an attention-grabbing headline and a clear order form. Most mailings have both, as they are the hearts of any POPDM offer. Now, look for common characteristics on each order blank. A call-to-action will be printed atop the return card, such as “YES! Please rush me my complete set of Elvis on eight-track!” and a postage-paid return envelope. Borrow freely from these proven techniques and use them in your own mailings. However, since you are offering a professional service rather than a commercial product, you’ll need to tone them down a bit. For instance, you can create your agency’s POPDM offer using any or all of the following formats:

Regardless of the format selected, make sure that you clearly present the benefits of adding the endorsement rather than just itemizing coverage features. For example, within the body of a replacement cost coverage endorsement offer, explain how your client’s current coverage homeowners policy deducts for depreciation on personal property and how buying replacement cost coverage can save them a fortune by providing new for old.

Also indicate how the upgrade increases their contents limit from 50 percent to 70 percent of the limit on the dwelling, at no additional charge. Then for convenience, estimate the actual premium estimate as a percentage (10 to 15 percent), instead of displaying an actual dollar amount. This way you won’t have to calculate individual premiums for each replacement cost offer.

Promote only a single upgrade on each POPDM promotion to keep your insured’s attention focused. Always include a specific agency contact person for questions and a spot the insured’s legal approving signature.

Conclusion
Too many insurance marketers focus exclusively on the cross-selling of complete policies and overlook the rich revenue opportunities that personal lines upgrades can generate. It’s foolish to disregard the small, easy sale simply because it lacks glamour. There are myriad methods for attracting profitable add-on sales. POPDM is one of the best. It’s a proven and cost-effective method of contacting and closing within a single mailing, plus it works equally well for both styles of upgrade.

Alan Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the 1001 Agency Ideas book series and other popular P/C sales resources. He may be reached at (800) 724-1435 or by e-mail at: shulman@agencyideas.com. His Web site is www.agencyideas.com.

Topics Auto Agencies Homeowners