Your Customers Want You to Succeed

Relationship management certainly isn’t new. Most agencies feel committed to their customers and believe that building and managing relationships is also a great strength of the agency. That said, how many agencies do you know with a well-defined relationship management strategy aimed at identifying and delivering what their customers are actually looking for?

For the last four years, I’ve been looking at the demographic, behavioral and attitudinal aspects of small and mid-market businesses. Here’s a summary:

Most of your customers define a “relationship” simply. When asked what they want from you they claim that they want local, choice, and trust.

More than a half of businesses desire a “single source” relationship with an independent insurance agency. But, as you will see below, they don’t have that type of relationship.

The “top-of-mind” worries held by most business owners have far more to do with managing human resources than with property/casualty insurance. Based on these findings, our study was expanded to a very specific examination of the demographic, behavioral and attitudinal preferences of business owners. For example, we asked them to define what really matters with regard to relationships with their insurance agency. Here is what they said:

72 percent of all respondents purchase both property/casualty and employee benefits lines of insurance, and 74 percent use more than one agency to handle these lines of business.

Almost half (48 percent) of buyers who have been with an agency three years or less would “shop” a product purchase with another agency, compared with only 26 percent of buyers who have had a relationship of more than three years with an agency.

The number one reason a customer would leave you is not price—not even close! It is the feeling that you don’t care about them. Combine the findings from the studies and you can draw some interesting conclusions.

First, let’s go back and examine some of the key findings of the first study. Business owners said that they wanted a local relationship. What your customer is really saying is that he/she would prefer a more intimate relationship, characterized by regular communication that generates understanding. When asked how often they had received non-billing communication from their agency, 51 percent claimed to have heard from the agency one time or less.

By claiming choice, customers are implying that they prefer to be in charge of the buying process, and that they want options, ideas and a broad menu of insurance, human resources, and financial services products and services that fit their entire business situation. In other words, they are not looking to be sold. They are looking for a partner who will help them evaluate what fits their financial profile and their actual business situation.

Finally, when your customer says that he/she wants to do business with “someone I trust,” what they are actually saying is that the customer is not really a customer—from their viewpoint—until your agency has created a positive emotional state based on shared information and your ability to truly make the customer feel valued and understood. What they also are saying is that the relationship with you or your agency has very little to do with an insurance product, per se, but goes far beyond product to some intangible element of “value” based on the needs or perceptions of this particular person.

What you are really looking for is to transform a customer to a client, where the bond between that client and you is verbally expressed when he/she refers to you as “my agent.”

The second study unfortunately implies that many of your customers don’t have the kind of relationship that they would like or that makes them feel comfortable enough to invest deeply with you. Rather, the majority seem to be spreading their purchases among one or more agencies. These business owners are claiming that they want regular communication from their agent. They want information, but they really desire contact and dialogue. And they want to know that you truly understand them. They are looking for emotional rewards, not transaction efficiency.

The message? To improve net profit, start focusing on building rich, deep, enduring relationships with your existing customers. Long-term customer satisfaction should be the number-one goal of the agency.

Rich relationships are not only satisfying, they are more lucrative. Buyers who have a relationship with your agency for three years or more have a much higher desire to consolidate their insurance purchases and are more tolerant of rate changes and agency mistakes.

If you really care about your customers, and I think you do, shift your thinking towards “whole customer solutions.” This means not only include introducing cross-selling concepts, but focusing on the softer, emotional elements of what your customer is looking for.

How do you do this? Start with technology.

Jack McMahan is CEO of Baetis, Inc., a Boulder, Colo.-based firm specializing in customer relationship management tools and services for insurance agents. E-mail: jmcmahan@baetis.com.

Topics Agencies Human Resources