Keeping Retention Rates High In A Softening Market

The success or failure of any organization can be traced to customer retention. Agents and carriers who retain the most customers have greater long-term success than those who consistently lose clients.

While many elements help keep retention rates high, there are two deciding factors in most cases: the overall relationship between the agent and policyholder and the perceived value the policyholder receives from the agent and carrier. History shows equal measures of both elements can typically withstand any market shift. However, when the market begins to soften, and sales numbers begin to decline, some carriers lower prices to attract and retain customers without providing the value customers want.

While price is important in a soft market, the agent and carrier have an opportunity to collaborate on something even better for the customer–providing the right insurance product or service to meet a specific need. Through shared objectives that revolve around the customer, clients will benefit from a long-term connection that makes value paramount and price secondary.

There are many ways to generate customer loyalty, but a successful agent-client relationship is best achieved by enhanced employee training, strategic business alignment and proactive customer relations.

Enhanced Employee Training
Staff development enables organizations to increase productivity and efficiency through staff training that develops skills, changes attitudes, produces ideas, reinvents organizations and enhances an agent’s ability to understand the customer.

Enhanced employee training teaches an agent how to conduct an in-depth client interview to determine a customer’s needs. This is accomplished using a systematic approach to knowing market needs, what makes an agency and product mix unique, and how this mix can satisfy a customer. By conducting an in-depth client interview, the agent can establish key findings and assume a position that no other agent can claim, hence giving a competitive advantage.

Effective training should familiarize agents with interview techniques to uncover the real issues the client is facing. By asking the right questions, agents can properly assess client needs and offer a solution. Some questions include:

“What are you not getting now that you want?”

“What makes your operation unique?”

“What if any changes have occurred since the last policy?”

The in-depth client interview is a hallmark at Hylant Group, a full-service agency that partners with FCCI, and the seventh largest privately held agency in the country. “We train our producers to be proactive in determining client needs in order to provide the appropriate resources, tools, coverage, and products,” says Tom Nix, chief operating officer. “This helps our clients meet their long term goals and not focus on price alone.”

Of course, asking the right questions and providing the best solutions does not always produce the lowest rates. An agent functions as a problem solver, while competitors may be operating on a transactional basis.

Strategic Business Alignment
Drilling down to a core need can help create an emotional connection with a customer. In fact, this technique should be used at all business levels. Since the customer may have several contact points within an organization, every person in the organization should understand the company’s unique positioning in the marketplace and the strategies required to reach the company’s goals. This organizational alignment will help a business retain customers in a softening market.

Alignment must be achieved between the agent and the insurance carrier, too. Leading carriers embrace alignment strategies and often include risk managers and loss control specialists as part of the alignment process. With a united alignment of the agent and carrier, retention rates can be maximized.

Proactive Customer Relations
Through enhanced training techniques and strategic business alignment, a proactive customer relations program becomes a natural by-product. It is easier for agents to cement long-term relationships with customers they understand than with customers they hardly know.

In many cases carriers organizationally aligned with an agent will provide all the tools needed to make business easy and valuable for a customer. Here are some tools agents need carriers to provide: Annual statement of expectations and commitments; mid-year audits, reviews, and analyses; stewardship reports to clearly show what the agent/carrier team has done; and face-to-face meetings with loss control specialists and underwriters.

Soft markets are normal in this industry. However, they should not be an excuse for declining retention rates. A strong alignment between the agent and carrier that provide measurable value and creates an emotional connection, not a transactional relationship, can lead to long-term success in any market.

Dinnin is senior vice president, Midwest Region, for FCCI Insurance Group, a commercial property and casualty provider throughout the Southeast and Midwest. Dinnin can be reached at (317) 571-3481 or edinnin@fcci-group.com.

Topics Carriers Agencies Pricing Trends Training Development