Do you sell commodities or relationships?

 George Nordhaus and his IMMS organization have earned a reputation for big-picture views and keen observation of insurance buyer trends and seller responses.  We’ve heard him speak out bluntly about the problems he perceived in the independent agent-company responses to insurance buyer wants and needs. His mantra: Independent agents must embrace and practice relationship selling…and do so wholeheartedly. 

Live by price, die by price 

In Nordhaus presentations we attended, Nordhaus claimed that agents who live by price will die by price.  He was quick to admit that some buyers will always shop price only, while at the same time saying that “results show that they will be in the vast minority.” 

How many policies per account do you have? 

Statistics that support the merits of relationship selling and account building haven’t changed much over the years.  In a nutshell, retention rates are better the more policies you sell per account.  Statistics have not varied much sinceNordhaus made this statement 30 years ago: “After 10 years, the following number of 100 original customers will stay with you if they have the policies as indicated---Auto only, 10;  Auto/Homeowners, 70; Auto/Homeowners/Life, 92.” 

When Nordhaus first revealed these figures, the average agency had 62% single policy customers!   

Three positive action steps for relationship selling 

STEP 1 “Stay in touch” 

Set up a formal business process with specific goals for rounding out accounts.  Plan a minimum of four positive calls a year (six would be optimal).  Contacts such as cross-sell mailers, newsletters, agency brochures, holiday cards et al. 

STEP 2 “Oh, by the way” 

Encourage your CSRs to use this method to positively and politely point out that your agency sells auto, homeowner, umbrella, valuables floaters, life insurance… and other coverages. Idea: Post a tentcard on each CSR’s desk with the Oh, by the way…” reminder.  Make this use of this round out and upgrade opener a habit just like McDonald’s sells the fries with the burgers! 

STEP 3 “Upfront account selling” 

This may be the most important step of all: Let new auto and homeowner insureds that you want their full property and casualty insurance account.  Do it right upfront, at the point of purchase. Tell them that you want to be their insurance counselor.  Point out the advantages such as better understanding of their overall needs, convenience, time-saving, and claims handling benefits. 

Gather your agency facts 

Gathering the facts is the starting point for the improvement of your relationship selling process.  How many single policies?  How many home-auto?  How many home-auto-others?  Who are they?  How can you produce a marketing program that will improve your account selling results? 

The agency income and profitability benefits of the multiple policy retention rates cited by Nordhaus make this sales effort well-worthwhile!