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Its not easy to be an insurance agent today. With a recession underway and layoffs sweeping the country, you may have had more than one client cancel a policy to save a few dollars.

Meanwhile, it seems like youve sold everything you can think of to everyone you know. Obviously, increasing your client base is more important than ever, but you just dont have the budget to spend a lot of money on the effort. Youre too busy trying to stay afloat!

So, what’s the inexpensive and very effective solution? Look in your own back yard.

Thats right, Im referring to referrals. If you provide valuable, worthwhile products and services to your clients, they will want to share you with others. Its just human nature, but sometimes they need a little nudge. Thats why you should have a system in place for promoting this positive word of mouth.

You need to know how you can use the power of referrals to your advantage. Here are a few suggestions:

1. To build client loyalty, give them an experience. Its all too easy for clients to view insurance as a commodity. You already know that service is what differentiates you from the agent across the street. But in order to really stand out from the crowdand to make your clients want to refer their friends and associates to youyou must become a memorable, noteworthy, one-of-a-kind insurance agent. Be the agent who gives out pumpkins at Halloween, or the one who calls each client on her birthday, or the one who holds “picnic seminars” in the local park to teach clients about new policies and services. In an experience economy, you must give your clients an experience. It builds loyaltyand it encourages referrals.

2. Seek out a systems-based approach. Too many agencies view referrals as something extra, a “doggie bone” a client tosses them every once in a while. This mindset needs to change. Everything you do should be geared to asking for and following up on referrals.

If you have a system in place for pursuing referrals, you and your staff will use it. You wont have to think, “What information can I send this referral?” or “How can I thank this client for giving me this referral?” Youll have a package on hand to instantly drop in the mail. It will be as automatic as brushing your teeth.

3. Keep in touch to keep ‘em happy. Initiate contact with your clients on a regular basis. Dont wait for them to call you! I suggest creating a monthly KIT (Keeping In Touch) Program for communicating with your best clients. In February, for example, you might send Valentines Day cards; in June, send some helpful travel tips; in November, share your favorite holiday recipesand ask for theirs. Furthermore, you should contact these special clients one to three times a year just to make sure they are happy with your service.

4. Persuade your clients with club membership. A referral club creates a sense of belonging and encourages members to provide referrals. You could have a referral appreciation dinner thats exclusively open to club members and their referrals.

Or you could partner with a local business, say, Sallys Floral Shop. When the referral rewards club card is taken to Sallys, she will give the shopper 10% off any flowers purchased there. Or perhaps you could send club members a special mailing or newsletter.

5. Become a “list lord.” An association list, industry list, department list, or club list can open the door to referrals. Let’s say youre sitting across the table from someone whos a member of, for instance, the Watertown Country Club. Just pull out your list and say, “I was wondering if you know anyone in this club who may be interested in the services I offer?” You will be surprised at the response you get.

6. Say it with flowers, or more creative rewards. Saying thank you to clients who give you referrals encourages more referrals. So reward these valuable clients with a nice letter or note from you. But in addition, give them something nice. Flowers and gift baskets are time-tested winners, but you can also be a bit more innovative. For instance:

–A book on a subject you know theyre interested in.

–Tickets to a sporting event, the theater, or the movies.

–A guest pass to a spa, or a ticket for a free massage.

–A free car wash or a coupon for dry cleaning.

7. Just do itand do it every day. The best way to get comfortable with asking for referrals is to make it part of your everyday business dialogue. Ask your clients, “What have you liked about the way we have served you?” Or tell them what youve done for them and then say, “Wouldnt you agree?” When they give you a positive response, its a good time to interject, “If there is anyone else who may need these services, please send them my way.”

If you simply cant bring yourself to say these words, there is another way. A referral request package can be a powerful marketing tool.

Send this package to all your clients. This mailing should include a nice cover letter and a form on which they can list friends and business associates who might be interested in your services. Many people find that asking for referrals in writing is much more psychologically comfortable than asking in person.

I cannot overstate the importance of asking for referrals. These leads are easier to close, cost-efficient, and they usually turn out to be loyal customers. And guess what? Most of your competitors are not asking their clients for referrals!

Some 90% of the business owners across the country that I talk to say they ask for referrals only occasionally. Why not be one of the 10% who do? It will make all the difference in your business.

, MBA, is president and founder of Red Zone Marketing(TM). She can be reached via e-mail at mk@redzonemarketing.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 7, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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