Attrition – it’s an ugly word that conjures up images of irreparably wounded relationships, disappointments, and lost revenue. Attrition is typically thought of as an inevitable obstacle to growing your insurance practice. You must sell enough to compensate for those predictable losses and sell even more if you want to grow your bottom line. It’s a bit like the old saying, “Three steps forward, two steps back.”
Trying to sell enough to compensate for lost customers then selling even more to increase profits is the norm for most insurance agents. Not only is it frustrating, with estimated costs for acquiring new clients exceeding $1,500 each, it’s a pretty expensive strategy, as well.
Power up with information
Do you know how exactly many customers you have lost? It’s surprising how many business people just assume that losing clients is “a part of the business.” They react at the moment it happens, but soon the disappointment fades and the client is relegated to a back room file with a “that’s business” shrug. You have to acknowledge a problem before you can fix it. Get into your old records and take a hard, honest look at your agency’s track record.
The average company loses 20 percent of its customers each year. If you have determined, or can determine, an average dollar value for each customer it’s not hard to figure out the amount of revenue that represents. You can even take that information to the next level and place a “life-time” value on each customer. How much revenue does a loyal customer represent for the lifetime of his or her business? This can be sobering information. It certainly shines a bright light on the value of customer satisfaction.
This isn’t the full picture, however. Loyal customers refer friends. But while you may score one or two good referrals from a happy client, a dissatisfied customer tells an average of 10 people.
Maybe it’s time to dust off those old file and create a plan for contacting the customers who have left you. Find out what the problem was. Some things, such as having to relocate out of your service area, are circumstances you cannot overcome. But other information is priceless. An issue that pushed a particular client into leaving may be annoying your other clients as well.
We are living in a business climate where most people feel they are little more than a number. This can be especially true in the insurance industry with its automated billing, forms, and notices. In an industry where people become numbers, just taking a personal interest and showing concern speaks volumes.
Obviously, fix and change what you can. If a problem is beyond your control, consider accumulating and passing on pertinent information to those in a position to make appropriate changes. As an agent you are the conduit between the client and the provider. We have all experienced the frustration of knowing there is a problem but feeling powerless to do anything about it. The research you conduct with customers who have defected gives you power to influence change and is invaluable to everyone concerned.
Hold yourself accountable
We are a goal-oriented species. Set a goal for how many clients you want to regain. Along with setting goals for recapturing lost clients, strive for 100 percent retention of your current customers. Remember, we seldom get more than we ask for. You won’t achieve 90 percent of anything if you’re willing to settle for 75 percent.
If you want to achieve 100 percent customer satisfaction, declare it. If you intend to regain 80 percent of your lost customers, take ownership of that goal as well. Write down your intent. Make it real. Writing down your goals literally impacts your neurology and enhances the likelihood your statements will become reality. But it is not a substitute for action.
As in everything, have a plan. Don’t wait for clients to defect before you listen to their concerns or randomly “deal with” complaints and then accept the fall out. Look for solutions. Show you care. Document what the complaints are so you can determine if there is a common thread. You may think a problem is solved, but that doesn’t mean your client thinks so. Create a short-term and long-term follow up strategy. It’s easier to keep a customer than regain one.
Keep in mind, a customer who has left you is not necessarily happier for having made the change. Let lost customers know you took their dissatisfaction seriously, and what you did or are doing about it. While you cannot necessarily change the policies of your underwriter, you can let unhappy clients know you took their complaint seriously enough to take it up with the powers that be. If it is an internal situation and you have addressed it, again, let the client know. Customers are especially impressed if you have actually made changes in how your agency conducts business a result of complaints (provided such action is warranted.) Don’t keep your responsiveness a secret. Let your clients know they matter to you. Even if you can’t change the situation immediately, genuine concern helps keep the door open for future communication.
So next time you are looking at where to start prospecting for new business, don’t overlook those files tucked away in a back room. That lost-customer file may look as useless as a pile of lead, but with a bit of prospecting alchemy you can turn that lead into solid gold.
Mitzi Crall, Ph.D. is a sales, marketing, and management consultant, speaker and, trainer. She is the author of “100 Smartest Marketing Ideas Ever,” available through bookstores and directly from Glenbridge Publishing online. She can be reached at 770-310-4873 or firstname.lastname@example.org.