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.