Do your commissions depend on clients staying in your agency? Probably yes. Most of us have one or more products that either pays ongoing commissions, a persistency bonus or both. For your income to grow exponentially, it is vitally important for you to retain more clients, have them buy more, stay longer and refer. Persistency pays.

Well, I’ve got a secret to share with you: some types of clients will leave no matter what you do. Others will stick by you even when rates go up – unless you screw up badly.

Here is a second secret: by changing your marketing, you can attract the second, much better group to your agency. You can build a loyal herd that would never dream of shopping for a cheaper price or asking another agent for advice. And they will buy everything you sell (appropriate for their needs) and refer wonderful friends and family just like them.

See also: Prospecting 101: How to build good habits

Doesn’t that sound like heaven? It would solve any and all persistency problem in your business.

Three types of buyers

There are three types of buyers, or said another way, there are three main motivators for buyers’ decision. They are price, value and relationship.

Price buyers

A price shopper is just that, very sensitive to the price for the item or service. It is the prime reason for his choice. Often (but not always) this is because the price shopper is currently in a low to middle economic bracket or perhaps he or she has experienced real poverty in the past and just hasn’t shaken off the mindset. People who lived through the tough times tend to be frugal.

The only way to pry open a price buyer’s wallet is to offer the lowest premium. That’s fine if you indeed have the lowest price… but times change and rates change. This buyer very likely will jump ship and leave you if your rates rise sooner than those of your competitors. You and I know that your competitors’ rates will increase in the future. Will this buyer come back to you or beat a hasty path to yet another “lowest price”? Their only loyalty is to themselves and the quest for the lowest price, never to you, no matter how good your service.

This buyer doesn’t hang around long, but that doesn’t mean they are cheap to acquire and service. You paid your hard earned commissions to attract this person. Are they really worth it?

Value buyers

Value buyers are the next step up in quality. The profit of this type of client can be much greater. Sure, they pay attention to price but it is not the sole differentiating point. They look for a good value for their dollars spent which means they factor into their buying decision the value of the item and service being purchased.

That gives you something to work with toward the goal of building a herd of loyal followers. Your sales presentation need not be a robotic quote of rates. It can become a demonstration of value.

  • What is the difference between two companies, two policies?
  • How would they benefit by choosing a certain level of coverage?
  • Which add-on ancillary products will serve their needs?
  • What service do you offer that justifies choosing you over another provider?
  • Why is it in their best interest to pay more for what looks on the surface as identical?

It’s entirely possible you will have this discussion with a value buyer. The price buyer will not care and cannot be engaged with these questions and answers.

If you demonstrate ongoing value with your product and service, you may keep the value buyer as your client for a decent amount of time. That would make the cost of their acquisition to your herd worthwhile.

Relationship buyers

Relationship buyers are the best and most valuable. They are looking for more than just a good value; they want to form a trusting partnership that addresses their true long-term needs. If you properly fulfill those, they will not balk at a higher cost.

This is the type of buyer who will buy permanent life insurance. They won’t choose a Medicare Advantage plan just because premium is so small. They will participate in dollar-cost averaging and not shuffle their (sizable) portfolio like a deck of cards, chasing the latest investment tip.

And as you can guess, these buyers tend to be affluent. That is one of the reasons they are not price-sensitive. Sound advice and good service that saves them time, and reduces aggravation, is worth a lot to them. They live by the adage, “time is money.”

What is one of the most attractive aspects of this type of buyer? If you give them what they want and you service them well, they will hang around paying premiums (and thus your commissions) for decades. That’s great, but there are downsides to this type of buyer:

  • They do not respond to advertisements for the lowest price;
  • They are more likely to rely on recommendations and testimonials of people from their strata;
  • They expect personalized attention at the sale;
  • They tend to be “experience” driven. How you approach them, your sales process and premises will tell them what to expect from a long-term relationship with you;
  • The relationship is everything to them;
  • They will expect excellent service not just at the sale but for the duration of their time with you so your agency must be organized and staffed to deliver that.

A definite upside to working with the relationship buyer is the competition is much lower, mostly because they are challenging to attract.

A Formula for Sky-High Persistency

  1. Attract the right who;
  2. Fix the problems that worry them;
  3. Foster a relationship.

Relationship marketing is a waste of money on the wrong client. Yes, you can build a thriving agency with price buyers if your business model includes lots of staff (because they tend to be high-maintenance) and a big advertising budget (because you will constantly be replacing those who leave.) To keep that type of clientele happy will gobble up your staff’s hours and still it won’t be enough for them to stay with you for 5, 10 or 20 years. And you’ll still have persistency problems. Is that how you want to run your practice?

With value buyers, be forewarned, they tend to have their ears perked up for a better value. They don’t jump ship easily but if your rates increase and your service does not please them, expect them to start shopping for your replacement.

Transition to better buyers

The key is to find people who will pay more for better. You don’t just need better advertising; you need better marketing and processes before, during and after the sale.

Questions you need to ask yourself:

  • What is your acquisition process?
  • What is your diagnosis and recommendation process?
  • What is your follow up and nurture process?
  • What is your staff training process?

Differentiate yourself and your service. How you present yourself makes competition and price irrelevant. If you are selling the same product as every other agent so the prospect can simply compare prices to choose agents at random, you are sunk! Don’t just quote a price for a commodity (interchangeable policy, product, or service of fixed value).

As the agent, if you add something of real value to the equation you can capture a higher grade of customer. You are the expert who has insider information. Put that knowledge to good use. Be the that delivers their real needs .

Cultivating a herd of relationship buyers is a very worthy goal. Yes, it will be work to gather and nurture this type of herd but it beats the pants off of the alternative – a revolving door of unsatisfied, price-sensitive whiners.