When it comes to insurance agency marketing, insurance account rounding is a term that is ubiquitous enough to be rendered almost meaningless. It’s one of those terms we hear so often that we almost stop listening. We hear about it in blogs, in agency news stories, and in industry webinars. We all know what account rounding is, or at least we think we do. Most of us know that it’s something we should be doing more of.
So why aren’t we? All too often, account rounding in insurance is the overlooked stepchild, always playing second fiddle to “new sales.“ Yet studies show that chasing new sales might not be the most cost-effective way to grow your agency:
“Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. It makes sense: you don’t have to spend time and resources going out and finding a new client — you just have to keep the one you have happy.” … Source: The Value of Keeping the Right Customers
And one 30-year-old seminal marketing study adds another cost-efficiency benefit:
“We showed that in industry after industry, the high cost of acquiring customers renders many customer relationships unprofitable during their early years. Only in later years, when the cost of serving loyal customers falls and the volume of their purchases rises, do relationships generate big returns. The bottom line: Increasing customer retention rates by 5% increases profits by 25% to 95%.” … Source: The Economics of E-Loyalty
That’s immensely compelling and makes the case that arguably the most important benefit of account rounding is its service rather than its sales function: it’s all about making sure your client has the right coverage. And therein lie the ties that bind. Account rounding deepens your relationship with your client, which in turn, increases retention and your insurance agency’s profitability.
Here are some of the other ways that account rounding benefits your insurance agency – it:
- Maximizes the lifetime value of the client. Your entire book becomes more valuable if you maximize current client potential.
- Creates exit barriers. The more products and services per client, the deeper and more complex your relationship, and the more of a hassle it is for the client to pick up and leave.
- Blocks competitors. If you don’t offer additional products and services to your client, someone else will, a risky opening to potential account loss.
- Allows you to write smaller local accounts. Locality is one of the strengths of the independent agency and serving a local community can be very satisfying. But you are likely losing money with small, single-account clients, whether personal or commercial. Account rounding can be a way to retain accounts that are otherwise too small.
- Requires minimal investments. You can boost income at minimal additional costs.
With all these potential benefits, why aren’t all insurance agencies focusing on account rounding? The reasons are many. Customer Service Reps aren’t comfortable with selling; Agency management systems don’t capture the right data or make it easy to measure; Staff is overworked and don’t have the time; Agency silos between staff roles create friction. Agency silos between product lines create barriers to success. Your agency’s reasons may vary. No matter. Determine what the barriers are and take them down. Success will require adjusting both your agency’s culture and processes.
- Analyze your book for opportunities.
- Prioritize. It won’t get done unless it comes from the top.
- Define a new agency culture: everyone is in sales, and everyone is in service.
- Change the language. Replace “accounts” with “clients” or customers.” Replace “account rounding” and “sales” with “offering all our clients the best protection options.”
- Set goals, track, and measure. It’s simple but true: What gets measured gets done.
- Incentivize appropriately. You may need to tweak your compensation or incentive programs, it’s that important. Add team and agency incentives.
- Train to increase the likelihood of success. Use scripts. Role play, practice, and mentor.
- Enable staff with the right technology. In fact, whenever possible, employ technology to handle non-service, non-revenue generating activities. Use people to the greatest extent possible to foster relationships.
- Celebrate success to reinforce the value and build a team culture.
Examples of account rounding and cross selling:
Add new coverage within lines – offer cyber liability, business income, and other beneficial coverages.
Increase coverage – increase liability limits or suggest endorsements targeting specific exposures.
Cross-sell between lines – offer commercial coverage to personal lines clients or add personal lines coverage to commercial accounts. Or suggest life insurance or voluntary benefits to anyone.
The more of these needs you anticipate and offer solutions to before customers turn elsewhere, the more loyal, multi-policy accounts you’ll keep on the books. One study shows that, on average, single-policy accounts stay with an agency for only three years. But stretch it to two policies and they stick around for seven years. Three-policy accounts last an average of 11 years. … Source: 3 Rs of Agency Profitability: Retention, Rounding, and Referrals
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