Business as Usual Won’t Work in a Hard Market: 4 Steps to Help Your Agency Come Out on Top

Prices are increasing. Customers are at risk of being underinsured. They have questions. And your phone is starting to ring more.

Many agents were already struggling with staffing post-pandemic. But with historically higher renewal increases on the horizon, many agency owners will find themselves facing higher call volumes they’re not ready — or able — to staff for. With the best of intentions, teams will scramble to retain as many customers as possible by remarketing to save a few dollars.

But that’s the opposite of what you should be doing now. Why?

This approach inherently means you’re being reactive to the loudest customers — and not spending your time proactively recognizing your most valuable clients, who are your agency’s lifeblood. Many agents tell me they speak to their customers all the time. But when I ask them what about, it’s usually when customers call regarding a bill, a policy change or a claim. What they overlook is that these calls are — at their core — negative. Our customers don’t wake up and get excited to call their insurance agent. They call when there’s a problem. And just solving a problem isn’t enough to build a deep customer relationship — not without proactive, positive touchpoints built in.

While some agents may have gotten away with a non-proactive approach before, with more customers calling to discuss price increases, there isn’t going to be enough time to answer all of them and protect your most valuable clients. Agents will need to reprioritize.

Leveraging the 80/20 Rule

You’ve probably heard of the Pareto Principle — or the 80/20 rule: 80% of all outcomes come from 20% of causes.

The same is true for how we operate our business and the customers we serve: 80% of your agency’s growth and profitability likely come from 20% of your customers. Let’s call these customers your “A” customers and do a quick exercise to see why these customers are important for your agency:

• Picture who you’d consider to be an “A” client. There are a few themes that tend to stand out: They generate the most referrals; they’re an account customer; they pay on time, have no claims and they rarely call you. When they do, it’s for counsel on their insurance needs.
• Then there’s the “B” client. What’s different? You might picture them also as an account. They have some billing delinquencies and a few claims. And they probably call you a lot more about price increases and help with billing.
• Now let’s think about a “C” client. Monoline. They have late payments — you’ve probably fought for reinstatement for non-payments for them more than once. They have multiple claims. And you are talking with them all the time about minor rate increases and shopping their policy. You may even be reaching out to them regularly to remind them to pay.

Which of these clients is more desirable for your agency? Hands down, the answer is A. In fact, our internal data support that, showing that an A client on average may provide up to a 10-times higher value over time than a C customer.

So, what if I asked how much time you spend with each of these groups?

When I talk with my agency partners, most say they spend between 60% – 70% of their time with their C clients, 20% with B and the last 10% with A. If you’re in a similar boat, you might consider reprioritizing your efforts.

Identify who your A customers are and make a conscious effort to focus on those clients. Here are four steps you can take:

With more of the standard auto and home market being commoditized, the future of independent agents is more with their complex accounts that value consultation and risk education. Agencies can take a big step in this direction by segmenting and identifying customers in their book of business accordingly, and refining how they proactively add value and defend those clients. By prioritizing where they spend their time, agents will set up their businesses for long-term success.