How a CRM Can Help Your Firm Create Compound Interest

CRM. AMS. Have you heard of these acronyms?

They stand for Customer Relationship Management software and Agency Management System, respectively.

The lines between CRM and AMS can get a bit blurry, mainly because people tend to use the terms interchangeably. However, they are two distinct systems that serve different purposes — and failing to leverage both could cost your brokerage thousands.

Most brokerages have an AMS to manage their backend operations. Many assume that their AMS is sufficient for all their needs. This is a mistake.

While an AMS is crucial for efficient backend operations and service, its benefits mainly come into play after the sale. If your goal is to acquire new customers, you need something more: a CRM.

Integrating a CRM with your AMS is the only way to truly get a 360-degree view of your customer. It’s essential for creating scalability and maximizing the effectiveness of your sales and marketing strategies.

Confused? Let’s dive in.

What Is an Insurance AMS?

An AMS is software tailored to meet the specific needs of running an insurance brokerage.

Its primary focus is on post-sale database management — operational tasks such as policy management and commission tracking. If you want a better connection between sales and service, you need an AMS.

If you’re in the world of insurance, you’re likely familiar with AMS platforms like Applied Epic, Hawksoft, and Vertafore products like AMS 360, QQcatalyst and Sagitta.

What Is a CRM?

A CRM is a software designed to handle customer relationships throughout their lifecycle.

Unlike an AMS, a CRM does a lot of the heavy lifting pre-sale. A CRM tracks prospect information, automates sales and marketing campaigns, and analyzes customer behavior. Think of a CRM as the command center for your sales and marketing activities, enabling you to better connect with potential customers and close more deals.

Hubspot, AgencyZoom, Sharpspring and Keap are a few popular CRMs in the insurance industry.

Reasons to Use a CRM

Now that we’re clear on the distinction between an AMS and a CRM, let’s explore the undeniable value a CRM brings to your insurance brokerage.

Here are ways implementing a CRM can boost your revenue.

1. Eliminate Wasted Marketing Spend

A CRM gives you complete visibility into your marketing and sales pipeline.

By tracking every lead from the moment they first interact with your website until they either become a customer or go cold, you can identify which marketing channels and campaigns are most effective at generating new customers. This information is invaluable for optimizing your marketing campaigns and reducing wasted spend.

Think about it this way: Without a CRM, you can only track Cost Per Lead. When you have a CRM, you can track Cost Per Acquisition.

The difference here is drastic. It means you can see which marketing campaigns are actually generating new customers — and which ones are just inflating your stats and wasting your budget.

For example, let’s say you’re running a PPC campaign on Google. You’re spending a few thousand dollars per month on this campaign, and you’re getting a decent number of leads. But you’re not sure which of those leads are actually converting into customers.

With a CRM, you can track which leads are coming from your PPC campaign and which ones are closing. You can also see which keywords are driving the most valuable leads.

By eliminating wasted spend on keywords that are not closing, you can increase your conversion rate and decrease your cost per conversion.

2. Sales and Marketing Alignment

How can you make your employees’ job easier and increase productivity at the same time?

The answer lies in implementing a CRM system. If your sales and marketing team is Batman, a CRM is their Robin.

Without a CRM, your people may be working in silos. Each individual follows their own process, and there is no quantitative way to measure their success.

With a CRM, your team can work smarter, not harder. A CRM helps you keep track of all your potential customers, including their contact information, interests and stage in the sales funnel. Next steps are made clear, communication is centralized to one location, and the handoff from sales to marketing is streamlined.

Plus, a CRM can automate many of the time-consuming tasks involved in sales and marketing, such as sending email campaigns, scheduling follow-up calls, and creating reports. This frees up your team to focus on more strategic activities, such as developing relationships with potential customers and closing deals.

The results? Increased productivity, efficiency and profitability.

3. Improve the Digital Experience

According to a recent study by Bain & Company, 78% of insurance customers say that they would be willing to switch insurance companies for a better digital experience.

Without a CMS, it’s nearly impossible to create the seamless, personalized digital experience customers expect.

Here are just a few ways a CMS can help insurance brokerages stay competitive in the digital age:

• Follow up instantly. When a potential customer fills out a form on your website, you can use a CRM to automatically send them a personalized email follow-up. This email can confirm receipt of their information, answer any questions they may have, and schedule a next step, such as a call or demo. This ensures you consistently seize the moment while prospects are actively engaged.
• Automate lead nurturing. CRMs allow brokerages to track leads through the entire sales funnel. This means that potential customers are not lost in the process, and automated workflows can be set up to nurture leads with personalized content, reminders and follow-ups. AMS is typically more focused on policy management and may not offer such lead nurturing features.
• Personalize communications. A CRM makes it easy to create highly targeted campaigns. You can segment your contacts into specific groups, such as leads who downloaded an ebook about landlord insurance or current customers who expressed interest in adding a new policy, but then disengaged. This allows you to send them targeted recommendations and offers that are more likely to resonate with them.

4. Win Back Lost Business

A Bain & Company study found the average customer lifetime value (CLV) in the insurance industry is $45,000 — but the top-performing insurers have CLVs that are up to 2.5 times higher.

This means insurance brokers have a significant financial incentive to focus on retaining customers and winning back former customers and leads that went cold. Remarketing campaigns are a unique advantage of a CRM for insurance brokerages. They’re sometimes called “win-back campaigns” for a reason: They’re the compound interest of owning an insurance brokerage.

Here are two key reasons why insurance brokers who don’t leverage remarketing are leaving money on the table:

• Insurance is a cyclical product. Customers need to renew their policies on a regular basis.

Even if a lead goes cold or a customer has switched to a competitor, there is always a chance that you can win them back by offering them a free policy review where they might find better rates, more comprehensive coverage, or other incentives.

Imagine this: Your firm started using a CRM in 2022. Across all of your marketing campaigns, you touched 100 new leads per month. Half of those leads converted into new customers.

Using your CRM, you can set up automations to reach out to the leads that didn’t convert 11 months after they initially reached out. This window coincides with their insurance renewal period. By offering to review their policy and provide better rates or more comprehensive coverage, you can re-engage them without any extra effort.

Now, instead of just 100 leads a month, you’re interacting with 150 — and this number compounds every year.

• Win-back campaigns can help you, well, win back former customers. Some customers will stop working with you for reasons that are completely outside of your control. Maybe rates went up, or carrier placement has changed.

Even if a customer has switched to a competitor or their policy has lapsed, there is always a chance that you can win them back. Your CRM will keep all previous interactions, emails and notes so you can pick up right where you left off.

In the ever-evolving landscape of the insurance industry, independent brokerages cannot afford to underestimate the significance of a CRM. More than just a project management tool, a CRM serves as the linchpin for scaling marketing efforts and driving business growth.