In my post last week, I talked about the old concept of taking the assets (i.e., customers, employees, equipment, technology, etc.) that a business currently has and using those assets in a new or more efficient way to increase its revenue, that is now being called “organic growth.” I also mentioned some resources that are available for agencies to use to assist them with implementing this concept. (click here for the post).
Since I wrote that post, I came across an article written by Chuck Blondino of Safeco Insurance for the Agents Council for Technology on the central distinguishing feature of high growth agencies in his territory. Although Mr. Blondino was focusing on personal lines agencies, his central point applies to all kinds of insurance. As Mr. Blondino put it, “your marketing efforts should be the result of knowing where your new business comes from, and how much revenue you make from the new business, so you can focus on how to drive in more and keep more.” The high growth agencies in Mr. Blondino’s territory did this by tracking their marketing efforts using metrics that focused on new business, average revenue per customer, and retention.
With respect to new business, its essential for an agency to know where it comes from and which types of new business sources result in the highest close ratios. Determining an agency’s average revenue per customer within the types of customers of the agency will tell it which type of customers are the most profitable and thus, should be the focus of the agency’s marketing efforts. Perhaps most eye-opening for me was the power over time of increasing an agency’s retention rate by only a few percentage points. In the example used by Mr. Blondino, an agency with $1,000,000 in annual revenues would see an increase in total revenue over a 10 year period of over $880,000 by increasing its annual retention rate just 3 percentage points. This without taking into account any new business. Click here to read the entire article which explains in detail how to track the above information.
On the subject of customer retention, Jim Schubert of Southern States Insurance has a recent post on his agency’s blog in which he suggests three ways to create strong relationships with your agency’s customers. As with many things in the marketing area, his ideas seem like common sense, but they take effort and discipline to implement. He suggests that you consider your agency’s customers to be like your friends. In doing so, you will want to learn about your customers’ personal characteristics, stay in touch with them regularly, and praise them or promote their business. Click here to read his suggestions for how to do these three things.
If you have any other ideas on how to achieve “organic growth”, please feel free to share them with the readers of this blog by posting a comment. In the meantime, best wishes for a Happy Thanksgiving holiday for all my readers and their families.