While many insurance agencies are focused on obtaining new customers, it’s no secret that customer retention is crucial to a business’ continued success. Studies show that increasing your customer retention rates by just 5% can net anywhere from 25% to 95% more profits. Meanwhile, it’s a common refrain in sales that attracting a new customer costs 5 times more than retaining an existing one.
Insurance agents can both attract and retain customers with cross-selling. Cross-selling makes it easier to generate extra revenue with little extra effort. Improving your customer retention rates ensures that that money stays with your company and generates more income with the additional product lines. You can increase your agency’s marketability, improving your bottom line.
The importance of cross-selling
Cross-selling offers many benefits for insurance agencies beyond increasing revenue and customer retention:
- Increase ROI. Maximize the amount you earn from winning each customer account by offering additional product lines for them to purchase.
- Reduced operational expense. Many ancillary insurance products can be bound online when offered directly through the trusted relationship of an independent agent.
- Increase customer value. By offering more product lines and retaining customers for longer, the overall value of that customer will increase.
- Increase customer loyalty. Customers are happy to work with insurance agents that can comprehensively meet their varied and changing policy needs.
- Balance new and existing growth. Finding new customers is important, but to grow your business you also need to find ways to increase revenue from existing customers.
- Provide convenience. Customers also love cross-selling because it saves them time from shopping around for product lines you don’t offer and transferring their accounts.
Cross-selling by the numbers
If you have a client who has home and auto insurance with you and is looking to add pet insurance, you’ll likely be the first person she calls. Clients are happy to continue giving you their business, even if they could get a cheaper price elsewhere, for the sake of convenience. If you cannot offer the additional insurance lines your customers need, you risk losing all of their business to another company that does.
Let’s say you have 15,000 customers and your customer retention rate is 80%. Your insurance brokerage decides to add pet insurance and home warranty to your product offerings.
Thanks to these new lines, you enjoy a modest 2% cross-sell rate. The cross-sell rate reflects the number of new purchases you gain by offering additional lines of coverage to your current customers. After two years you can add nearly $80,000 in additional commission revenue with customer renewals. Check out our ROI calculator to see these numbers in action.
It’s simple to earn additional commission revenue just by adding a few additional products to your lineup.
Bindable makes cross-selling easy
Cross-selling will help you increase revenue, retain clients, and boost commissions. Many insurance agencies don’t cross-sell more product lines because access to specialty carriers may be limited without minimum premium requirements.
Bindable makes it easy for agents to offer multiple insurance products across many leading carriers, all in one location. Our white label front-end ecommerce solution and cloud-based technology make it easier for customers to shop for what they need remotely, with convenience and flexibility.