One of the largest P&C agencies I know does the unthinkable. They requote every customer at every renewal on personal lines. Why? They are scared. They are afraid their customer will find a better price somewhere. They are afraid their customer will leave them without telling them. They are afraid their customer will get angry that they were not being managed properly.
By acting upon those fears, what are they doing to their agency? They can’t grow. The amount of work devoted to keeping these customers forces them to work well below capacity. Even if they can stay PIF positive, they lose WP and therefore commission dollars every year. On top of this scenario, they grow dangerously close to damaging their profit-sharing by degrading the value of their carrier books and relationships, as well as diminishing the book’s ability to absorb losses.
What is scarier?
Don’t feel bad if you find yourself in this story. We all do it. The media, friends, the internet, colleagues, carriers, etc. love telling scary stories and wallowing in fear. It gives us something to talk about, and injects a level of the dramatic into our lives.
After a while, fear becomes second nature. Rather than trusting your customer, because they bought from you on trust and relationship, you default to fear.
You think: “They are calling, something must be wrong, I must fix it before they leave.”
Rather than talking with the client, and discussing what they have and why, we run to the comparative rater to give them a cheaper option whether they are asking for it or not. (By the way, you and your customer can always find a cheaper deal, so remove that worry)
How do we combat fear? The big way is Trust. Trust you agency. You are a professional. You sold them the best product at the best value. You have their interest at heart. You know the value of staying somewhere long-term rather than jumping the customer from carrier to carrier.
Trust your customer. They need you, and want your advice. Assume the best from them and not the path of fear. Develop this relationship rather than becoming an automated vendor they push for a cheaper product every time they dial your agency.
One agency I have worked with did this. They were in a market where a large percentage of their book of business was skyrocketing and they didn’t have the manpower to remarket everyone.
This scenario forced them to do something different. They talked to every customer that was receiving an increase, but rather than calling them with a new price proposal. They shared the increase news, reviewed their current product, and discussed how they could adjust coverages, deductibles, or even provide new products to stabilize the increase.
The results were surprising to the agency, to me, and to my colleagues. Retention increased, as did revenue, because of the price increase; but also because they sold new product due to the customer contact. Not everything was rosy and perfect, some clients left, but the rise in price and product dramatically offset any loss.
In a down market, they saw growth and generated company profit-sharing when most agency peers did not.
Run from fear (they can smell it), and trust yourself, your agency, and your client.