Successful sales organizations recommend that their sales staff spend 30 to 40% of their work week prospecting for leads. This is not punishment from an overworked, out-of-touch manager to a new sales agent. Experienced sales professionals know that activity breeds results and while the newfound salesperson will unlikely close every deal they get in front of, persistence will help them obtain the results they are seeking.
Since we are in the independent insurance industry, let’s apply this logic to a new agency owner. Of the thousands of agents that we have interacted with over the last 15 years, most of the agents looking to start an independent insurance agency have the following backgrounds. They are transitioning from a captive agency owner to start an independent agency; they were a producer for a captive agent, or they were a producer for an independent agency owner. Of course, we have had real estate agents, mortgage brokers, title companies etc., but they are less frequent than the rest.
What most of these agents have in common is while they may have grown or managed large books of business in the captive or independent channel, they have either sold or walked away from those books of business when exiting. As a result, many agents start from scratch. They have no premium on the books, they have no clients yet, and now they have the increased expense burden that comes with running a business. So, how do you get started, how do you generate enough sales to run the office, pay your mortgage, feed your family? Activity. Sit at your desk and stare long and hard at your phone and we promise it will not ring with clients wanting you to sell them something.
In an attempt to stay close to the subject line of the blog “referrals” we wont stray too far into which activities are the most productive when prospecting but maintain that new agents have 1-2 years of putting themselves in front of the public every day to be successful. Leads from friends and families will dwindle quickly but developing a referral system at the beginning of your agency development effort will eventually be the difference between a thriving agency and one that will suffer to remain viable.
Every customer interaction is an opportunity for a referral
Talk to enough people and you will close a deal. When that deal closes, then what? Customers buy from insurance agents only for a couple reasons. They either liked your personality (least common), they appreciated your explanation of coverages and how you can protect them better than their other agent, or they like your price. In every situation there, you have provided them a valuable transaction. The law of reciprocity states that “we want to pay people back for what we received from them”. Ask for a referral, every time, and your business will flourish. Don’t and every day you will be prospecting to find new customers and pay the bills.
How do you ask for a referral?
Remember, you already have a new customer. Develop a script, practice it, and use it every time.
Example at end of call or meeting (to your client):
Thanks again for your business. I try to provide the best service for all my clients. Hopefully you feel that happened here today. Could I ask you a favor? Do you know anyone like you that would be interested in (saving money, having their coverages evaluated, etc)? Would you please let them know that I will be calling?
Why is it important to ask for the referral?
Either you know from experience, or you will find out that when you pick up the phone and make a cold call, you have no relationship and no emotional tie and therefore little time to persuade the person on the other end of the phone not to hang up.
When calling a referral, generated from your sales activities, you now have a common bond, the person that provided the referral. Forbes magazine in 2018 provided statistics showing that cold calling is successful 2% of the time where referrals will convert to a sale 50% of the time. And what happens after you successfully close a customer that was provided as a referral from another customer? Ask them for a referral.
Perfect this system and stick to the plan and you can stop buying leads that only convert 10% of the time or having to compete with 3-5 agents that bought the same lead. Follow this approach and there will be no need to pick up the phone book and decide whether you should start with “A” or “Z”.
Practice, follow your plan, and succeed. Legendary sales coach David Sandler coined the term “Wimp Junction” which is applicable here. The premise of “Wimp junction” is the moment where you either wimp out and abandon what you know is a best practice, or you stick to your plan. Ask for referrals in person or on the phone while you are engaging with your customer. Don’t send them a text or email or include it in the bottom of your email or on your website – don’t “wimp” out, your business depends on it.
How do we get started?
Building an agency from scratch requires commitment and persistence. If you have a network of customers to engage with, your growth trajectory can be flatter if you follow a process of finding referrals through every connection you make. If you don’t, revisit this plan in 6 months and unlock the secrets again to eliminate the daily grind of cold calling for new business and propel your agency to a lead generating machine.
Pacific Crest Services is an Alliance of insurance agents operating in 27 states. We provide a proven path for agents to grow their agencies beyond their expectations. With over 300+ markets, industry leading compensation, commercial and specialty risk training, our agents compete and win against the competition. Want to learn more about Pacific Crest Services or have a confidential, no obligation discussion? Contact us here: https://www.pacificcrestservices.com/