Insurance Industry Analytics: Want to retain more clients? Target four products per client
Written by: Chad Hawkinson, Senior Vice President Data & Analytics
Welcome to the first installment of our new monthly column on Insurance Industry Analytics. Each month, we’ll analyze an aspect of independent agency performance leveraging data from our RiskMatch platform. Our RiskMatch platform is the largest data platform in the insurance industry, containing over 100 million policies and covering over $106 billion in premium. It covers 40% of the commercial P&C market, as well as personal lines and benefits, and includes policy information from over 4700 agencies across every state and every NAICS code. RiskMatch unlocks the insights hidden deep in this data to help agencies drive their business forward. We will use this column to share these insights with you.
This month, we look at cross-sell and its impact on agency growth. Because this is a column focused on data and analytics, let’s look at some data:
In the above data, we see that the average agency retained 82% of their commercial clients in 2018. That means that 18% of clients do not renew. That is a tremendous amount of business that needs to be replaced in a given year, taking away focus from growing existing clients or growing your business. However, we see that agencies that embrace data and analytics (e.g., those agencies that use Vertafore’s RiskMatch product), retain 89% of their clients. That means that embracing data and analytics can save you the effort of having to replace 7% of your client base every year. This means that producers and CSR’s can focus on growth rather than just replacing lost business.
How are data and analytics driving this increased client retention? When we drill down into what these agencies who embrace data and analytics are doing differently, we find something very interesting in the cross-sell data:
As you can see in the above chart, the average agency in 2018 sold 2.6 products to commercial customers. However, if you look at the customers who embrace data and analytics deeply (e.g., those customers who use RiskMatch), you will see that those agencies sold 1.4 more products to each of their customers, for a total of four products per client.
This makes sense. The more products that a client uses, the higher the likelihood that they will renew. However, selling more products to your customers is easier said than done. The data clearly shows that some agencies are better than others at selling more products to their clients. What separates these agencies? How can you become like one of these agencies?
Before answering, let’s look at the way this is currently done at most agencies using an example. Let’s say Bob’s Oil Company is our client. They have been a good client for a few years. Our producer would like to make sure she is providing the best service to her customer and wants to know if there are other products that would be valuable to Bob’s Oil. The best way to answer this question is to have a deep knowledge of what other, similarly sized companies, in the same industry also buy. If the producer has been selling into oil companies for her whole career, perhaps she knows that answer based on her experience. Even so, wouldn’t it be nice to know have facts to support what others are doing? Insurance has become a very innovative and competitive market. It sure would be nice to see if there are other good ideas out there that the producer could use, beyond what she knows from her firsthand experience. And if she doesn’t have firsthand experience, it becomes even tougher to find someone at the agency who does – and who has time to provide answers on short notice.
That’s where the value of data and benchmarking comes in. RiskMatch offers industry benchmarking data at your fingertips. Need to find what other similar companies are buying? This benchmarking data can tell you immediately, as well as likely price, limits, and carrier appetites. You don’t need to be the expert in every industry and policy type. You can let the data show you the way—quickly and easily.
Customers who leverage benchmarking data like this see immediate results. They sell more products to their customers, and they retain more clients than average.
So, if you want to retain more clients, focus on achieving four products per customer. Do you know how many products your customers use?