By Sara Bankert, Director of Small Business
Cross-selling is the process of marketing related or complementary products to existing customers. According to Investopedia, cross-selling in the insurance industry has long been an effective method of generating new revenue because it involves selling products to clients that agents and brokers have already established relationships with.
The following are three key reasons why insurance agents and brokers shouldn’t ignore the benefits of cross-selling as part of their selling strategy.
1. Building more personal relationships with clients
Have you ever had a sales professional suggest a product or service that has helped you fill a need or solve a specific problem? It’s certainly a good feeling when someone knows you well enough to provide what you need before you even ask for it — or didn’t realize that you actually needed it!
Cross-selling insurance works in a similar way to help policyholders feel valued and known. The strategy of cross-selling demonstrates to existing clients that their insurance agent/broker has taken the time to become familiar with their individual situation and objectives, and therefore can offer them an insurance solution to best meet their individual needs.
2. Improving retention by reducing monoline policies
According to the insurtech company Agentero, 61% of policyholders have only one policy with their agent, 29% have two policies, and just 10% have three or more policies.
Insurance agents have long known that customers who have more than one policy with their agency are less likely to switch insurance companies at renewal. Why? Because changing companies can be a burdensome process and, in many instances, customers will lose certain discounts if they switch (e.g., longevity, claims free, multipolicy). Cross-selling can be an effective way to hold on to existing policyholders longer.
3. Reducing marketing costs
With an average price tag of $303 per client, the insurance industry has one of the highest customer acquisition costs of any industry. It can cost seven to nine times more for an insurance agent or broker to attract a new customer than it does to try to retain one.
Cross-selling isn’t just an easier way to generate more revenue; it also allows insurance agents/brokers to put new business on the books without having to spend additional marketing dollars. The key is to be proactive and let existing customers know about additional product lines. That way, if they have a need in the future, they won’t immediately go to a competitor.
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