Don't let referrals define your agency's marketing plan

Don't let referrals define your agency's marketing planI've read with interest the comments by Rough Notes' columnists Roger Sitkins and Michael Jans concerning the importance of obtaining business by referrals. As a former agency owner myself (one who chased every referral who ever called in), I have developed a different take on the importance of referrals to an agency's marketing plan. I'm not so sure that referrals are the best source for new business.

Here's why.

Most referrals call you. Before that person makes the call, though, the referral discusses an insurance problem with one of your customers. Then you get a call. Sounds great, but think about it for a minute. A problem is a problem, whether it's beyond their control or not. If their current agent or insurer is having trouble with them, chances are you will too. In addition, you may have little expertise in their class of business or lack the right markets.

There is another source of referrals-one you initiate by asking your current customers for referrals. This may get around the issue of "problems," but you still have little control over the types of referrals you get. Once again, this means you may not have the expertise or markets to do the job.

Referrals are tempting. Because they are quick and easy to handle, sales reps get on them right away. That's good. But relying completely on referrals for new business can lead the agency in unplanned directions. That's not so good. I'm not recommending ignoring referrals. I am recommending that referrals be a minor player in your new business game plan.

There's a better way to build a more profitable agency. Identify the types of customers you want, and then set up a detailed marketing plan to go after them.

"Going after them" takes time and persistency-after all, the customers you're trying to get are probably happy with their current agent and insurer. But, almost everyone wants to check his or her insurance sometime. The question is: Will they think of you and your agency when they want an insurance review? They will, if they think you can help, they think you care, and you've kept in touch.

Developing, running, and monitoring a marketing plan takes time and resources. Not all agencies can afford a full-time sales manager. Fortunately, there are automated marketing solutions that can help.

The first step, though, is to make a realistic appraisal of your agency's strengths and resources, and then envision your agency 5, 10, even 15 years from now. A clear idea of where you want to go is essential to mapping the route to get there. And, don't overlook what you "like to do." Your likes are one of your greatest strengths. People working in a field that intrinsically appeals to them do a better job.

Next, evaluate the automated marketing tools you may already have. Look first to your agency management system. Most systems have some marketing capabilities. Often you can run cross-sell reports and send letters or e-mails to help you round-out accounts. Some systems also let you enter prospects and send periodic letters.

Off-the-shelf contact management products such as Outlook, ACT!, and Goldmine are good for gathering information and sorting prospects, but difficult (or impossible) to configure to handle future events on a group of prospects. There are also companies that specialize in a particular part of an overall marketing plan such as telemarketing, mailing postcards, and sending e-mail.

Consider a more comprehensive automated marketing solution that handles the entire sales process and is designed specifically for insurance agencies. It should include strategies for developing new business, for crossselling existing accounts, and be complete with marketing letters, e-mails, postcards, and e-faxes.