According to the Deloitte Center for Financial Solutions, Insurance Agencies lose 17% of their customer base within a few months of a merger. An additional 17% is considered “Highly Likely” to change agencies. That’s 34% of your clients – certainly not a number to scoff at. And just to really put perspective on things, 14% are somewhat likely to change; leaving you with a mere 52% of your client base. With such a high rate of customer loss, what can you do to keep client retention high and avoid the pitfalls of a new purchase?
Adopt the Customers Point of View
According to Bain & Company, institutions with high levels of client retention (and procurement) after an acquisition are those that adopt the customers point of view of the merger when making key integration decisions. Put simply, this means as you decide what to keep, change, and discard during the purchasing process, simply think about what your clients would want. If you want a change something, but you can’t honestly answer that your clients would like it, it probably isn’t a good decision. Empathy and understanding go a long way in life, and in insurance agencies.
Hold a Compelling Reason for Clients to Stay
Another reason insurance agencies find lower client retention after a merger is competition. Assume your competitors know you’re acquiring an agency, and they know it means your clients are more susceptible to jump ship for the right offer. Be sure to keep an eye out for those offers, and give your customers a compelling offer of your own. If they have a good reason to say, like good rates or a good company representative working closely with them, they will probably stay. Always be giving your customers those reasons.
Keep Your Staff Up-To-Date
One of the biggest reasons for lower client retention is employee misunderstanding of what’s going on during the acquisition. Your company culture is only as strong as the people effecting it, and if these people are left in the dark they’ll fill in the blanks with rumors and assumptions. A key to client retention, and a successful merger in every aspect, is constant contact and transparency with everyone in the agency. Communication is more important than every other aspect of business. In fact, keep customers up-to-date as well. If your customers know the details of the merger, and feel comfortable about it, they will be much less likely to go to another insurance agency.
Losing 34% of your client base would do massive damage to an agency of any size. To ensure this doesn’t happen, follow the keys pointed out above and continually practice excellent communication among your staff. Never let your staff, or your customers, stay in the dark about any issues. Keep them from believing rumors by staying visible and vocal. Continue to do this throughout the life of your agency – don’t forget about it after the initial excitement of change.