aggressive pursuit of new business, The

Rough Notes, May 1995 by Stewart, Robert L

"Hot" prospects are your own insureds. "Cold" prospects are names from new mailing lists. And somewhere in between is "lukewarm"--those names you have who are either ex-insureds, or who made an inquiry, but didn't buy.

It is painful to acknowledge how competition is increasing while markets are decreasing. How commission income is shrinking, reflecting soft-market pricing. How insurers are still squeezing and contingency checks are becoming leaner when they exist at all. But unfortunately, those are the realities of the agency business in the '90s.

In our view, the agencies that are going to prosper--not just "survive"--are those prepared to aggressively pursue new business.

Renewals are being challenged every time around so new business has to replace that lost by attrition. New sources of income also must offset reduced agency revenue. Finally, the cost of doing business has not been lowered correspondingly; in fact with the new technology required to keep pace, the bottom line often is not an accountant's fondest dream.

Make the "churning" work for you

While renewals are likely to provide the same--or less--income than last year, every piece of new business represents dollars that weren't on the '94 balance sheet. Just as somebody else is challenging your renewals, you must challenge theirs--and then some. Referrals are still a great way to get new business, but with the shorter persistency of accounts, great relationships that can be built over a long term might not be in place at the end of a year or two.

The solution is to go for new business on your own. Always start with your ex files. Have they been exhausted? Have your producers and CSRs been trained to account sell? Have you used life/A&H coverages as an extension of the P/C coverages you provide?

Let's assume you've done it all and you have an account-selling plan in place for your own customers who are still your "hottest" prospects. Then what?

The next step is the pursuit of "lukewarm" and "cold" prospects. A "controlled" direct mail program is still the most cost efficient for most agencies. Among the "controls" required is a firm resolve that every non-responding prospect you mail to gets a follow-up phone call to at least build a chronological database of "eligible" names and x-dates.

Among the "tools" you will need are attractive stationery and enclosures that are of value to the prospect, or at least will get his/her attention. One source for all of that is The Mines Press, headquartered in New York.

More about the sales builders in a moment. The first concern is your list. Let's begin with ex-insureds, particularly those who left because of price. By now, they may be disenchanted with their new source and since most people tend to remember only good from the past, they might be excellent prospects again. Another advantage is that you know the expiration date of their insurance, so you can solicit a particular coverage 60 to 90 days before renewal and be right on target.

As an example, let's take homeowners coverage. Perhaps you have 10 or 20 accounts in your "ex-files" for which you know the renewal dates and perhaps a list of people who have inquired in the past, but not bought. It's worth re-soliciting them before you "close the cases."

As stated earlier, if your current stationery doesn't make you proud, before you start on this mail program, have it re-designed or updated. (The aforementioned Mines Press and others offer suggestions, often without cost.) They also have a "household inventory" brochure which, in addition to the standard room-by-room guide, includes instructions on preparing a video-taped inventory of household possessions. It lends itself to agency "personalization" and is perfect for "warm" and "cold" homeowners prospecting because it underscores your professionalism in covering everything to value, and your concern for their needs.

Assume you are armed with such a piece, you have your "ex-file" list and you supplement it with a homeowners list of "cold" prospects, selected by the better ZIP codes in your selling area. We suggest your letter salutation address the home owner by name. (Many agency management software programs help you do this.)

Here's how you might proceed with your "warm" (ex-insureds) and "cold" (new list) solicitations. Your imprinted household inventory folder (see the above illustration) is the centerpiece of the mailing. Your envelope is imprinted: "Here's homeowners insurance with a "guaranteed" loss payment..."

Now, let's consider a more general "warm/cold" solicitation. This can be directed to ex-personal lines clients of every type and description--as long as they have children! You also can request a "cold list" by ZIP-code and stipulate that there be school-aged children in the family--you'll see why in a moment.

The Mines Press has available a very attractive folder on bicycle safety (see the above illustration). (Illustration omitted) It provides the "rules of the road" for children who are going back to school, so it makes a perfect mid-to-late summer mailing when there is usually less frenzy about the house.