from PropertyCasualty360.com, February 7, 2018
Should you consider selling to small businesses? If so, how do you sell to them?
The first answer is yes. Suppose you decide on a marketing campaign to add $400,000 in new business premiums. Would you prefer to try to produce two or three large-premium new customers, or would it be easier to produce 25 new small-business customers? The potential retention rate on large accounts is probably one to three years, compared to seven-plus years for small businesses.
Small-business selling should be a major part of your sales strategy, provided you establish some clear guidelines:
— Establish a minimum commission threshold that the prospect can generate in the first year. Depending on location, that could be between $800 and $1,200.
— Prospects must be willing to meet with you to conduct a "fact-finding" survey and premises inspection.
— Prospects must allow you to review all current policies, audits, leases, etc., and loss experience.
— Explain your agency's unique process. The first appointment is strictly fact-finding (no sales pressure); the second appointment is a presentation of the results of your fact finding and policy review. The third is to deliver policies and introduce the assigned CSR.
— Set the next meeting for three months to make sure everything is satisfactory. The customer should bring all personal insurance policies (P&C and Life) for review.
— Cross-train a good personal CSR to small commercial businesses. The customers like it, the agency will love it (one paycheck), and the CSR will love it.
The more policies a client has with the agency, the more your retention will increase. Develop long-term relationships and many of these small businesses will grow and take you along. Think of the referrals you can obtain with these relationships.
Prospecting in the small-business market is easier than with large accounts, and comes from referrals and personal contacts. By consistently communicating your agency's value proposition, you can develop a solid reputation as the go-to insurance source that understands the insurance needs of small businesses. After all, as a small business you face many of the same issues they do. Consider these activities:
— Select specific businesses to focus on and develop your expertise. Look to your present client base. For example, if you have three bakeries, prospect in that market. Mix in professional firms and blue-collar trades and services. Go out of your way to patronize these businesses as a customer and send others to them as referrals.
— Join one or more local Chambers of Commerce.
— Sponsor sports teams and other community events.
— Volunteer and support other businesses’ charity drives.
— By invitation to clients and prospects, conduct workshops to discuss mutual issues faced by small business and have one of your clients as a guest speaker.
— Reach out to others, such as community banks, museums, and historical societies to jointly sponsor after-hours events for local businesses to network while providing opportunities for the host/sponsors to talk a few minutes about their own organizations. Wine and cheese after hours always works, as does bringing in a few local food vendors to display their products.
— Hook up with a business or high-tech incubator at a nearby university or other facility. Incubators are desperate for business speakers who can volunteer some time to help prepare these start-ups for what they will need in the future.
— Look in your own checkbook. Where do you spend money? Approach everyone with an opportunity to get a second opinion on their business insurance program.
— While producing large commercial accounts will generally account for the major revenue of a successful agency, I still believe it is shortsighted to avoid selling to small businesses. The revenue from small businesses, including their personal business, can provide a very solid foundation and substantial percentage of an agency's revenue.
It still provides the best way for an agency to grow organically and for new staff and producers to gain the experience and expertise the agency will need in the future.