It’s an age-old dilemma for small businesses: “Where should we invest the bulk of our marketing budget? In customer acquisition, or retention?” Of course, this principle especially applies to independent insurance agencies. Granted, you want to obtain new clients, and grow your business that way. At the same time, you likely realize that client retention is the “lifeblood” of a healthy insurance agency. So where should you spend your marketing dollars?
The reality is, in certain industries (like insurance) existing clients are almost always more valuable than new ones. This is not only in terms of cost. The research indicates it may cost 6 or 7 times more to acquire a new client than to retain an existing one, but also in terms of profitability.
Simply stated: keeping your old clients costs less and brings in more money.
Let’s talk about 3 key reasons why this is the case. And why you should seriously consider investing the bulk of your marketing resources in existing clients instead of new ones.
1. Existing Clients Already Know Your Brand
One of the main reasons why it’s better to focus on your current customers is their familiarity with your business.
It can take a tremendous amount of effort to attract prospects and capture leads. You have to make them aware of your brand, then attract them with your ads, and then convince them to investigate the benefits of working with your company. And after all that, they still may go with a competitor!
It’s usually much easier to sell to existing clients. After all, they already know your business and are comfortable in their relationship with your brand. They know the level of customer service you provide. It likely won’t take much to convince them to buy another product or policy, if they need to make a change.
2. Existing Clients Can Become “Brand Ambassadors”
We’ve all heard the term “brand ambassador” before. It basically means a customer that speaks well of a particular brand, and advocates for others to buy from the brand as well. Another term that advertisers use a lot is “word-of-mouth marketing.”
Word-of-mouth marketing is really, really effective for growing a business. In fact, research indicates that consumers are 92% more likely to trust a recommendation from a peer, friend, or family member than messaging from an ad. That just makes sense. People trust people they know.
By focusing on client retention instead of acquisition, you may actually be feeding into this cycle: Your loyal customers spread the word to their friends and colleagues, and they decide to look you up on their own initiative. The best part? You don’t have to pay a cent for that form of advertising.
3. There are More Cross-Selling Opportunities with Existing Clients
According to a study from Bain & Company, “repeat purchasing not only builds trust (so a customer will more likely consider purchasing other products), it also provides more cross-selling opportunities.”
For example, if a customer has already purchased an auto insurance policy through your agency, it would only be natural for that same client to also explore home/rental insurance options with your business, should the need arise. By focusing on your existing clients, you’re actually creating the perfect environment to maximize profitability through cross-selling.
How Renew King Can Help You with Client Retention
Now that we’ve established just a few of the reasons why client retention is such a big deal, the next logical question is: “How do we go about achieving a higher retention rate?” This is where Renew King comes into the picture. Our solution offers a better way for insurance agencies to stay connected to their clients, build trust, and foster loyalty.
To learn more about Renew King and see for yourself how it all works, check out the Renew King demo today.