"Episode 2: Maybe It's Not The Rate: The Real Reason You're Losing "Disloyal" Clients"

Introduction

SPEAKER_01 0:00

Being an agency owner isn't for the faint of heart. Strategy, market conditions, building a team that lasts. This is From the Field, where Josh and Joe help you do it all without losing your mind.

SPEAKER_00 0:13

So welcome everybody to another episode of From the Field. My name is Joe Newple, and I'm with my good friend and co-host Josh Rickenaugh. Josh, how's your morning going? It's going, buddy.

SPEAKER_01 0:23

We're uh getting along, getting along. It's back to school season here in Illinois, so we're uh we're enjoying our time.

SPEAKER_00 0:29

Yeah, you actually get some time back during the day, so that's that's not a bad thing for sure. Um, so

The Real Cost of Client Retention

SPEAKER_00 0:34

Jeff, kind of jumping into topics today. Uh, one thing you and I've talked about, we're gonna discuss today in detail, is the idea of client retention for the agency owner and customer loyalty relative to where it's been in the past. So I want to share a couple of stats and then I want to uh pose a question to you. So the insurance innovation reporter, they came out and they said that the average cost to acquire a client is about seven to nine times that of if you actually retain one. So, you know, we start to talk about this topic. It's not just a feel-good topic from the standpoint of economics, it's a it's a really important topic. The other thing they talked about was the fact that our industry has the highest acquisition costs of any industry that's out there on the sales side. Um, for the entire workforce, about 82% is the annual retention number. And then the other thing I think that that stands out that we'll talk about a little bit later is referred clients, if you look at three-year retention, is about 92%, or people that come in through other avenues is about 67%. And we know those referred clients tend to um also refer other people. So, my question for you though, knowing that it's such an important financial topic, is I think there's a feeling that overall customer loyalty has diminished over time. Do you feel like that's accurate or not accurate?

SPEAKER_01 2:00

Well, I think that's definitely the feeling, right? I mean, and those numbers were staggering. My goodness. You know, it makes me feel good about what we're doing here. But yeah, I mean, you feel it. You know, you you go hang out with agents, you go to meetings, what do you hear? Oh, they're leaving me. Oh, they left me. You know, there's this idea that uh the home office has uh, you know, they don't value us, and and and it's all about price and and these kind of things. And I can't believe they left me. I've I've been with them for so long, you know, I've taken good care of them. Uh they have this memory we do as an agent, right? We remember some things forever, like, oh, that took great care of their claim. That's like, yeah, back in 19. You know, I mean, for the client. Or I just met with them and you pull it up and it was three years ago. You know, I think I think our memory is a little different maybe than the client experience because remember, we're their insurance company. They're one of 300, 400, 2,000, 4,000 clients, right? So I think our memory gets a little distorted on that. And it's easy to get that lens, uh, the perspective that clients have become less loyal.

SPEAKER_00 2:58

Yes, it makes a lot of sense. Now, I've heard you talk about this topic before, and you've got one phrase that always sticks with me that I've used many times since hearing it. I've heard it multiple times from you. But the idea of an agent, when you say burning

Burning Furniture to Stay Warm

SPEAKER_00 3:13

furniture to stay warm, which I think is very clever, um, kind of talk me through when you talk about that concept. What exactly are you talking about?

SPEAKER_01 3:22

Yeah, I mean, I think it's a lot of the post-COVID idea, right? I mean, this is what what were people doing? If if you go to college and then uh you studying the economics, right? You want profit. There's two things, right? There's revenue and there's expenses. So whether no matter what you think you can either raise revenue or cut expenses or a little bit of both, the idea of cutting expenses, right? Post-COVID, people working from home, we saw our corporate offices, right? You saw people getting rid of commercial buildings. Do we need this much space? Do we need these kind of things, right? And I think at the agent level, it was easy to hear what you wanted to hear. Oh, maybe we should close the office. You know, maybe we should work from home. You know, maybe we should, and there's not knocking virtual, you know, work virtual office is working home. I have one. It's very beneficial, but I set it up that way. We also have our physical locations where we've been in in communities in there. But the burn your furniture stay warm is the idea that, like, oh, we'll just be open less. Maybe I'll just cut my team down, right? Like if I just get rid of uh one of my service assistants and we only go with two, uh, man, that that puts a lot of uh fat back on the on the bottom line. And what happens is you run out of furniture, right? So I look around, it's like the first cut's easy. Like, oh, that we haven't used that in forever. Let's get rid of that. Well, if you're not increasing revenue, actually revenue is going down, you got to keep cutting expenses. And eventually you run out of furniture to burn. And I think that's where we have seen a lot of agents get to where they're just throwing their hands up. This idea that I don't know what to do anymore. You know, everybody's leaving me. I'm doing all these things I'm supposed to do. And it's like, well, have you really, you know, have you really reinvested in your business? Or have you just been cutting? And I think that some people saw their profits stay the same, or to do that, they they took some shortcuts and and and no corporate offices are you know absolved from this either. We've seen that at the corporate level, right? They overcut, they sold too many buildings, and now they want people to go back to work and uh where do we go? Shared workspaces and that. So now burn your furniture to stay warm. I mean, it it was a post-COVID idea that I had, and I've said it a lot of times, and people tend to ask me about it, but it's this idea that you can only cut so far, you know, and are you cutting things that help you, or are you cutting things that degrade the client experience and and ultimately do cause disloyalty? And it's not disloyalty, you you started it.

SPEAKER_00 5:39

Yeah, and and you know, you you bring up a great point, and this isn't always the case, but I think oftentimes there's an inverse relationship between efficiencies, increasing efficiencies, and relationships. So I think sometimes the the relationship suffers due to the efficiencies that we create. I heard a phrase the other day that I thought was fantastic, especially for this. It was look smart on the spreadsheet, felt terrible to the client. Right. And it's like that's that, you know, that's dead on. I mean, so um, yeah, that's a that's a crazy.

SPEAKER_01 6:11

I feel like I could apply that to you know a bunch of emails I've seen corporately recently. Like, come on, guys. Like, I'm sure that was a great idea in a boardroom. You know, somebody came up with that. That was a black belt six sigma great idea that's gonna save the bottom line. Right. And just terrible implementation and how that that fell to the client. You know, you told me offline you were talking about something the other day, and and and you are further in the AI space than I am. I I I really try to stay there. I believe that it's coming. I think that if we put our head in the stand, you're not gonna be here in in 10 years. But you you were talking about, you know, kind of us inviting our competition in the door, you know, in in what are we doing as agents or what are you seeing in the field happening as agents that we're we're just opening the door to AI and saying, hey, please take my clients. And that

AI's Impact on Client Loyalty

SPEAKER_01 6:56

could appear as disloyalty, right, as the as the agent. I've taken great care of you, and now you're leaving me for for online or for this. But talk to me about like how you you what I guess tell me here what you told me there about you know AI jumping in to the space that we're creating for them.

SPEAKER_00 7:16

Yeah, so so let's back up. Let's go. So let's uh can you hear me? Can you okay? So it just totally went went garbled. So let's um I have red too. I had red is struggling.

SPEAKER_01 7:34

So what do we need to do? Pause and repeat?

SPEAKER_00 7:36

Yeah, I have the same thing. So yeah, let's on that question. Yep, so just um we'll just start with that question and I can splice that together. No problem at all. But yeah, what part do you think?

SPEAKER_01 7:46

I couldn't even get the intro where I said we were talking offline.

SPEAKER_00 7:50

Yeah, I think that's what we do. So we'll just take we'll just pause here for a second, then I'll I can splice this to where no one will be able to really even tell.

SPEAKER_01 7:58

Anyway, one of the things that I was looking at on this was we were talking offline, and you'd mentioned something about uh, you know, us opening the door or us as a field or what you view agents doing. And I thought it was great. You know, it was this idea that it can be viewed as customer disloyalty or that they're just chasing price. But, you know, talk to me about AI and how you view that we as an agent or field force have opened the door for them to step in and allow a competition that didn't used to exist.

SPEAKER_00 8:25

Yeah, no, that's that's a big topic, right? Um, and AI is very polarizing. You have people that like myself that utilize it for all kinds of things throughout the day, and other people that feel like it's the end of the world. And and I think one misconception, and and I may be wrong, but I think one misconception is that AI is what's gonna actually take the the career away or gonna take the role away of the agency owner. And I don't believe that to be true. Here, here's what I see I see it being a multiplier on top of what you're doing. So let me tell you both ends of that spectrum. If you have someone that that brings no value to the client relationship, AI is gonna magnify that because now all of a sudden I can I can shop in one click, I can get so much information, which I'm gonna talk about in a second, at my fingertips. You and I see it all the time, right? We sit in, we sit in appointments and all of a sudden people come in with their chat GPT or their Claude questions. Um, they know, they know what coverages they need to talk about, what questions they need to ask. The consumer is so much more well-versed in what we do. Where if we go back, especially 10, 15, 20 years ago or when you and I started, they were reliant upon us, right? That was that was the value add, was I know things you don't know. But that's not the that's not the case now. Now, now the information they can get arguably is much quicker and and sometimes even better than what they can get from you and I. But I think for the individual agency owner that has found a way to make their clients feel valued and to make them feel like they're a discussion partner and that it's it's it's one family together, I think AI is going to do nothing but help their business because the same person can be at home on their couch and all of a sudden in those conversations with AI, they find out they've got all kinds of missing pieces to their puzzle. Now they're reaching out to you because they trust you and you're you come alongside them and you build out an even better plan for them. So I think for the people doing the right things, you know, it's gonna do nothing but amplify their business. But I do see the people that are average are not doing a great job bringing any value whatsoever. They're gonna really feel the pressure because at this point, it's like, what do I need you for? I mean, I don't need you for anything. And you and I both know, and we and I know we've talked about this, but I'll use two quick examples for myself. I drive, I live in a community that has three hospitals. There are so many general practitioners around here, it's unbelievable. I drive 90 miles to mine because I've had him for years. He takes ample time with me every time. I'm never rushed. He he knows me, he knows my wife, he knows my kids' names. I feel like I'm important when I go in there and sit down. So I make the drive an hour and a half each way for something that I could go five minutes and get. The other thing I thought about the other day was literally we had a decision point on a restaurant. Restaurant A, I think the food's a touch better. Restaurant B is comparable, but when we walk into restaurant B, everybody calls myself and my wife by our names. The the servers who aren't even serving us that night will come over and and spend a minute and talk to us and and welcome us and great to see you again. And it's kind of like cheers, right? I mean, it's it's you go in and all of a sudden everyone knows your name and you feel valued. And the food's probably a tier below the other restaurant. But once in a while, you just like to feel like you matter. So um I I think I think that's the big thing when it comes to AI, is it's gonna shine a light and it's gonna make the strong stronger and it's gonna make the weak completely irrelevant. I couldn't agree more.

SPEAKER_01 12:09

You know, if you if you really look at what we view as, you know, and I don't mean you and I, I just mean our our field, right? Is is clients are disloyal or they've become less loyal. Like it's probably earned, right? There's a there's been a degradation to the client experience with an agent or an agency. I mean, it used to be, right, we'd go out to their houses, you know, if you go the way back machine, inviting them in. But when are we contacting them, not

Why Clients Really Leave

SPEAKER_01 12:37

selling them something? You know, just saying thank you, sending a birthday shout out. I saw your son or daughter in the paper, I saw them on the news, you know, like their Facebook post. Be part of it. Because it it seems like one-way loyalty seems to be the sales mentality. You know, it's kind of they're not loyal to me. Well, what have we done to earn that? You know, back in the day when you were showing up at the house once a year, you pet the dog, you know, the old school agent that I could view in my head, right? With the the briefcase that sumbles in and does whatever, yeah, they were a little schleppy and they were always pushing insurance, but like they were there. You know, now we're out of sight, out of mind. I mean, if if you've decided to go virtual, if you if you're the new age agent and you're open 24 hours, you're open zero hours because you're open the same amount that AI is, you're open the same amount that online is. So it right, I think the loyalty is is a two-way street. And I love the idea when you brought that topic up about, you know, agents think that that their clients have become less loyal. You know, we live in the Amazon world. The expectations are above probably what we can reach. You know, we can't ship things that you order right now by this afternoon. But we can certainly acknowledge that that's the environment we work in. The expectations are there and do the best we can to to deliver that and elevate the client experience. I mean, those retention numbers you told me are horrifying. Like trying to replace 18% of your clients a year is going to reach an economy of scale too quick for most agencies.

SPEAKER_00 14:05

No doubt. No doubt. And and you know, one thing that that sticks out to me too, that's it's more the psychological component of this. And that is if you look at the kind of the mental health uh research that's been done in general. So obviously, generality is everyone's situation is different. Most people, though, there's there's an epidemic of feeling undervalued, not appreciated, right? People feel it in with their employers, they feel it in their homes. You know, it to actually feel valued by someone you work with is not the norm. So when you do that, I I know people absolutely leave on price. No doubt, right? There's there's no doubt. There's two things I want to say about that. But people do leave on price. But a lot of the time, a lot of the time, people leaving on price are really leaving because they feel like a number. And the socially acceptable thing to say is you're too expensive. Right. It's hard for me to say, hey, Josh, I want to talk to you. You didn't make me feel seen. I always feel like I'm underappreciated. You're doing more of the same. I want to go somewhere where someone cares about me. Like no one's having that conversation with their insurance provider. No, that's yeah, right. You just say price. And then and then we say, hey, we're not priced correctly. When in fact, we've got some shared responsibility there. So I think that's the big thing. The other thing I want to say on that, real quick, um, is we've got to make it easy for people to come back. So when people do leave, a little bit off topic, but when people do leave, we have to embrace the fact that they have to do what they have to do, but immediately we need to jump in and show them we really care that you left. Like we're checking in three months, six months, nine months, 12 months. We want you back. So it's not personal and you don't shut it off. Most of those people you end up winning back because they realize, you know, Josh really does care. And and these rates are cyclical, you know. So um, I think that's another thing where I see people

Building Loyalty Through Small Gestures

SPEAKER_00 15:57

sometimes miss the vote.

SPEAKER_01 15:58

Well, I'll say I'm glad you brought that up because how many times have you, it's the it's the Verizon Comcast generation, right? If you call and complain about the price, what do they do? Right? You can call Comcast or Verizon and just get a better rate, nine-stop XM radio, serious, whatever. You get it free with your car and then it goes to 90 bucks a month. But if you call, you get it for eight dollars a year, right? Like that we're being taught as consumers that that's the expectation that you have to complain to get it. But we as agents better not care more for the client when they're leaving than when we did when they were here. Like, that's also something that those clients don't like. It's like, well, now you care. And it's like, I guarantee you in leadership, you heard clients say that when they leave. Like, yeah, you called me three times and I was leaving, hasn't called me three times in the last year. Right. You know, yes. I I I love the angel and devil idea here that you know it's clients and it's this, but it's like, man, like you better not care more about them when they're on their way out the door than you did when they were your client. And and that's just the levity that we need to be carrying into thought, word, and deed, of how we make a client-focused, client-centered business. And if the clients at the center of your agency, you know, those things aren't gonna happen. You know, you mentioned price. We don't see ads that say switch to me and get a better agent. It's switch and save, spend 15 minutes and save, get better rates, like better, better, better. It's always rates, right? They they never talk about the relationship.

SPEAKER_00 17:25

Very true, very true. So I I want to get your opinion. I've got two quick ones I want to share, but I want your opinion. Um, what are you guys doing that you feel like the viewer that's an agency owner with themselves and then their team, the things they could implement to create this feeling of being cared about? And I want to share two of them first while you think on it. The two of them that I'm I'm somewhat mind blown at times. First one is I'm amazed how few people call clients after a claim. Like we see a claim comes through, even a even a comp claim where someone hits a deer and they don't even reach out to say, hey, I saw this happen. How are you doing? Right. So it's like it's like the clients are only a means to an end to see in that monthly paycheck how much you actually get paid. It is. I mean, it's it's sad. They they don't realize when they're in the Bahamas or they're paying for their kids' travel ball, it's those individuals that that are funding it. So there's there's a total disconnect of how important those clients are. And instead, they're just this conglomerate of a means to an end, which drives me nuts. The second one, um, which to me is the most impactful of them all, we talked in a previous session about the importance of the client annual review. I would say less than one out of 20 joint appointments I've run with agency owners. Does that close of the meeting sound like somebody looking somebody in the face and saying, Josh, I know you can have your business a hundred different places and you choose myself and my team. And we don't, we don't take that for granted. I mean, that means so much to us. We're gonna continue to take care of you however we can. If there's anything we can improve, let us know. But I want you to know I truly appreciate you. And you're looking at somebody and you're speaking from the heart, those are the things that stop people when they get a mailer of going and quoting the business. But we have them in front of us, and it is such a rarity that we put it in pause and we tell them what we really feel because those are the things that really carry weight. So those are two that I think of. What ones are you and your team doing that you feel like really create that environment where if they were, if they had a poll for your clients, they would say, you know, Josh's, Josh's agency, they really care about me.

SPEAKER_01 19:43

Well, I think it's it's thought word indeed, right? You you can't just say something or do something, like it all has to match. Like if what you're saying doesn't match what you're doing, right? It there's still you're kind of wasting time, money, and effort. I mean, when a client comes in for their annual review, you know, one of the first things that I say is, first and foremost, I want to thank you for your business. You know, I realize you have choices on your way here. You probably heard three car insurance commercials. You know, this is what we do for a living. This is, you know, we really appreciate your support. I have a lot of vendors, I have uh cell phones, I have power companies, I have internet companies. Not one of them ever calls me and says, you know, thank you. So I do think it's important that you you have choices, and I want to say that thank you. And, you know, we're here to help you. That second part, you know, you're talking about claims and these little things. We have a client concierge, and this came from a course guided principal, you know, where he was talking about the difference between two really nice hotels. You know, at this hotel, you know, they're gonna check you in. Thanks for being here. Welcome here, Mr. Newpl. You know, you're in room 201, you're gonna go down to the hallway, you're gonna go to the elevator, it's second room on your right. He said, when you go to a high-end hotel, Mr. Nupal, let me walk you to your room. They open the door for you, they drag your luggage for you, they take it in for you, they say, here's this, they give you a little tour room. Is there anything I can get for you? Would you like a bucket of ice? Would you like these kind of things? Just a little extra. Sure. Right. So we have implemented a concierge program here where anytime there's an interaction with our agency, not only does that happen that day, it's completely logged. We've got checks and balances, but the concierge follows up the next day. Mr. Newple, thanks for calling in. I see that you worked with uh Jenny yesterday. Looks like you guys got a new vehicle. Uh, congratulations on that. Wanted to make sure that that went well for

Retention Strategies That Backfire

SPEAKER_01 21:25

you. Do you have your ID cards? Did everything come through the email correctly? Do you have any questions? And and a lot of times we get voicemails. Um, so we'll send a text. Just we've noticed you had a vehicle change yesterday, you worked with this associate, wanted to make sure everything was to your satisfaction. Is there anything additional we can help you with? We don't hear back on most of those. Sure. But when I see people, they mention them. Hey man, I appreciate you following up on that. Like it's weird. Like, we don't get a lot of of initial feedback, but I know that it matters because when I see people, they'll talk about it. Hey, yeah, you followed up on that claim. Everything was fine. We didn't need to worry about it. Um, sorry I didn't call you back. I was working with the adjuster, he did a great job. That was there, but it's the little things done over and over that add up. And it's it's it's fundamentals, man. The stuff that we get excited about, you and I do, are different than what most people want to measure. They want to measure awards, they want to measure this kind of stuff. And it's like, be fundamentally sound and do the right things over and over, the little things, and they add up.

SPEAKER_00 22:27

I love that. I love that. And and going back to the stats starting off, it's amazing how many people have have money that they they allocate for acquisition,

Accountability and the Mirror

SPEAKER_00 22:36

obviously um mandatory, right? But but when you talk about, you know, if I took 50 agency owners and I said, give me your your top two or three retention strategies, a lot of the times we would just get blank stares, right? Because they don't spend time on that part of the business.

SPEAKER_01 22:54

Um I mean, how about the retention strategy of I have a retention specialist? When people call to cancel, they go to my retention specialist. Like, that's not a retention strategy. That's a hopefully hold the door open kind of thing. I mean, that's an insane business model that you know that's the Verizon, right? Like, not throwing shade, but like your cell phone company. Sorry, I shouldn't be specific, but when you call to complain about your rate, magically there's a better one. I mean, I had direct TV and I've had Dish. And if you call to cancel, you get a better rate. Like you get the kind of impromptu person that's just kind of taking your call. And then if you say you want to cancel, they transfer you over there, all of a sudden it's a pretty good salesperson that has better solutions for you. So, you know, I don't think that translates to the insurance world because number one, we don't set our rates. So it's not like if if Mr. Nuple calls me up, I can go, oh, well, since you complained, let me give you this rate. And I think people think that might be, and we just don't ever want it to get to that point. So your retention strategy better not be uh trying to offer discounts on their way out the door. That's that's a recipe for you being out the door, not them.

SPEAKER_00 24:01

That makes perfect sense. Anything additional you want to add to this topic? I think that that covers it pretty well.

SPEAKER_01 24:06

I I think when we look at customer loyalty, client loyalty, I I think it's the mirror we need to look at the most. You know, there's hard losses, man. I've got an I'm sorry text, you know. I'm sorry, man. Love you, appreciate what you do for the community. We just found, you know, savings here and we got to do it. You know, I and those are the hard ones to take. You've done everything right. You know, they're there, they want to stay with you, right? I mean, I've had clients say, How much money do you make? You know, uh, we appreciate what you do for the community. You know, we'll pay you your commission still, you know, which is a crazy thing. And I'm like, no, no, gosh, no. It's our fault if we got out of pricing alignment, you know, we'll we'll get you back. And we will. But I think the mirror is where we need to start with this idea of have clients become less loyal. Because if you haven't done everything, if you haven't increased what you're doing, if you've pulled back, if you burnt your furniture to stay warm, I I think the person causing that disloyalty is probably the one you're looking at in the mirror, not the client. And and we can we can really improve not only our retention, but you know, the client experience by putting them back at the center and everything you're doing, thought, word, and deed, going towards the client experience. If you do that, I think we're gonna solve a lot of those uh loyalty issues or perceived loyalty issues.

SPEAKER_00 25:22

You know, and and adding on to that, I think one thing I see with great agency owners like yourself is exactly what you just said, and that is overaccountability. There's times where the client really was going because of rate, but the individual agency owner will blame themselves because they could have done a better job, even though that may not be the case. But you're right, you're better off to blame yourself for all of those and than you are to constantly dismiss it as rates and the company's fault. And I think the other thing that comes out of this, Josh, is sometimes it creates coaching moments. If you get a client that all of a sudden leaves that you thought you had a great relationship with, to call them and say, hey, Josh, we've worked together the last 12 years. I see you just went to company X. Can you talk me through what we could have done to retain your business? I can't be in a position where I'm losing clients like you. So I want, I want open feedback. Tell me what we could have done better. And you may find it's not your fault, or you may find something's going on inside of your team you weren't aware of. You know, maybe, maybe someone's not getting back, and all of a sudden you can coach to wherever the weakness is. But I think that comes with being overly accountable and trying to figure out um exactly why that individual left.

SPEAKER_01 26:32

We learn more from losses than wins, right? I mean, it's it's it that's a it's been a reality of business and personal life and everything. So it what an introspective time to find out why that's happening and make sure that doesn't happen again or do everything you can.

SPEAKER_00 26:47

Love it. Love it. Well, as always, I love uh spending our time together and and uh brainstorming these ideas. Great perspective. And uh I will look forward to the next one when we get together. Yeah, appreciate you, buddy. All right, brother. You bet. See ya.