It’s a great thing to be recognized as a company’s employee benefits broker of record. However, it’s a privilege that can be taken away at any time. You never want to leave the door open for competitors. That’s why it’s important to understand the correlation between cross-selling and retention.
Building Value by Cross-Selling
Each line you sell has value. When you sell multiple lines to a client, you increase your total value to that client. This strategy can also help you build deeper relationships with your clients.
According to McKinsey & Company, building deeper relationships and offering complementary products can produce many benefits, including reduced customer-acquisition costs and increased customer lifetime value. One insurance company implemented an initiative to build deeper relationships including a cross-selling strategy. The pilot program involving life, health, pension and annuities saw a 50% increase in gross written premiums.
This alone should provide ample incentive to cross-sell. However, the benefits of cross-selling don’t stop with the immediate sales. When you build deeper relationships by cross-selling multiple lines, you’re also utilizing a powerful retention strategy.
Making Yourself Indispensable
Imagine there are three grocery stores in your area. Store A has the bread and baked goods you prefer, Store B has the best produce and meat, and Store C has the lowest prices on the staples you use every week, like eggs, milk, canned goods, and cereal. Going to all three stores is a hassle, so a lot of the time, you just go to Store C.
The same principles can apply to insurance. If you only offer one product to your clients, they may love it, but it may not be enough to keep them coming back to you. They might decide to go with another broker who offers more of the products they need. This is bad news when it happens to a personal lines client, but it’s even worse when you lose your employee benefits broker of record status.
To avoid this situation, you need to make yourself indispensable. A good way to do that is to offer multiple lines of coverage. For example, if an employer is only getting life insurance from you, what do you think will happen when another broker offers life insurance, disability insurance and retirement benefits? Sure, the employer could keep life insurance with you. That’s the best-case scenario, and it still means that you’re missing out of the disability and retirement benefit sales. There’s also a chance the employer will decide to go with the new broker for everything. Ignoring cross-selling opportunities could cause you to lose a big client.
Overcoming Resistance to Cross-Selling
Cross-selling helps you increase sales in the short term and boost retention in the long run. The benefits of cross-selling are undeniable – so why aren’t all agents doing it?
- They don’t want to seem too pushy. We’ve all dealt with annoying salesclerks who try to push upgrades and extras that we simply don’t want. You don’t want to make that mistake, and that’s understandable. However, this doesn’t mean you can’t offer any other products.
- They don’t want to move out of their comfort zone. If you’ve made a career selling one product, you may be reluctant to venture out to new products – but you should absolutely take that step. When you work with a wholesale distributor specializing in the products you need, you get the right support to make offering new lines easy.
Create a Cross-Selling Strategy
You can boost your profits and retention by cross-selling to employers.
- Offer the right products. To make yourself truly indispensable, you should offer at least four lines of coverage. For example, you could offer group life, group long-term disability, executive IDI benefits and voluntary long-term care insurance.
- Help employers take advantage of the IRS Code 162 executive bonus plan. A great way to retain your broker of record status is to help employers retain their talent while taking advantage of tax breaks. Show your clients how to use IRS Code 162 to offer life and/or disability insurance to executives.
- Get to know your clients. You want to be helpful, not pushy. To accomplish this, you need to get to know your clients and their needs. Find out their pain points and budget and offer products that will help.
- Offer products for their evolving needs. If you want to create long-lasting relationships with employers, you need to be receptive to their changing needs. Maybe they didn’t need a certain product five years ago, but that doesn’t mean they won’t need it a year from now. If you don’t keep up with their needs, they’ll find another broker who will.
Cross-selling can help you keep your broker of record status, and disability insurance should be part of your cross-selling strategy. Make disability insurance part of your portfolio. See how DIS can help and be sure to download our Supersize Commission Guide.