I have a very simple idea, one that everyone knows about, but my idea is so simple that no one ever does it. Sound crazy? Of course it does. But stop and think – how many great ideas have you heard in your career where you think “of course!” and then go right back to not doing it?
I’ve had that experience – a bunch of times.
So, before I give you my idea, promise yourself you’ll try it! Ok, ready?
Not so fast! Let me ask you a question first. What was your retention rate the last 3 years? Subtract that from 100%. What then was your slippage, non-retention, etc? For the average small agency, it was about 15% per year. This means that if you’re average you’ve lost 45% of your customers in the last 3 years.
What if you could have one third to one half of them back?
If you could do that, in a year, you’d grow by 15% to 22.5% right? Divide your growth rate last year by that number. The average growing agency grew about 5% last year, so if you could do this and you’re average, you’d increase your growth rate 300% to 450%. Regardless of your actual numbers, I hope you get my point.
Ready for my idea?
It’s really simple. Call your old lapsed customers back! Almost ALL OF THEM will be glad to have you quote! What’s your conversion rate? It’ll be higher with these people because they know you, trust you already, and will be happy to come back! I have a partner who has a department of people who focus solely on this, and they win back a huge per cent of those they call. Here’s another great idea – do what they do and hire someone(s) to focus solely on this.
Let’s do the math. Assume a $2 million book of business and a $2,000 average account size. That’s 1,000 customers. Forty five per cent of that number is 450. Assume you can resell a third of them. That equals 150 “new” customers at $2,000 premium each or $300,000 in new business. That’s $45,000 in “new” commission income. For a $300,000 revenue agency, that is a LOT of new business. Multiply or divide for your agency’s size.
This is such a simple, powerful, and profitable idea that only the most successful business growers will even try it. Are you one of those?