Acquiring new customers for your insurance agency is time-consuming and expensive. You need to find new prospects, convince them your product is worth their time, and onboard them. In contrast, your existing customers are cheap to contact, and your current relationships are valuable resources when approached correctly.
There are two main ways to drive more value out of existing customers. The first is Upselling; the second is Cross-Selling. Both options are practical choices for extending the lifetime value of your customers. However, they are not interchangeable, and each method has different use cases.
What is upselling
Upselling is a sales strategy where customers are encouraged to buy anything that would make their primary purchase even better. Ever purchased a better, more expensive version of a cell phone? Or the extra protein at Chipotle? Then congratulations, you've been upsold!
In the insurance industry, one way your agency can take advantage of upselling is by switching customers to higher protection plans.
What is cross-selling
Cross-selling is selling another related product to a customer that might complement their purchase or needs. Amazon does this exceptionally well with its "customers also bought" section. These are products a customer was likely eventually going to purchase. They are just convinced to act with more decisiveness.
Your agency can take advantage of cross-selling for almost every customer. Are they buying auto insurance? Ask about adding life insurance to their plan. Are they going on a trip? Traveler insurance makes sure they are protected. Even asking if your customers would like baggage insurance when they enter an airport could give them peace of mind.
Your agency can take advantage of cross-selling for almost every customer. Are they buying auto insurance? Ask about adding life insurance to their plan. Are they going on a trip? Traveler insurance makes sure they are protected. Even asking if your customers would like baggage insurance when they enter an airport could give them peace of mind.
Advantages
We know alternative sales methods are a great way to increase revenue. Cross-selling and upselling have both been shown to increase profitability by up to 30%. But they can be advantageous to your agency in other ways.
One way is customer loyalty. Your policyholders want to feel like they have a personal relationship with your agency. Well-timed agency cross-selling and upselling can be the ticket to connecting with your customers and making them feel heard.
Another advantage is convenience. Humans don't like to put in more work than we need to, so when you can become a one-stop shop for your policyholders, they will think of you favorably and bring you top of mind whenever there is an insurance need.
Disadvantages
Both cross-selling and upselling are valuable tools for your agency. But only if they are done well. When done poorly, they both have similar disadvantages.
One way is by suggesting something that is either too far out of someone's range when upselling or an unrelated product when cross-selling. Seeming to not care will make customers uncomfortable or annoyed and may lead to no sales.
Offering your customers too many choices can also annoy them. Be careful you aren't going too off-script when selling. If someone comes in looking for small business insurance, don't try to sell them alien abduction protection.
To avoid unhappy customers, you should be clear about what your company is offering and make sure you know how to cross-sell and upsell
As an insurance agency, your primary goal is to provide peace of mind to your customers. Cross-selling and upselling will do that while also giving you a bonus in customer engagement and revenue.
