November 5, 2020 by David Gambrill
Physical distancing or no, brokers still see referrals as being the best way to generate sales leads and gain new clients.
“Word of mouth,” one broker in the 2020 National Broker Survey wrote, when asked about the most beneficial way to find new clients over the past 24 months. “Our brokerage is in a smaller community, so we know many/most of our clients personally. And the assistance we provide our clients, our willingness to help when they have questions, concerns, or are dealing with a loss, leads them to refer family and friends to us.”
One senior broker of 42 years in the industry said he now does business only by referrals. “I’m completely customer service-oriented, so selling my knowledge and skills for the past 42 years gives me an excessive amount of referrals from existing clients, plus I belong to a networking club.”
As in the past three National Broker Surveys, brokers found it most beneficial to ask existing customers for referrals, as opposed to asking other professionals for referrals, although both methods are popular. Out of six options for generating new leads, brokers placed referrals from existing customers at the top of the list (67% this year), and referrals from professionals in second place (46%).
The popularity of seeking referrals from professionals jumped 11 points from 2018 to 2019 (from 41% to 52%), but levelled off slightly this year. Still, one broker in the survey said the business contacts generally resulted in better closing success. “Industry players — e.g. financial advisers, life agents, and real estate agent referrals — will yield much better prospects that fit your corporate culture, thus higher closing/client success.”
Other options in the survey included maintaining an active social media presence, personal advertising (not the same as the brokerage’s general advertising), or cold-calling. Company website leads and digital marketing leads from third-party vendors also came up in the written comments.
Kent Rowe, president of the Insurance Brokers Association of Canada (IBAC), believes changing demographics in Canada have contributed to the success of referrals in finding new business. Access to information has improved on the internet, and generations that have grown up with the internet (such as Millennials, for example) have become more likely to research a product before buying online, as Rowe observes. As part of their research, they are asking friends and family for advice, which makes referrals from them all the more important — and successful. And so, brokers are more actively reaching out to their clients for referrals.
Insurance Brokers Association of Ontario CEO Colin Simpson does not see this changing because of the social distancing required to slow the spread of the novel coronavirus. “There is always value in relationships,” he says. “Insurance is a people business. A referral could actually add more value to a brokerage. It becomes stickier because of the relationships involved. It’s less likely to move around than in situations you might see [during the pandemic].”
For example, a client unhappy with relief offered by an insurer during the pandemic could theoretically be more likely to move from one brokerage to another, seeking a better relief package. And some referrals during a hard market may be one way for clients to access capacity that may not be available.
Feature image courtesy of iStock.ca/carlosalvarez