Most sales professionals claim to be expert customer relationship managers. But to see just how good they perform we must examine the core ingredients of an effective relationship.

We have conducted surveys to determine how insurance buyers define a desired relationship. Most say that a relationship doesnt exist until they feel some type of an emotional bond with you or your agency. In other words, an effective relationship has a sense of connection, often expressed by the simple term “my agent” or “my agency.”

A customer will rank the effectiveness of a relationship by how well you deliver value. The value, they tell us, is not the effectiveness of your pricing or the breadth of your product. Less than 20 percent of the reason your customer stays with you is based on these facts.

More important to the relationship is how well your customer feels that you understand them in the context of their business and personal life. (Note that relationships always tie to people, not to the account.)

Most of us feel that we do a pretty effective job assessing the risk exposures of our client. But how many of us conduct an equally important analysis of our clients business goals, financial goals, behavior, values, relationships and more?

The key to effective relationship creation and sustained customer loyalty is finding out what truly motivates a customer, then customizing the product, distribution or service offering to deliver true value.

An agency only has a true relationship with about 40 percent of their customers. The remaining 60 percent are transactional customers who stick with the agency out of habit or due to the frictional costs associated with a change. Transactional customers are typically those who have one product line with the agency, and, outside of a billing or claim event, have one-or-less communications with the agency annually.

Transaction customers are important. They pay the bills, they provide critical mass, and they enable us to satisfy the volume commitments of our carriers. But we probably dont make much money on these customers. In fact, because we only have one line of business with them, nearly half also have another transactional relationship with another agency, just like yours.

What I call the “40 percenters” are key. These customers have a true relationship with you or your agency. Somebody knows them personally. These are the individuals who call you and ask for advice when they are thinking about buying a house or opening a new business location or buying out a partner.

These customers generally buy what you recommend. They typically dont haggle over price, and they are far more likely to forgive you when you make the occasional mistake.

So how do we build a client relationship? Here are our recommendations for the professional agent or broker who is willing to listen to their customer.

“I Want a Local Relationship!”

What your customer is looking for when they say they want to do business locally is more intimacy. They want to see you and hear from you often. About 51 percent of all businesses we surveyed claim to have heard from their agent one time or less over the preceding year. These same businesses say that to have a relationship with them they expect communication at least quarterly and, for some industries, as often as monthly.

Believe it or not, just being on the holiday mailing list is a simple way for showing you remembered. Your customer wants dialogue. They not only want you to know them, they want to know you. They want you to know what they think, but they also want to hear what you think as well.

The customer who says they want to do business locally also is telling you something about his/her community values, which should also tell you something about yours. Are you visible in your community? Does your community contribution reveal anything about your values to your clients or prospects you would like to have as clients?

What does your customer find valuable about you or your business? Most of us arent really sure. As a result, we guess. Instead of guessing, ask! Quantify what the customer is looking for and whether they find the values they seek repeatedly and consistently in their relationship with you. When is the last time you asked what the customer values about their relationship with you?

“I Want Choice!”

This claim is your customer crying for help in finding solutions that deal specifically with the problems or issues they face day-by-day. Your client is looking for recommendations that deal specifically with those issues–or, at least, put your product or services recommendations in the context of these challenges and opportunities.

Many sales professionals call this “understanding the whole customer.” Yet few of us do. Some 81 percent of the businessowners we surveyed would like to find one place to have all of their insurance needs met.

Typically, an independent agency concentrates products and services around property-casualty products. Yet when tested, most businesses claim that better product guidance (finding a “navigator”), one-stop shopping, and finding solutions to human resources/employee benefits worries are far more top-of-mind than finding improvements to p-c challenges.

“I Want To Do Business with Someone I Trust!”

We have found that trust is the single most important ingredient in a true relationship. Trust demands a level of risk, for implying a willingness to fulfill expectations that have not been yet stated. Trust demands an investment in getting to know someone (trust is always personal) and then using that intimate knowledge to provide increasingly customized, personalized responses.

Dont confuse product quality, breadth of coverage or price with trust. These attributes are essential to your business “product,” but they have little to do with trust. Trust is doing what you said you would do. Trust is demonstrating how much you know about me, such as my age (and how that might affect products or service needs), my goals, the size of my business, something about my competitors, my financial situation, and my interests–and then weaving all of these factors into a product or service context.

In other words, your true client is not looking for a product so much as theyre looking for an advisor. Somebody to bounce ideas off. Somebody who has the courage to render an opinion or challenge a decision that may not even relate to a purchase.

Jack McMahan is CEO of Baetis Inc., a Boulder, Colo.-based firm specializing in customer relationship management tools and services for insurance agents. He can be reached via e-mail at [email protected].

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 24, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.