Point of Difference #7: Avoiding the Lead Fetish
Sometimes when people think of marketing, they think of leads, leads, leads.
New business is sexier than renewing business. Maybe someone rings a bell in the office. Someone gets a pat on the back. Someone gets a bonus.
When a renewing client is downloaded at night from your carrier, it’s very likely nobody even notices.
It’s common enough for agencies and brokerages to have some ‘new growth’ strategy. It’s far less common to discover that they have a – documented and managed – ‘retention strategy’ or ‘account rounding strategy.’
Savvy agents and brokers take a comprehensive approach to growth.
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In this business, you can grow three fundamental ways, and, over time, they compound against each other, causing strong reliable growth patterns.
For example, let’s consider a firm with $5 million in annual revenue. Let’s assume it’s growth has been flat lately, so it’s still sitting at $5 million at the end of a year.
For example, let’s say they had an 86% retention, so they lost 14 out of every hundred customers. But, they got 14 new ones for every hundred. With revenue per customer staying flat, agency revenue stays the same.
Now, let’s just make a few very small tweaks. Let’s bump retention by 3 points. New customer acquisition by 3 points. And let’s do some more cross selling and boost revenue per customer by 5 points.
That adds an amazing $565,000 in one year. But even more amazing, in five years, that’s an eight and a half million-dollar agency.
Leads matter, of course. And having reliable systems that generates leads with an acceptable closing ratio and a healthy ROI are important.
But the strongest, more reliable growth doesn’t just come from more leads or a better closing ratio. It comes from a comprehensive approach to increasing both the number and the depth of relationships.
A careful examination of the 4 Stages Of Marketing reminds us that, from a marketing perspective, lead generation is generally the single most expensive thing we can do. Advertising costs money. And, at the early stage of lead generation, it doesn’t deliver income.
You could say there are ‘4 kinds of money’ represented in the ACOR+ Marketing Model:
- ‘Attract’ represents future income.
- ‘Convert’ represents new income.
- ‘Optimize’ represents reliable income.
- ‘Retain’ represents wealth.
In terms of leverage – the ratio of output to input – the leverage is in the back end of the process: small efforts in optimization and retention leverage large results.