How To Build a Referral-Based Insurance Business

So we all agree that customer referrals are incredibly valuable to any business, right? People who were referred to us tend to make their buying decisions quicker, and they tend to be more loyal--buying more over a longer period of time.

Clients like this are paramount to the independent insurance agent because they allow you to sell more and prospect less. So how do you get more referrals as an insurance agent? It's not enough just to say "I'll get more referrals by offering really good service." It's good to think that way, but if you really want to be a referral-based insurance practice, you need to be more intentional than that.

There are many ways to go about this, one is Precision Marketing: the practice of identifying the ideal client for your business and systematically targeting prospects who fit that profile.

For more insurance marketing strategies to take your agency to the next level, download the white paper "Recession-Proof Your Business: An Agent's Guide to Marketing During the Downturn."

Precision Marketing

You’ve got three appointments today. One is with pre-retiree who wants to roll some of his investments into a fixed annuity. Another is with a young couple looking to purchase life insurance. And the third is with an elderly woman interested in Medicare insurance. Three appointments, three completely different situations. That means different products, different cross-sell opportunities, and different stories and anecdotes to tell during your presentation. That’s a lot to remember and, therefore, a lot more chances to make a mistake.

What if you could spend the majority of your time offering solutions for people with similar needs? Could you become more efficient and offer more value to your clients by being an expert at dealing with specific situations?

Precision Marketing is the key to all of this. It will help you:

  • Hone your practice to a well-defined specialization
  • Generate more referrals
  • Engage only those people who have a need for your solutions

All of these elements are important anytime, but they are critical during a recession. In this economy you can’t afford to engage people who don’t need your services. Now more than ever, you need a plan to help you target prospects with precision.

Determine Your Ideal Client

The more you work with a certain type of client, the more efficient your practice will be. If every situation looks pretty much the same, your stories, your examples, your presentations, your understanding of certain situations becomes almost second nature. You become masterful at helping a certain type of person.

This is also how you define yourself as a specialist. By being an expert, you give your clients an experience that will make them more likely to refer you to others. When you get involved in cases that are outside your specialty, you risk wasting time and making mistakes that could actually cost you cases.

So look at your top 10 clients in terms of revenue and search for similarities among them. Are they married? What solutions do they need? How old are they? How did you meet them? Look for similarities you can use to create a composite profile of your idea client. This will help you identify the core situations and products you feel most confident working with.

Now, it could take years of highly targeted networking and marketing to get to a point where most of the people you deal with fit your ideal. Most agents are not in a position to turn away business simply because it doesn’t fit their profile. But you should strive for it anyway.

Use Referrals to Drive New Client Discovery

So how do you find people who fit your profile? Really, the only good way to find people who fit your ideal client profile is through people you already know who fit the profile. In other words, through referrals and networking.

There have been countless articles written on the subject of referrals—how to ask for them and how to get more of them—but really it comes down to two main principles: 1) You have to ask for referrals; 2) You have to be systematic about how you ask. The rest really comes down to your style and the types of clients you’re working with.

Here are a few tips that might be of some help.

Strive to develop lifelong clients. A client is someone who knows you, trusts you and listens to your recommendations. Clients will introduce you to other people.

Referrals can’t just be happy little accidents. You need develop a system for when and how you ask for referrals. Do you offer incentives? Do you ask during annual policy reviews? Do you ask on a customer satisfaction survey? Decide on a referral system you and your clients can be comfortable with.

Never start a relationship off with a cold introduction. Get a formal, in-person introduction from the referrer if you can. Or send a branding brochure with an approach letter to the prospect, then call to follow up. Calling out of the blue could put them on the defensive.

Solidify your relationships. Constantly be looking for ways to add value to your relationships. Send articles they might be interested in, recommend authors, share ideas. Not only will these things make them like more, but they will keep you top of mind. So when the time comes, your name will be the first they think of.

Building a marketing strategy based on referrals is not easy, but it’s definitely worth the effort. Referrals are far more profitable than other clients because they take less time and effort to close and you didn’t spend anything (but time) to acquire them.

Check out my other hub: Insurance Agent Leads: How to Make the Most of Them to learn more about how to handle referrals once you get them.

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ryan 4 years ago

Great tips, thank You

chi chi 2 years ago

Here's another thing, you need a good tool to help you with your referral process.

keebitz was designed to manage the whole referral process, you won't forget to send incentive to your clients, and you can also track all the referrals. Take a look at and you will learn more about it

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