Why Data Is So Important for Insurance Agents

So-called “big data,” which reveals intimate aspects of who your customers are and what goes in to turning your prospects from qualified insurance leads into customers, is the future of the insurance industry. If you’ve yet to put some form of data collection and analysis tool to use with your clientele, then you are basically operating your business while wearing a blindfold. Let’s look at some of the areas where data matters to the insurance agent.

 

Your CustomersNeeds

This aspect of data collection as an insurance agent should, of course, be your primary motivation. By anticipating renewal dates, life changes, and specific milestones, you can assert yourself as an agent, who goes above and beyond the call of duty to provide great customer service — the kind people want to hang around for once they sign up for a piece of business. While the paperwork that your customers fill out will reveal some things about them, you should go beyond this and have your own database of details that reveal specifics about who your customers and their family members are. Most customers these days buy based on price, but they don’t stay around because of it. Data points like these can help you zero in on why they do stay around and work to fill that need.

 

Your Cost of Customer Acquisition

Unfortunately, many agents are lazy when it comes to tracking the cost of acquiring customers. They’re fine at tracking operating expenses, but let this — many would say the most important part of their financial picture — slip through the cracks. Knowing your Cost of Customer Acquisition (COCA) is important for gauging the effectiveness of marketing tactics and building a better strategy. Put in simple terms, your COCA is how much you spend on a specific piece of marketing versus the results that it yields in real dollars. Say that you pay $1,000 for an advertisement that brings in 100 prospects, but only 35 of those end up becoming clients. Then your COCA is close to $29 per customer. This can obviously go up and down depending on your method of outreach, but it’s important to know if you want to stay ahead of the curve.

 

Employee Cost vs. Benefit

In any insurance agency, you are going to have two primary types of employees — revenue producers and non-revenue personnel. Even though one directly brings in money and the other does not, both are equally important so long as you are able to track the benefit to your agency. With revenue producers, that importance is pretty clear. Just look at the new business they’re bringing in. Non-revenue isn’t as simple, but you can still attach a dollar figure to their contributions. Just look at what the agency earns in terms of revenue versus how many hours you put in generating with leads, meeting with prospects, and writing new business. Say that you and your agents are able to produce a total of $1 million in revenue extra as a result of the 10 hours of administrative work they DON’T have to do because of your non-revenue employee, and there are four of you total. Well, that means your non-revenue staff gives you a cost benefit of around $480.76 per hour total. If you have four non-revenue staff — one for you and each agent — then that is a cost benefit of $120.19 per hour, per employee. Now let’s say that you’re paying your non-revenue staff $20.19 per hour (just because we like round numbers), then that employee is basically bringing you in $100 an hour. (This was calculated on a 40-hour workweek and a 52-week year. The totals change based on actual hours. Now you can see why data is so important!)

 

In Summary

Don’t make the mistake of many of your competitors. Collect data in droves. Know how to reach your customers. Know what that customer costs in acquisition terms. Know what both your revenue and non-revenue employees are bringing to the table for the good of your agency. Good luck!

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