How to Build a Referral-Based Insurance Business

When I talk to real estate agents about growing their business, one of the biggest frustrations I hear about is how unbelievably expensive advertising is. Most agents wouldn’t mind quite as much if they were confident their marketing efforts were paying off. In general, though, they just don’t feel like they’re getting the return they should. Honestly, they probably aren’t—and there’s a good chance you aren’t, either.

What if there were a way to spend less on marketing and grow your business without having to resort to cold calls and knocking on doors? Better yet: What if you already have everything you need to get going?

Of course, the secret sauce I’m talking about here is referrals, and you do have everything you need: Your current client list

Focusing on Referrals Makes Good Business Sense

The most expensive form of marketing is the kind that starts from scratch—at the very top of your sales funnel. It requires casting a broad net, which means a less-than-ideal combination of big bucks plus low conversions (sales). But it’s a necessary evil, particularly when you’re first starting out or trying to kickstart your business growth. The good news is, if you’re intentional about going after referral business, you won’t have to rely as much on your paid marketing strategy.

I know what you’re thinking. Really? Does focusing on referrals actually work that well? It does, and here’s why: According to Nielsen, 83% of people trust recommendations from family and friends. And guess what? Everyone has family and friends and everyone needs insurance. With referral marketing, you’re still casting a broad net, but you’re casting it into a really, really well-stocked pond.

Also, growing your business from referrals is a kerpillion times easier than growing it with, say, content marketing or social media marketing or search engine marketing. Those things are good and important and necessary, but they’re tough and time-consuming. If you want to make more money faster (who doesn’t?), referrals are the way to speed your sales cycle and accelerate your business growth.

A Dozen Ways to Build Referral Business

1. Be an agent worthy of referrals. If you have terrible customer service, overpromise and under-deliver, lack follow-through, or just don’t really care much about your clients, you’ll need to push pause and fix all of that first. We don’t tell our friends and family to go to the terrible pizza place, right? Same for your business: April’s not going to give you Don’s name if your receptionist is rude to her every time she calls.
2. Make a list of the clients with whom you have the strongest relationships. These aren’t necessarily the people you hear from most often or the people who’ve purchased the most policies from you. They’re the people who seem grateful for what you do and with whom you have a great rapport. The clients you like. A good place to start could be the clients you’ve been serving the longest.Don’t be discouraged if your list isn’t terribly long. Focus on the top 20% of your clients. As you gain customers through referrals, that list will grow. It’s a self-sustaining cycle of satisfaction. (Say that three times fast!)
3. Jot down some qualities of your ideal clients. It’s a lot easier to ask for referrals if you can specify the type of person you’re hoping to serve.
4. Call the people you listed in step 2—or, better yet, invite them for coffee—and ask them if they can refer you to anyone like those you listed in step 3. Practice a bit beforehand, so you feel confident and natural. It could go something like this:
   
   Amy, it’s been such a pleasure serving your family over the last several years, and it would be great to have more clients like you. I’d like to work with people who are professionals with young families—people who are just starting to think about their long-term insurance needs and wish they had someone they could trust to guide them well. Do you have friends or family in that situation?
5. Change your mindset about referrals. Some agents feel like they’re begging for business when they ask for referrals. Instead of thinking that way, remember that you provide a valuable service—and by inviting your clients to refer you, they get to be helpful to people they care about.
6. Express your gratitude. When your clients offer referrals, thank them—and thank them again if you actually win their friend’s or family member’s business. It’s surprising how many agents forget to “close the loop” like this. It’s important, because most people have a tiny twinge of regret when they hand over their friends’ or family members’ information. So when you call to let them know things went well, they’ll be reassured that you’ve taken good care of their people—and they’ll be more likely to refer again.
7. Empathize with the risk of referrals. Speaking of that tiny twinge of regret… when you make the ask, reassure people by talking about how you handle referrals. Something like this works great:I know it can feel uncomfortable to just hand over your friend’s information. Please know I’m honored by your referral, and I won’t do or say anything that will jeopardize your relationship with them. I’ll reach out once—maybe twice—but I won’t do any high-pressure sales or spammy emails.
8. Send referrals your clients’ way. “You scratch my back; I’ll scratch yours” is how referral-land works. People are much more likely to refer people to you if you’ve done the same for them. Be sure to say something like, “Please feel welcome to tell Gary I sent you his way!”—otherwise Gary won’t have the foggiest idea that you were responsible for that lead.
9. Look beyond current clients for referrals. Real estate agents miss out on a ton of referrals because they don’t think about potential partnerships. RECAMP has helped agents just like you develop as many as 30 new referral partners in just two months.
10. Ask every new client how they found you. You might already be getting referral business and you just don’t know it. At your introductory meetings with new clients, ask them how they found you. If they were referred, pick up the phone and thank the person who made the referral. They’ll be much more likely to keep sending business your way. (Plus, good manners matter.)
11. Don’t wait. Make referral marketing an everyday part of your business. If a client compliments you on your work, say thanks… and then immediately ask if they know anyone else who could use the same kind of help. It’s not nearly as awkward as it sounds. People want to help people they like.
12. Avoid gimmicks. Don’t try to bribe your clients into giving you referrals. You want solid leads smack in the middle of your ideal client persona, and an authentic referral will always be more likely to convert than one driven by a $25 gift card.

Remember: The fastest way to grow new business relationships is through relationships you already have.