When Is It An Investment, And When Is It Throwing Good Money After Bad?

Every agent with whom we speak tells us that his primary product is SERVICE. He and his employees provide such a high level of service to the customers that they not only stay with the agency, but also are glad to refer friends and associates to achieve the same levels of service.

But what happens when the agent takes off the ‘rose-colored’ glasses to find that the service levels for which he expresses pride could be chasing clients away, instead of keeping them, and that the wonderful force, inertia, is what keeps his clients with him. The referrals he gets may be due to his client telling his friends that his agent’s service “is not too bad,” rather than boasting about ‘super-service’ as the agent would like to have believed.

We would like to issue one warning and two tests about “Walking the Talk” when it comes to providing excellent service to your clients.


Don’t boast about your service until and unless you have thoroughly tested it. If you or a representative calls your agency ten times with ten different issues, problems, changes, complaints, how many times are you likely to get satisfactory or better service?

The best way of testing service is just that – have a series of calls made to the agency testing a variety of service issues (claims, fast response and call-back, correct feedback and answers, etc.) and gauge the results. Do not blame employees if the results are not to your liking. Use the information to educate the employees to the levels of service that you expect from the agency.

The Tests:

Measure two things for a twelve-month period: the number of existing customers lost (and why), and the REAL number of referrals made to the agency by your customers.

If you can identify the total number of active customers in the agency at the end of any month, start with the next month and keep an accurate count of lost customers in each of your departments (i.e. personal lines, commercial lines). Make sure your staff records reason for loss. Death and retirement (moving) are perfectly reasonable reasons for no longer being insured – non-payment is not! Treat every non-payment customer (not just a policy) loss as a preventable loss to the agency. The reason the customer left is because (s)he didn’t have enough reason to stay. This test also tells you whether or not your staff even KNOWS if and why their customers leave them.

As we all know, aggressively writing new business while losing existing customers is a recipe for disaster. An agency with which we work claims that “everyone” loses accounts these days. They have lost 15%-20% of their revenue annually and have finally considered counting customer losses. If premium and commission loss won’t convince them that they may have low customer service, perhaps client losses will. Of course, not everyone loses accounts and no one has the capacity to absorb all of the accounts that all agencies in a territory would lose if it really were a “price war”.

The second test, testing referral status will also either confirm or deny excellent service. The number of new business calls, whether written or not, is not a good measure of referral numbers. If many new prospects are coming to the agency through cold call-in’s these cannot be considered referrals. True referrals can be counted by simply asking each caller how they heard about the agency. If they refer you to a customer name or even if they tell you a friend referred them, it can be counted as a true referral – whether or not a policy is written. Remember, we are trying to determine service quality by the number of times your clients refer their friends and acquaintances to your agency. These are still customer referrals – even if you do not write the account.


An agency that boasted high service and referral rates found that the total number of referrals in a six-month study was less than 15. The agent stopped the study at this point and re-trained and/or replaced his entire service staff over the next two quarters. We conducted a similar study twelve months later to find the number of referrals had grown to fifteen each month! Obviously, if you can identify the ingredients of good service and if you implement them and manage to them, you will achieve better results.

We have not addressed the actual ingredients of a strong servicing agency in this article. We have covered this ground many times in many other forms. The ingredients include 1) Expressing a ‘Helping’ attitude to the customer (instead of quoting and order-taking), 2) Providing the requested information quickly and accurately, 3) Under-promising and Over-delivering.

The problem that we would like to uncover for many agents is the mis-perception that they have high service levels when they do not. It is comforting to think of your agency as a high service agency and that the problems you encounter are systemic problems affecting all agencies. Be aware that the agencies that truly have great service levels do not boast about it while the agencies that are suffering, perhaps from low service standards, are very vocal about the poor nature of the customer, carriers, economy or the industry in general. The next time you are at an Association meeting, note the agents who are not vocal about these kinds of problems and get them to discuss how their agencies differ from the vocal majority. You will find that strong service is well-managed service and that it has little to do with how many generations the agency has been around or how long the CSRs have been in place. Customer service is transitory. The customers are always looking to what you have done in their last contact to gauge their perception of your service.