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Why Knowing the True Cost of Servicing Clients Can Help You Grow Your Book of Business

“I knew I had made it in the insurance business when I fired my first client.” 

Firing a client is never an easy decision to make, especially when you are running an insurance agency. However, there may come a time when retaining a specific client becomes more of a burden than a benefit. This can be due to several reasons, but the most common one is when the cost of servicing the client exceeds the revenue you generate from them. Having data that shows the true cost of servicing a client can help you make data driven decisions. 

Here are a few signs that indicate it may be time to fire your client in your insurance agency: 

  1. Constant Complaints: A client who is always unhappy, making unreasonable demands or complaints, can be a drain on your resources. Imagine if you could put a hard value on how much it is costing you for each call, email response, and time spent worrying about this client. If this is the case, it may be best to part ways with them before the negativity affects your agency’s reputation. 
  1. Late or Incomplete payments: Clients who are consistently late in making payments or who require constant reminders can be frustrating to manage. Regular reporting and analytics that show you your aging reports can help in this case. If you find yourself spending more time collecting payments than servicing the client, it may be time to cut ties. 
  1. High Service Demands: Some clients may require more attention than others, which is entirely reasonable. However, if a client requires a significant amount of attention and time that stretches your resources to breaking point, it may be time to reassess the value of the relationship. Understanding the hard costs of servicing clients is crucial to your agency’s success. 
  1. Low Profit Margins: If a client’s profit margins are too low or do not match up with the amount of time and effort required to service them, it may be better to invest your resources in more profitable clients.  Commission and revenue reports can show you the margins you are making across your customer base and lines of business. 
  1. Ethical Violations: If a client has violated any ethical standards, laws, or policies, it could put your agency at risk. In such cases, it would be best to end the relationship, even if it means losing the client’s business. 

In conclusion, firing a client can be a challenging decision to make, but sometimes it is necessary for the survival and growth of your insurance agency. By keeping an eye on your data, you can look out for the signs mentioned above and you can determine when it is the right time to let go of a client that is causing more trouble than good. Remember, your resources are limited, and using them wisely is vital to the longevity of your business. Click here to learn more about how our Informer Business Intelligence solution can help you better understand the true cost of managing your customers. 

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