Cross-Selling Needs Know-How, Baetis Study Reveals

July 18, 2001

Independent insurance agents can increase sales of life, health, retirement and group benefits to small business customers, but cross-selling is more effective when agents understand buying patterns and characteristics of specific groups of customers, according to a new study by Baetis Inc.

The survey of small business owners suggests that agent marketing can be more effective by paying attention to campaign characteristics such as frequency of contact. For example, when asked how they are contacted by insurance agencies, 61 percent of respondents said they are contacted at least once a month but only 40 percent of them want to be contacted that often.

The study also identifies two kinds of “policy consolidation behavior” – whether customers prefer to consolidate insurance products with one agency or distribute them among more than one agency.

“Consolidators,” who are better prospects for cross-selling, are more likely to use independent agents rather than buy direct, the study found. Consolidators are more likely to be experienced insurance buyers, making decisions alone rather than as a group. They also are more likely to be found in manufacturing, retail and wholesale industries, while “distributors” – those who buy insurance products from more than one source – are more likely found in the services, transportation and utility services sectors. Women buyers also are much more likely to consolidate over their male counterparts (65% vs. 35%).

“Small business owners are buying multiple policies, and it’s clear that as they gain buying experience, they see value in consolidating with a single trusted source, an independent agency,” said Jack McMahan, president and CEO of Baetis. “However, agents can do a better job of consolidating those policies at an earlier stage by targeting the right messages at the right frequency to the right person – blanket marketing campaigns the old way won’t cut it. Effective dialogue from the customer’s point of view is critical.”

Telephone calls are the preferred method of contact by agents, said 35% of respondents, followed by direct mail of brochures (28%), e-mail or electronic newsletter (19%), and personal visits (11%).

Agents also should be cognizant of the insurance-buying experience of their prospects and customers, McMahan said. The study classifies the number of years a respondent has been making business insurance decisions. “Rookies” have had three or fewer years of business insurance decision authority. “Veterans” have between three and 10 years of decision-making, and “pros” have more than 10 years. Rookies prefer more frequent contact, McMahan noted.

The study also identifies the number of years a decision maker has been doing business with the agent or agency from which they purchased their most recent policy. The “tender” category covers those who purchased a policy from an agent they have known for three years or less. “Mature” have purchased from an agent they’ve know for between three and 10 years; and “enduring,” more than 10 years. Each category has unique characteristics for marketing purposes.

The Communications Strategy Survey was conducted in April by Intae Myong, Director of Marketing Intelligence for Baetis and fielded by Aspen Media and Market Research, which compiled 300 telephone interviews of business owners across industries and geographical location with between 10 and 100 employees. For a copy of the study, contact Mark Van Iwaarden, (303) 530-5984 or This is the first in a series of research projects by Baetis to guide agencies in building and maintaining a vital customer-centric relationship with its customers.

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