Did you know there were 409,950 life insurance agents in the United States in 2020?
That’s a lot of competition, especially now that many insurance sales take place online and telephonically. Gone are the days where you just had to top your local competition.
Reports show that while consumers historically preferred in-person sales, in 2020, most people would rather buy insurance online and via the phone.
This means that you need to work double-time to stand out. One powerful way to do this is through referrals. In this post, we’re sharing a little-known referral source that insurance agents often overlook.
Ready to start ramping up your referrals? If yes, keep reading to find out what this overlooked referral source is and more.
Referral Source Definition
Before we dive into the benefits of referrals and how to leverage a little-known method for generating referrals, what does “referral source” mean exactly?
A referral source is a person or place you can get referrals from for your insurance business. For instance, say you sell a life insurance policy to John, and then John tells his friend Sue.
Sue also happens to be looking for life insurance, so she asks John if he was happy with your services and if he’ll give her your contact details.
If John recommends you, he then becomes a referral source, meaning he directly referred a new lead to you.
The Power of Referrals
Did you know that referrals are one of the best sources of leads? Unfortunately, many insurance agents don’t know about the power of referrals. So let’s take a look at why they are such a valuable lead source.
First, leads that come to you via referrals are typically warm. They are usually already primed to buy and are simply looking for a good agent to work with before purchasing a product. If you follow up on referrals right, you have a good chance of making a sale.
In contrast, leads from other sources may take a lot more time and work to convert. Someone who is casually shopping for insurance but hasn’t reached a pivotal point in their journey usually requires more contact and marketing than someone who is actively looking for a good agent.
Additionally, leads who come from a referral source also have a level of pre-established trust. If they got referred to you by a person they know and who gave you a good recommendation, they’d be more likely to trust you over a lead you acquired through something like paid ads.
Lastly, leads from referral sources are usually either cheap or free. This means they have a fantastic ROI.
All combined, these advantages make leads from referral sources some of the best you can get.
The Most Often Overlooked Referral Source
Now that we’ve covered what referral sources are, as well as how valuable referral leads are, let’s get into the overlooked referral source we promised to share with you.
Like with most referral sources, you need an existing client to leverage this one. This is how it works.
When you write a new life insurance policy, you will name one or more beneficiaries on the policy. Although it’s not in any way mandatory, a great way to give extra value (and open the door to more referrals) is to contact those beneficiaries.
As the insurance agent, you will have the contact details of the beneficiaries. Use these to contact them and notify them of their appearance in the policy. Besides this, you can also notify them of what steps to take should they need to file a death claim.
Once you have notified the beneficiary, it’s an easy transition to offer your services to them. What’s more, you don’t have to be uber salesy about it. A simple “and if you have any insurance needs, don’t hesitate to contact me, I’m always happy to help” is a great segway to generating a referral sale in the future.
The Benefits of This Strategy
There are various advantages to this soft-sell strategy. For one, letting new beneficiaries know about their status in the policy is a great way to show your thoroughness and customer service level. Not all insurance agents go the extra mile to notify beneficiaries, making for a nice touch.
Following this up with a natural and contextual plug of your services can be very effective. For one, you have already demonstrated that you go above and beyond when servicing clients. Second, the fact that someone close to the beneficiary has taken out life insurance may get them thinking along the same lines for their loved ones and dependants.
Besides potentially triggering a direct referral, you can also ask beneficiaries to refer you to their friends and loved ones who might be looking to take out life insurance.
In summary, by going the extra mile and servicing beneficiaries ahead of time by notifying them and informing them what they need to do to make a claim, you’ll establish yourself in their minds as a trusted and helpful source for life insurance products.
Other Referrals Sources and Strategies
Now that you know about one of the most overlooked sources of referrals, what are some other referral sources you can leverage? As we outlined above, referrals are a standout lead generation method.
Here are a few extra referral sources you can leverage to draw in more high-quality leads.
Setting Up a Referral Program
One of the most effective ways to get more referrals is to set up a referral program. This is pretty simple to do, and essentially what it means is you pay a certain percentage or reward to each person who refers a lead that makes a purchase.
To automate this, there are several referral tools you can use. Once you have signed up and set your criteria, you can then generate referral links.
Current clients can then share these links. If someone clicks on a link they have shared and purchases an insurance product from you; then they automatically receive a monetary reward.
Now, you might think that this is a waste of money. Why would you give away your profits to referrals? Well, as we explained above, referral leads are some of the best there are.
Therefore paying an existing client a small percentage to generate a sale is highly worth it, as these costs can have an outstanding ROI.
Another potential referral source can be influencer marketing. If you are new to the concept, influencer marketing is the practice of rewarding an influencer to promote your product.
If you pick the right influencer and niche, you can enjoy a high payoff from influencer marketing. Influencer marketing works on the basis that influencers typically promote brands and services they personally endorse.
Because this is very similar to client referrals, it nets you similar benefits. These include warmer leads, enhanced trust, and brand exposure.
Asking Clients to Refer You
Whether you’re looking to build your client base up after a tough year (we’re looking at you 2020) or add to your already growing sales, referrals are an invaluable source of leads.
If you’re wondering how to build your referral sources, something you might be overlooking is simply asking your existing clients. As the old saying goes, “he who doesn’t ask doesn’t get,” and this couldn’t be truer when it comes to insurance referral sources.
Put yourself in your clients’ shoes. Chances are, they don’t realize you’re looking for new customers and are trying to grow your network. Asking them to refer you to others looking for life insurance is a great way to remind them to recommend you.
However, when asking for referrals, there are a few key tips to keep in mind. First, confine your requests to clients who you know are happy with your services. If you have a client who wasn’t 100% happy, they should not be your go-to when asking for referrals.
Also, try to pose your request naturally, light-heartedly, at a good time for the client, and at a point where you know, they are happy with their purchase.
Reports show that the key to growth in life insurance is to focus on the customer. If you ignore their needs and push them to refer you before you’ve satisfied their needs, this will not be effective.
Are You Looking to Grow Selling Insurance?
If you’re looking to grow selling insurance, focusing on referrals is a great way to gain new, warm leads that have pre-established trust in you.
However, there is a lot more to selling life insurance than generating good referral sources—even if it’s something many other agents overlook.
Do you feel like you could be achieving more with your time? Are you still looking to unlock the insurance sales game? If so, we can help.
At ILIAA, we give you access to training, sales coaching, and on-demand support. Ready to flip the tables on your sales numbers? Take a look at our membership tiers today.