Today, most life insurance agencies run sales organizations, not service organizations. After reading this blog, you’ll see why you must hire a Director of Old Business, not just a Director of New Business.
On average, Americans buy life insurance 7 times over their lifetime, from 6 different agents. Imagine if someone bought a hamburger from a different place every time? We wouldn’t have McDonald’s or other great brands, because they would have no predictable revenue.
Consider that McDonald’s often gives away coupons for a free meal in order to gain a customer. It’s the cost of acquiring that customer’s future business. Call it Customer Lifetime Value. The first commission you make from the sale of life insurance is the cost of acquiring that customer. The real value must come later.
The Life Insurance industry is that way today – with the exception of agencies with AUM, the only entity in the life insurance value chain with predictable revenue is the carrier. But if the agency and advisor really own the relationship, then they can count on each policyholder to buy 7 times over their lifetime. That changes the customer lifetime value by 700%.
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