Do Referral Programs Really Work?

Written by Lexi Williams

May 17, 2021

A good referral program is one of the most critical marketing elements for any independent insurance agency to grow its business. If you take care of your clients, they can offer an endless supply of referrals. Whether you use referral emails, incentives, or community outreach, a referral program can become the lifeblood of your business.

Referrals Deliver a High ROI

Dollar for dollar, a referral program is one of the best ways to put your advertising budget to work. According to Forbes, referrals are some of the best leads that you can generate.

Without a referral marketing strategy, your agency will miss out on some of the best growth opportunities. Tools like lead forms, emails, and social media are all practical when used in conjunction with a referral strategy.

According to a study, more than 8 out of 10 clients are willing to make a referral, but only 29% do. The difference an effective insurance referral strategy can make is astounding.

Referrals Are Ready to Close

When you get a referral, they are already “warmed up” by their friends and family. When speaking with the referral, you are talking to someone who not only needs the products you offer – they already have some confidence that you can provide the best solution to their problems. 79% of insurance shoppers ask family and friends for recommendations, according to the National Association of Insurance Commissioners. As you probably know, the close rate can be as much as 7x higher for a referral than for a non-referred lead. A healthy referral stream can help an agency stay afloat.

Referrals Become the Best Clients

Since they have a relationship with one of your preexisting clients, referrals are often more loyal than other customers. They know they can get reliable guidance about you from someone they trust, which builds trust, loyalty, and satisfaction with your insurance agency.

Think about how powerful a referral is: Each time you close one, they are more likely to become long-term clients and refer others. With a well-designed referral program, you have an automatic stream of viable referral leads.

Keep in mind; loyalty is a two-way street, however. If the referrer leaves your agency, you may also lose the referee. The best way to combat this is to keep up with exceptional customer experience and customer relationships.

A successful referral strategy reflects that you show gratitude to your clients for promoting your insurance agency; don’t underestimate the impact of a sincere thank you and good customer service. This can all be a massive contribution to your relationship with them. With a high closing rate and today’s technology – it’s easier than ever to build a referral program! If you want more help with referrals, contact Agent Pipeline today at 800.962.4693.

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