When is it time to “fire” a customer or just let them go? When is “enough”, enough?

Man Hand writing Goodbye with marker on transparent wipe board. Business, internet, technology concept. Stock Photo

By Ken Kukral

This question can conger up all sorts of images, but the one I am interested in is when is it time to “fire” a customer or just let them go?  Sometimes it is in your best interests to let a customer know you cannot satisfy their demands or expectations and they might be better served by going to another agent.  Although this may be an agonizing decision it can be a healthy one for your agency.

First of all, why would you want to “fire” a customer?  There can be many reasons, but some are:

  • Loss ratio – There are those customers who see the “value” in insurance IF they get back MORE than they paid in premiums. They don’t see insurance as a “catastrophic” type of backstop, but see it as a reimbursement type of contract.  I paid this much in premium and I should be able to get that much back in loss payments.
  • They do not look to improve their risk exposures and are not willing to do systematic updates to their property to prevent future losses. They see an aging roof as an opportunity to have a roof loss so they can get a new one, rather than scheduling periodic updates and scheduling of repairs or upgrades.  You can see the handwriting on the wall, knowing the next big storm is going to get them the repair they have been putting off.
  • Payment issues – You only make money if they pay their premium. If you have to follow up for payments or have cancel/rewrite issues, are you doing yourself a favor by retaining these customers.  The chronic late pay clients will be the first one pushing to maximize their loss settlement and get paid quickly.  Just when you thought direct bill would solve all the payment issues you were wrong and they still crop up.
  • Accounts that use all of your time. Ultimately you need to make money on an account.  If they take considerable “hand holding” and they do not value your time, can you afford to keep them?  Even worse, they ask for your advice and then ignore it!!  It still needs to be a cost/benefit decisions and needs to make dollars and cents sense.
  • What about accounts that refuse to deal with other members of your firm (especially customer service personnel and claims personnel) and will only deal with you? If they are your largest account, then “maybe” they are worth it.  Tough decisions but something to discuss with your office staff and your client of they aren’t “getting it”.  Even worse if they are rude or obnoxious with the others at your office.  The rest of your team will start losing respect for you if you don’t nip it in the bud and set them straight.
  • I previously mentioned the issue of clients not taking your advice. There are times that you have to stand your ground and let them know that if they chose not to take your advice, you can no longer be their agent.  If they get so “cheap” with their insurance program, that IF they were to have a loss they would have major coverage issues, then you may want to let them move on.  Those  “savings” are not worth the future hassles, lawsuits and potential for that business to not survive in the event of a major loss.

So what are you to do?

  1. Be straight forward with your clients. Be willing to “walk” if they cannot make responsible decisions based on your advice.  You are looking to put together an insurance program that best fits their needs and not accepting your recommendations can seriously jeopardize their coverage.
  2. Simplify the issue/coverage/decision/problem and walk them through the pitfalls. They need to know that you know what you are doing, what the consequences are of their decisions and how they could inadequately be protecting their assets.
  3. Have a system for addressing problem accounts and putting them on the path to “recovery” if that is even possible. There will be those “unethical” clients along the way and remember you are judged by the company you keep.

The accounts you lose sleep over….  Might be the ones….

The account you tend to shake your head as you hang up the phone with… might the ones….

Sometimes it is “addition by subtraction”…..

I am not saying just go out there and start firing your customers…. Just ask the question, is this a client I should be firing?  Do something about it….  Get them on track or move on….  Your time is too valuable!


Questions to ask prospective clients

Are there questions we should be asking prospective clients that we aren’t that would help us to better understand what they want?

Are there questions we are afraid to ask prospective clients?

Are there questions we should be asking that would help us to “qualify” prospective accounts?

I have a feeling that the answer to all three of the above questions is yes.  In fact I KNOW the answer is YES!  I do a post mortem on accounts I lost, didn’t write or spent significant time on and wondered if there were questions I should have asked that would have helped me to do a better job.  Questions such as:

  • What kind of premium or rate are you expecting or the insured is expecting? While they may not know, many times they do.  I have saved a lot of time and effort by just relaying minimum premiums for certain classes of business and found out they were expecting something significantly less.  That way the agent is able to move on to the next account and not spin their wheels that they aren’t going to write.
  • Why do you want to fire your current agent? Using a word like FIRE puts a touch of reality to the situation and many times the client will tell you what is important to them that the other agent is not providing.  If they say “they aren’t sure they want to fire their current agent”, then you have your work cut out for you.  Most likely they are just price shopping and you will have to work to differentiate yourself if you are going to have a chance to write account.
  • When do you need the quote by? Simple question, but I am surprise on how few it is asked.  It is essential if you want a clue as to what your prospective client is expecting.  Isn’t selling all about meeting or exceeding expectations?  If we don’t know the clients expectations, how do we have a chance to meet them?
  • What kind of premium are you currently paying? How many times have you worked an account, didn’t write it and found out the premiums they were currently paying after the fact?   If you knew up front you might have decided to not waste your time since they already had a great deal!  If they won’t tell you, that is a signal they are price shopping.  Do they think if you know what they are currently paying you will come in just barely under it?
  • If they don’t currently have coverage, why are they looking for it now? I know a number of carriers that don’t like accounts that do NOT have current coverage.  They found when they did “look backs” on the accounts that experienced losses, that the loss ratio for accounts that did not have coverage directly before them, experienced more losses.  I think the answer to this question, tells a lot about the potential client.  If they cancelled previously for non-pay, is this potential client going to be a payment nightmare or more susceptible to losses?  Are they only looking for coverage now since someone else is requiring it?  This is not necessarily a bad thing, but is important to know.
  • If they move coverage to different carriers over the last few years, why? They are most likely driven by price, don’t have any loyalty and don’t understand the true “cost” of switching carrier often.
  • Do we ask about their website? I can’t tell you how many times I do some internet research on a prospective account and the agent is unaware of what I found.  Many underwriters do the same thing and I hate to be “caught with my pants down” and unaware of what the insured’s website says or what is available on the internet about them.
  • How did you hear about us or come to call us? Did someone suggest us to you?  This give you some information on where your business is coming from and what is working.  If they were sent to you by another client, it lets you know who you should thank!
  • What is your biggest concern or what keeps you up at night about your insurance program? Again, it helps you to better know your client and find out what their “hot buttons” are.  Besides, if you don’t ask questions like this, how will you ever know?
  • Tell me about how you got started…. People love to talk about themselves and tell “their story”.  Knowing more about their “passion” and what makes them successful will help you to protect that commercial client.
  • What is their tolerance to risk? You will most likely get a confused look when you ask this question.  Ultimately you are there to properly protect their assets and they need to know more about what risk those assets take.  This is an opportune moment to help educate your potential client and help them understand what you are looking to do.

Finally…. Ask the prospective client if there are any questions you haven’t asked that they think you should?  This lets you know where you stand and how close you are to being on the same page.  Another expectation assessment moment.  If you are having to extract information and they are not very forthcoming, it will be hard for you to do your best job for them.  If it is a “need to know” type of environment, you have not built the trust element enough and are in for a bumpy road ahead and a reduced chance to write the account.

Keep in mind, you are there to learn about the account and portray them in the best possible light to the carrier to get them the best terms, most appropriate coverage and meet or exceed their expectations.  So ask away!
