Local Partners: Bank Referrals and Independent Agents

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    Many factors contribute to an independent agent’s success. One of the most crucial is relationships — with both customers and business partners. Nearly 70 percent of insurers consider partnerships to be integral to the longevity and innovation of their company, according to a report by KPMG at the Institute for Mergers, Acquisitions and Alliances.

    One particular type of relationship that is beneficial for agents to develop and nurture is with customers’ local banks, because the two businesses will likely have to work together several times. What’s more, these relationships can create lead-generation opportunities for agents.

    Here are the benefits of having these relationships and what agents can do to strengthen them.


    Develop a Powerful Referral System

    Referrals are an important component of building a thriving insurance agency. Customers who are referred have a 37 percent higher retention rate and 18 percent lower churn rate than non-referred customers, reports referral marketing platform, Extole.  

    And that trust breeds loyalty. Because they’ve already been “warmed up” by their mortgage broker, referrals tend to have a strong commitment to your agency and usually become some of the best insurance customers, agrees marketing specialist Adrian Jans. This translates into valuable long-term customers. In fact, referral program provider Referral Saasquatch says the lifetime value for one of these customers is 16 percent higher than non-referrals.

    So it’s easy to see the impact receiving referrals from a local bank can have. Here’s a simple example of how things may play out in this type of situation.

    Say someone just received a mortgage. They went through a local bank to secure the loan and interacted with multiple representatives throughout the process. During this time, they developed rapport and built relationships with the bank. It was a positive experience, and a certain amount of trust was established. When the topic of homeowners insurance came up, the mortgage broker recommended you as a dependable agent who could help them find the right policy.

    There’s a good chance a customer would be receptive in this situation. They’re looking for comprehensive coverage, and a recommendation from a trusted bank rep would probably generate some interest.  

    Beyond that, a referral makes it easier to gain a customer’s trust — something that’s critical in today’s highly competitive market. In fact, trust is more vital to brand survival than ever, explains Vanessa Mitchell, senior journalist at marketing insights resource CMO.

    Establishing relationships with local banks means you’ve got a highly relevant referral system consistently sending leads your way.

    Businessman in teamwork concept with cogwheels

    Customers Will Reach Out at Critical Times

    Insurance is all about timing. There’s a specific point when a customer needs a particular type of coverage. Whenever customers approach their bank or credit union (for a car loan, boat loan, new mortgage, etc.), you’ll hopefully be notified by the contact with respect to the customer’s changing needs.

    In the case of someone getting a mortgage, suggesting optimal homeowners insurance to this customer allows you to offer the right insurance at the right time. Not only can you help them sort out the different premiums and understand the process, you can also educate them on specific risk factors in their area. ‘


    Hyper Local Insights

    Another benefit of having relationships with financial institutions is that you know the area because you live and work there yourself. You know the weather patterns, flood and fire risks and so on.

    Insurance writer Arthur Murray says a local agent in an area prone to tornadoes, for example, would want to fully explain wind losses to a customer. Or they may know that homes in a particular neighborhood are susceptible to broken water pipes or flooding problems.

    This level of personal attention and local knowledge are what make independent agents so appealing, says Alleghany Insurance. Building relationships with banks in your area enables you to seamlessly offer personalized insurance that customers need.


    Have the Chance to Be a Trusted Advisor

    The way independent agents and banks become more profitable is by focusing on the advisory aspect of insurance, writes independent broker Barry Siegerman. It’s about establishing a culture where both parties assist customers in different phases of their journey.

    Building strong relationships with community banks and credit unions means these organizations can pass a customer on to you at a critical time. At that point, you can serve as a trusted advisor and be a valuable resource to the customer who is seeking guidance and answers.

    And this is precisely what insurance customers want.

    “They’re looking to their insurance agent to be a trusted advisor — someone they can collaborate with to reach their financial goals year after year,” says global insurance lead at Salesforce, Jamie Bisker. “In fact, 75 percent of policyholders would switch insurers in order to get more personalized service.”


    Reduce Marketing Costs

    By developing a referral system through local financial institutions, you can save money on marketing. Cross-promotion can have a huge marketing payoff because both partners are able to tap into each other’s customer base, reporter Kare Anderson points out. The result is a credible introduction, where prospects are made aware of your insurance agency without you having to spend on paid marketing methods.

    And the savings can be substantial. Businesses spent an average of 11.1 percent of their company budget on marketing in 2018, reports Chris Leone, president of WebStrategies. Having local banks point qualified leads in your direction could help considerably and potentially lower that number, allowing you to allocate resources to other areas.

    Cross-promotion an extremely cost-effective technique, says Mandy Jones at Easy Digital Downloads, and requires less of a financial investment than traditional marketing, if any. She points out that cross-promotion can include joint advertising, the costs of which can be shared.

    Businessmen Cityscape Handshake Partnership Concept

    How to Strengthen Relationships with Local Banks

    Now for the big question: How do you create relationships with banks in your area? More importantly, how do you get to where they’re comfortable and willing to supply you with targeted leads?


    Make Sure You’re on the Same Page

    Understanding one another is essential, Seigerman writes. Local bank leaders need to have a firm grasp on how your agency makes money and the impact of developing long-term customer relationships. For example, you might ask a banking partner to suggest a particular type of homeowners insurance — one that you are offering. And as an independent agent, you need to understand the bank’s compliance issues.

    You’ll want to have in-depth conversations on these types of topics before a local bank sends business your way and vice versa.

    Lacking congruent goals and unified messaging can create confusion on the customer’s end, adds the team at American Family Insurance. So there needs to be a level of uniformity so that customers follow a logical sequence as they move from having their banking needs to insurance needs addressed. Ensuring you’re on the same page right from the start should eliminate a lot of friction and make the experience more rewarding for everyone.


    Focus on the Customer

    With so much effort placed on generating valuable leads and increasing business, sometimes agents may forget what’s most important — satisfying the needs of customers.

    The Business.com team explains that it’s all about focusing on how to legitimately help customers get the insurance coverage they need rather than simply pushing products on them. If you do this, the rest should fall in place.

    Data is one of the most important tools for improving the customer experience, says global senior marketing director at SAP, Joe Pacor. It’s what helps agents answer key questions and offer the right coverage. When you’re able to obtain the right data, you can get a holistic view on the customer — increasing your odds of getting started on the right foot, writes the team at Pitney Bowes. Therefore, it’s crucial that any local banks you partner with gather as much information as possible and pass it on to you.



    Reciprocity is also essential. This is a key element for creating trust and paves the way for meaningful, long-term business relationships, says business marketing and development consultant Lahle Wolfe. You can’t expect to nurture relationships with local banks without giving back and being an asset to them as well. It’s all about delivering mutual value.

    “Building mutually beneficial business relationships is more difficult than people think,” explains Glenn Llopis, business strategy consultant and author of “The Innovation Mentality.” “It’s not just about whether you can trust someone anymore, it’s whether you can expect the other side to add substantive value.”

    Here’s an example of how you might reciprocate. Say someone is interested in buying a home and doing preliminary research on homeowners insurance. After reaching out to you and building rapport, you might recommend a local bank for that customer to contact about a mortgage.

    Localization manager for Shopify, Dan Virgillito, points out that you may also want to promote local banks on your social media, as this is a simple way to create goodwill.

    Everyone wins with strategic partnerships, says Paul Parisi, president of PayPal Canada. He sees them as “fundamental to improving business outcomes.” In his two decades in the payments industry, he’s seen benefits such as increased markets and relevance for businesses and better product offerings for customers. When two companies like an insurance agency and financial institution work together, both are positioned to fulfill common goals of growth and longevity.


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