Today's top-performing brokers and agencies are generating per-client revenues that are 150% higher than what most of their competitors are doing. Stick with me and I'll demonstrate the commission-generating formula behind their superior performance.

In my May column, I showed you how workplace voluntary benefits can be your prospecting secret weapon, putting you in front of the prospect, putting your competition at a tremendous disadvantage, and putting the BOR in play for you.

In June, I revealed the power of combining voluntary with consultative advisory selling to help you close more sales by solving pressing HR problems for your clients with no impact on their budget.

These are tremendously powerful strategies for the broker and agency that is willing to adapt to the new marketplace and industry realities. My clients who are implementing these strategies are quickly replacing lost commissions and rapidly building their books.

But building a strong book and a truly lucrative practice requires more than just effective prospecting and selling strategies.

Total lifetime value of a client

Let me introduce a critical business metric with which you should be familiar. "Total lifetime value of a client" is simply the total amount of money that a client is worth to you during the time they remain a client.

The higher this metric, the better job your practice or your agency is doing and the more bottom-line revenue you are generating.

Put another way, total lifetime value of a client is a function of your client's annual value to you (share of wallet) times the number of years you have them as a client (retention). For example, a client worth $1,000 a year that you keep for three years has a total lifetime value of $3,000. Pretty simple but extremely important; every agency should be tracking this metric.

Because of their impact on total lifetime client value, retention and share of wallet are also key metrics for the broker or agency that is serious about transforming their business into a true commission machine.

Share of wallet

By "share of wallet" I mean the amount of the client's total spending that an agency captures in the products and services that it offers. Increasing the share of a client's wallet that your agency receives is almost always a more efficient and cost-effective way to increase revenue than adding new clients.

Most important, increasing share of wallet has a multiplicative effect on the lifetime value of your clients, making them much more valuable to you. I'll get to that in a minute.

The most important strategy for increasing your share of the client's wallet is cross-selling voluntary benefits. As I demonstrated in my February column, you and your clients should consider voluntary as simply additional employee benefits that help protect employees from financial risks.

Cross-selling voluntary is the easiest and most effective means of increasing your share of wallet.

One easy way to do this is the innovative strategy I described in my May column of bundling voluntary health benefits such as critical illness, accident and medical supplement with a high-deductible health plan.

A broker client of mine in Texas who works in the small-group market has begun cross-selling voluntary in this way and is doubling his first-year commissions while lowering his client's premiums and improving the benefit plan.

Regardless of your cross-selling strategy, voluntary can increase your first-year commission - and your share of wallet - by 50% or more.

Cross-selling = retention

You know that retaining your clients is critical if you really want to build your book. Growing your book is extremely challenging when you're having to prospect just to replace clients. And having to bring ever-higher medical renewals makes it difficult to hold on to a client.

An exciting side effect of cross-selling voluntary is a dramatic increase in retention.

Retention studies were first done by State Farm in the '70s and have been repeated by MetLife and a number of other carriers since. The findings haven't changed over the years.

You might be as surprised as I was at the impact on retention of cross-selling multiple product lines into an account. Of clients who have been sold a single product, only about 50% are still a client five years later.

For clients that have been sold two product lines, five-year retention increases to 70%.

I would suggest that the employer views the medical as one product and sees the group of ancillary benefits (LTD, group term life, dental, vision, etc.) as a second product. This explains why so many brokers report a five-year retention rate in the range of 65%-75%.

But when clients are sold three or more products, their five-year retention rate tops 90%! (See box above.)

Notice that cross-selling voluntary benefits has a dual effect: You are increasing the annual value of your client by selling additional products and you are keeping that client for additional years.

Add a product, multiply revenues

So selling more products to clients has a multiplicative effect on revenue and profitability. More share of wallet means more revenue per client (due to multiple product sales) and greater client retention. Plus, successive years are more profitable since you no longer have the client acquisition expense.

By cross-selling voluntary into an account, your total lifetime value of a client increases dramatically as you make more per year and hold on to the client for more years. An increase of 20% in annual client revenue through cross-selling a third product line yields a huge 150% increase in total lifetime client value.

It's hard to fire a hero

But the impact on retention of cross-selling voluntary doesn't stop there.

If you use voluntary benefits to help solve a painful HR problem for your client (see my June column) - such as poor benefit communication, high turnover, or paper apps - you change your relationship with the client.

By solving their problems, you move beyond mere salesperson in the client's eyes. We have a name for those rare individuals who go around solving problems for others. We call them "heroes."

And let's face it: People are loath to fire their hero. There just aren't enough to go around.

So when that high renewal comes in, your client is much more likely to recognize that you are just the messenger. Since you've already proven yourself to be a problem solver, your client probably won't go into shock and anger but, instead, look at you and ask, "So, what's your plan to fix this?"

Voluntary can be extra sticky

Even when a client does leave you due to a high renewal, quite often the new broker of record won't offer voluntary. So you retain the BOR on the voluntary.

Most brokers I know who lose the BOR on the medical give up on the account entirely and no longer communicate with the client. With the BOR on the voluntary, however, you have a perfect opportunity to continue talking with the client, checking up on voluntary claims, billing and re-enrollment.

Because voluntary allows you to remain engaged with your client even after losing the medical, you never really lose the client. You keep the account in play and have a chance at quoting the medical again when the next high renewal is delivered.

The bottom line: By cross-selling voluntary into your accounts, you will boost your share of wallet to increase your per-client revenue, improve your retention to keep your clients longer and, as a result, raise your total lifetime client value and begin to transform your business into a true commission machine!

Griswold is a leading authority on consultative selling and cross-selling voluntary. He consults with agencies and carriers to explode their sales revenues. Reach him at (615) 656-5974, or

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access