growing insurance referrals

Among all the sales funnels you may have, referrals can produce the most revenue at the lowest cost. That alone should make building your referral business a priority.

Some agents think of referrals as their customers doing them a favor. In a way, that’s true. But more importantly, by asking for a referral, you are giving your customers the chance to help friends, families, or colleagues to address a need in their own lives. In other words, your customers may be doing you a favor, but you’re doing them one, too.

What makes referrals so important?

Referrals can be an excellent source of new and continuing business in terms of the cost and effort required. Consider these facts about customers acquired through referral:

Trust Value

According to Nielsen research, 92% of people view earned media, including recommendations from family and friends, as the most trustworthy source of information on what and where to buy.

Acquisition Cost

Acquisition cost is the amount you spend on sales and marketing divided by the number of new customers. It is estimated that independent insurance agents spend an average of about $900 per customer between all acquisition efforts.

It costs much less than that to generate referrals. Sometimes, all it takes is to ask an additional question during a customer conversation, which costs nothing.

Lifetime Value

Across all industries, the lifetime value (LTV) of a new referral customer is 16% higher than a new customer acquired through other sources, according to the Wharton School of Business.

How can I grow my referral business?

To get quality referrals, you provide value and an excellent customer experience. Presuming you have those essentials taken care of, let’s look at simple actions you can take to build a productive referral network.

Ask for a Referral

Texas Tech University found in a survey that 83% of satisfied customers are willing to refer products and services, but only 29% do. The most frequent reason was that they weren’t asked for a referral.

You read that right. The single most important reason that some insurance professionals get few referrals is that they don’t ask for them! Because of their excellent service, some referrals come their way by default – but they could be getting so much more.

If uncomfortable using the word “referral,” ask for an “introduction.” Either way, ask the question!

Reach Out Repeatedly

Frequency and consistency are essential in building referral business. The more you connect with your clients, the more comfortable they will be with you. Their trust in you will continue to build. You remain closer to their top of mind. All combine to increase the likelihood that your name will come up in conversations they may have with family and friends about insurance.

Inform and Educate

The best referrals come from customers who recognize the value of their own experiences and understand what your business can offer. Inform and educate customers about what you do.

Make sure your customers know what types of customers you enjoy serving. Say things like “I really enjoy working with young families like yours” or “I wish more small business owners understood as well as you do why they need disability coverage.”

Follow Up

Like everyone, your customers have challenging periods in their lives. A particular challenge may have been what brought them to you as a customer in the first place.

The point is, just because a customer didn’t want to or couldn’t think of someone to refer to you when you first asked doesn’t mean they will always feel that way.

You’re already following up with them periodically to ensure everything is going well. Assuming that it’s all good, ask a question at the end of each conversation about whether they know anyone who might be interested in the coverages you offer.

Give as Well as Get

To get more referrals from customers, give more referrals to customers. They don’t have to own a business to benefit directly from your referrals, although that’s the most obvious situation.

In addition to business owners, you likely have customers that work in sales for their employer. Others may work for a company that rewards employees who refer a new customer.

Be the person who helps them increase their revenue, meet their sales quotas, or earn that employee incentive.

Say “Thank You”

People love to help others. Even more, they love to be thanked for their efforts. Make sure you circle back around and thank those who refer people to you.

There are lots of methods to say thanks. Send a card or letter. Pick up the phone. Drop off a small gift. Whatever you do, make sure it’s sincere.


Providing excellent customer service, asking for a referral, educating customers, giving referrals as well as getting them, following up, and saying thank you will all go far in building a referral network that will pay off for many years into the future.

As you work to expand your referral business, don’t forget that Disability Insurance Services is your complete resource for disability and long-term care insurance. Request a Quote or call us at (800) 898-9641 to discuss case design to fit specific situations. We’re here for you!

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