solution

Case Study

Motim manufacturing revenue scenario

Motim Manufacturing has a relationship with Beta Broking, a general insurance broker that began when Motim sourced a public liability policy via Beta. A year later, Motim decided to source its Director’s liability cover from Beta. The following year its all-risks buildings and plant policy came up for renewal, and Beta secured the business in competition with the incumbent provider. This was followed by the provision of motor insurance to its fleet of 15 vehicles. The value of premium income secured by Beta with Motim during a 15-year period was as follows.

Thus, the lifetime value to Beta Broking of its relationship with Motim Manufacturing amounted to commission earnings of some £501 350 over the 15-year period.
This illustration gives some idea of the real value of making that initial sale of a £2200 public liability policy that generated just £440 in commission. It also underlines graphically just how valuable it is to follow through the customer relationship chain to achieve customer advocacy. Indeed, in this example the real value is derived from referrals; during the 15-year period of the example, 88 per cent of the lifetime value accruing to the Motim relationship is accounted for by the resultant referrals.