Question

Which one of the following statements is correct with respect to referrals from existing customers?

A. Referred customers tend to stay with an agency or brokerage longer than customers from other sources.
B. Referrals from profitable customers are no more likely to be profitable than referrals from unprofitable customers.
C. Agencies and brokerages should avoid referrals because a problem with one account can spill over and affect other accounts.
D. The best approach for an agency or brokerage is to ask each and every customer for referrals.

Answer 1

Referred customers tend to stay with an agency or brokerage longer than customers from other sources.

Step-by-step explanation:

The correct statement with respect to referrals from existing customers is: Referred customers tend to stay with an agency or brokerage longer than customers from other sources. This means that customers who are referred to an agency or brokerage by existing customers are more likely to remain loyal to that agency or brokerage for a longer period of time compared to customers who come from other sources. For example, if a customer refers a friend to their insurance agency and that friend becomes a customer, it is likely that both the referring customer and the new customer will continue to do business with the agency for an extended period.