Peer advice continues to grow in importance
Over the last several years, we have seen an increase in the number of business owners and decision makers turning to non-professional sources of advice when they are thinking about risks to their business. Peers, colleagues and even friends and family members provide a valued supply of advice and guidance, with 58% turning to these groups this year, up from 52% last year.
On the one hand, this finding is a concern for the industry as a whole, as it indicates that informed, expert advice is waning and many SMEs are putting their trust in advice-givers with no professional knowledge. This then means an increased risk of under-insurance or inappropriate insurance for too many businesses, and therefore it is critical that the industry continue to communicate the value of the expert insurance advice that brokers deliver.
However, there is also an opportunity in this finding: given that many SMEs turn to their peers when thinking about business risk, how can brokerages encourage their existing clients to refer them to their friends, family and colleagues? Word of mouth is a very powerful source of new business for brokerages and yet how many brokerages actively encourage referrals? In previous editions of the SME Index we have learnt that 39% of potential broker clients would turn to word of mouth recommendations when looking for a broker.