Customer Service As Profit Center

CUSTOMER SERVICE AS PROFIT CENTER

by G. Edward Kalbaugh

In a service business, customer relationships fuel the engine of sales. This tenet is especially important for insurance agents, whose cost of account acquisition remains high in comparison to account revenue. G. Edward Kalbaugh offers 10 strategies for improving profitability through customer service.

The customer service function — the foundation for account relationships — continues to lag behind other agency functions in terms of resources committed. One way to change this is to refocus customer service as a profit center. Use these 10 strategies for improving profitability through customer service:

1. Define customer and agency expectations. This requires a thorough understanding of how your customers’ requirements align with agency products, services, business goals, and objectives. Developing this understanding will go a long way to clarify the agency/customer relationship.
2. Establish the image you want to portray to your customers. Your agency image is portrayed to your customers, and all others who deal with your agency, through your staff, your products, and all other forms of communication generated by your agency. Collectively, this is your agency’s brand.
3. Employ only the best customer service agents. Insurance is a knowledge business, and success is highly dependent on the expertise of your staff. Don’t compromise on this issue. Paying less money for less than competent staff is a false economy that will cost more money in the long run.
4. Make extraordinary service routine. Give considerable thought to defining what 'extraordinary service' truly means. Don’t accept weak definitions. Understand what it takes to translate extraordinary service into the routine of everyday actions.
5. Provide customer service in real time. This requires immediate access to all information relevant to customer transactions, as well as the ability to interact with third parties in real time. This is essential with decisions relating to the outcome of customer transactions — such as quoting.
6. Encourage self-service as an attractive option. Consider such basic steps as account status look-up on your Web site, or automated e-mail. Self-service increases customer convenience and account profitability.
7. Exploit technology. Integrate interactive Web technology into your account servicing process. Connect by the Web, PDAs, cell phones, land phones, fax, and e-mail. Be sure that customer management systems integrate all touch points.
8. Develop processes that ensure consistent efficiency and quality. Employ the 'one and done' principle to eliminate duplication of effort. Ensure that quality is built into the product or service to minimize oversight requirements and get everyone productively engaged.
9. Train, train, and retrain. Employees automatically seek the course of least resistance, which is often counter to agency requirements. Training ensures proper expertise and process. Conduct training regularly.
10. Measure results. Adhere to the axiom: 'You can’t manage it if you can’t measure it.' Make sure that all customer service staff understand and embrace performance measurement as an essential part of delivering excellent service. Share results.

IMPLEMENTATION

To implement these strategies, create a basic project plan that answers these questions for each strategy:

• Who will be responsible for each strategy?
• What will each person do? This includes the end result or 'deliverable' and the tasks required.
• When is each task and/or deliverable required?

This project plan provides a road map for accomplishing the strategies.

SUMMARY

Treat your agency customer service function as a profit center, for both new account production and account retention. These 10 steps will help ensure that the customer service function performs to meet agency goals and objectives for profitability and help create a customer service experience that’s pleasurable for all parties involved, thus improving account retention.

This article originally appeared in Rough Notes magazine and is reproduced by permission.