Survey Your Customers

It's easy to lose sight of the fact that agencies are in the service business. But consider that all agents sell the same product-insurance. Why do some agencies blossom while others wilt? Service and marketing are keys. Too often, getting new customers (through marketing) is emphasized at the expense of keeping customers (through service). You have to do a first-rate job at both to have first-rate growth and to control expenses.

Getting a new customer costs five times as much as keeping an existing one!

How to tell whether service is good or bad? There's only one way to know for sure: Ask customers! And that's why customer surveys are becoming so important.

Maybe you think customers will let you know when they're not happy. Some sure do, but others get their revenge quietly.

'A great many customers will not return bad service with bad behavior,' writes James Donnelly Jr., Ph.D., in a new book, Close to the Customer. 'They are always polite and never get loud, cause a scene, or scream for the manager. They just never come back.'

Other experts have estimated that only one in 27 customers who have had a bad experience will file a complaint. And 91% of those who complain won't buy again.

Today's consumers are less tolerant of poor product quality and poor service than ever. As an agent, you're facing an uphill battle because you're tarred with the real or imagined 'sins' of the insurance industry. Given the backdrop of rising Auto insurance rates, company insolvencies, and scattered scandals, consumers are skeptical.

So, when Mr. and Ms. Customer feel that your staff is indifferent to their concerns, they won't be happy. Little irritations add up . . . such as the agency not returning phone calls promptly, if it returns them at all; not solving problems quickly; not letting customers know what to expect at renewal; not knowing what's going on with a claim; and failing to alert customers of additional premium due after an audit. All are ways for your customers to soon become someone else's.

As Donnelly points out, 'Customers do not buy your products or services - they buy solutions to their problems.'

Whenever a problem crops up, there's almost always a chance to solve it. If the situation is cleared quickly and the customer is kept informed, you can actually enhance the customer relationship. But when communication breaks down and the customer perceives an indifferent attitude, the odds of keeping the business are slim.

According to Rennie Walt, vice president, Service Research Corp., Lincoln, NE, few agencies survey their insureds - at least not regularly, and not in an unbiased, objective way.

'I believe that most agencies think they survey their insureds,' says Walt. 'But remember that motivations for buying change. So though you may have learned about customer perceptions and preferences last year, you must continue to ask. The customer is a moving target, and you need to move in the same direction.'

Agents tend to assume that since their agency is growing and making more money, all's right with customer relations. Or they believe that price will be the answer to all problems.

Walt says that a better price is indeed often the reason an account moves. But the buyer wouldn't have gone shopping if his or her needs were being met.

'Reliability, responsiveness, and assurance account for 75% of what the customer really wants,' he points out. 'But if you provide outstanding service, insureds will become so loyal they won't even think about leaving.'

To provide that kind of service, you must know what the agency is doing right and where it is 'messing up' in the customer's eyes.

'Successful insurance agents know what their customers are thinking because they ask,' Walt says.

In his book Thriving On Chaos, Tom Peters asserts that companies must ask customers about their performance often, and in different ways. An outsider should gather the data every year. A professional researcher's results are taken much more seriously than research compiled in-house, Walt observes.

Walt suggests taking the following actions to improve service:

Tell the staff to go the extra mile. Suggest that whenever they speak to a customer, they probe for other ways they can help.

Meet with clients a few times a year. Get feedback about claims handling, mid-year coverage changes, special filings, phone call returns, explanations, and courteous and professional treatment.

Whenever insurance company personnel are interacting with clients, ask these company representatives later about their perceptions of the relationship among the three parties.

Consider starting a 'customer council,' a focus group of eight to 12 clients that meets twice a year to provide in-depth feedback.

Most importantly, survey insureds by mail every year. The survey should ask customers for opinions about all aspects of service. It should include open-ended and close-ended questions.

A survey is like a snapshot of how the agency is viewed by customers at a particular time. A survey measures what customers perceive to be the facts. Those 'facts' will determine how customers will behave.

Of course, you can get an informal idea of customer perceptions, but surveys show the exact degree of dissatisfaction and pinpoint the key issues.

Should only large agencies conduct surveys? 'Size really has nothing to do with it,' Walt contends. For any company, if anyone other than the owner is dealing with clients, the owner won't be getting the full picture, Walt notes.

Try to identify all the services that customers use, consciously or not, to evaluate the relationship with the agency, Walt says. Talk to the staff and encourage them to provide ideas.

Also consider convening a focus group of some of your most important customers. They can identify the service areas that concern them the most.

Then design a questionnaire that will be sent to a random sampling of customers. Use a variety of questions: yes/no, multiple choice, and open-ended.

Start with a few nonthreatening, easy-to-answer questions, and Walt advises. Give respondents plenty of room to make comments. Group questions together for logical flow and ease of completion.

But even experts can make mistakes. So test the survey on a few clients before you send a large mailing. That will avoid any unpleasant surprises, Walt says.

Mail is preferable to the telephone, Walt believes. The phone often rings with a sales pitch just as someone is sitting down to dinner. Phone surveys can irk customers - and you don't want to worsen customer relations!

'A written survey you mail to customers is the most cost-effective, nonintimidating, and respondent-friendly method of gathering data from the largest numbers of insureds,' Walt says.

Of course, a written survey doesn't have quite as much flexibility as a phone survey in which the researcher can ask follow-up questions based on responses. However, flexibility and probing can be built into the questionnaire.

'You can anticipate what they'll say,' Walt points out. For example, the survey might ask, 'Were you satisfied with the way your claim was handled?' If the answer is 'yes,' the respondent is asked to provide the details. If 'no,' ask him or her to provide the circumstances. Was the problem with the agency, carrier, or both? And so on.

It's possible to do your own surveys; reference books can show how to structure survey questions. Most experts, though, recommend using a consultant. A key reason is trust: Participants respond more honestly when they're sure their responses will remain anonymous and confidential.

Furthermore, with in-house surveys, there's a tendency to skew the questions and select respondents to make the agency look good. You want honesty. The research firm will design the questionnaire, using your input. The firm will analyze and summarize the data and written responses. And it will make recommendations.

Finally, customers are impressed when they learn that a research firm is conducting the survey.

A properly designed and administered survey will provide a wealth of information.

Number one: Are clients happy with service? If not, why aren't they? Could some common irritations easily be remedied? What aspects of customer service are most important to customers?

The survey can also determine how many times a year the agency contacts clients. Do insureds feel they're getting too little, too much, or about the right amount of contact? Are they satisfied with the agency's responsiveness to their needs? Do customers believe that you understand their businesses?

Customers can also tell why they do business with the agency. With some probing, you can find out what could make them go elsewhere. This would be nice to know if you want to stop them from leaving!

Staff persons and their attitudes determine the level of service that the agency provides. So, be sure to share survey results with your staff; get their reactions. 'This is a team-building activity,' Walt notes. If any clients criticize certain employees, handle the matter confidentially, one-on-one. But let all employees see the general criticisms.

'The goal of insured satisfaction research is not to measure past performances, but to drive future behavior,' Walt asserts.

Perhaps some procedures are persistent irritants. For instance, maybe people don't like the receptionist asking, 'Who is calling?' because they believe their call might be delayed. A survey might reveal that the agency needs to expand office hours, revise claims handling, modify renewal procedures, or improve accounts-receivable procedures. Finally, with hard data in hand, it's possible to set up an action plan for implementing service goals.

After a survey, insureds expect you to take action. 'You've asked for their help and they have responded,' Walt points out. 'Now you need to tell them what you have learned and what you are going to do about it.'

Remember, he adds, to thank them for their time. Tell them that their input will enable the agency to improve service. Let them know your thoughts through the agency newsletter or a personal letter. You might also want to share the survey results with customers. ('Here's what you said about us,' you might write. 'Thank you for your time and thoughtful responses. Here's what we're doing about it.')

Finally, the survey may produce testimonials and referrals. Use both. Testimonials can be very powerful for direct-mail materials, brochures, and newsletters.

Research firms typically quote a flat rate for services based on the number of people in the survey. Service Research Corp. charges about $2 to $8 per insured (not respondent), based on the number of customers.

Walt explains that because of the mathematics of probability, the smaller the agency, the larger the proportion of customers that are needed to survey. For instance, if the agency has 250 clients, it needs 151 responses to have a 95% accurate survey. For 1,500 clients, you need just 305 responses; for 1 million customers, only 383 responses are needed to fill the bill.

Of course, a larger number of surveys must be sent to get the needed response. Walt says his firm regularly gets response rates of about 42% to 43%.

Two years ago, the First National Bank of Chicago asked its customers what they demand in service. Customers wanted to:

1. be called back when promised
2. receive an explanation of how a problem happened
3. be provided with information so they know telephone numbers to call
4. be contacted promptly when a problem is resolved
5. be allowed to talk to someone in authority
6. be told how long it will take to solve the problem
7. be given useful alternatives if a problem can't be solved
8. be treated like a person, not an account number
9. be told about ways to prevent a future problem
10. be given progress reports if a problem can't be solved immediately