Recently, the people at Motorola, the electronics giant, announced that they had 'lost their way.' This innovative company, which had boasted that it was by far the largest manufacturer of cellular telephones, lost that position to the young upstart, Nokia.
No one has ever questioned Motorola's innovative atmosphere. However, somewhere in the 1990s, Motorola lost its customer focus and became driven by process. Innovation became lost in technology and the company moved away from what its customers wanted. As a result, Motorola cut 17,000 jobs last year and has gone through a period of corporate soul-searching.
What on earth has Motorola to do with the insurance agency business?
Many 'successful' insurance agencies have also lost their customer focus in this never-ending competitive market. Price-driven marketing and internal automation have been ways of offsetting lower margins and permitting the agency to process better, faster, and more efficiently. However, the constant price chopping has convinced them that price is all the customer wants. And a concentration on automation has led many agency owners to distance themselves from the most troublesome question they face: 'What does the customer want in this market?'
Agency after agency boasts of its customer orientation and excellent customer service. In most cases, though, this means that they do exactly what the customer expects as a minimum requirement-processing transactions quickly and relatively error free. Although this is obviously needed, anyone (direct writers, banks, Internet companies) can process at least as well as an agency can. These 'excellent customer service' agencies continue to lose revenue base to the soft market and customer base to competition. As a result, a morale problem plagues the top of the organization. When agency owners no longer believe in themselves, their organizations, and their customers, the decline of the business is difficult to stop.
The self-fulfilling prophecy really works. It is, in fact, a form of visualization. If you believe that your customers are disloyal, that your companies are out to get you, that your employees don't care about the work or the agency, then these results will become true. If, on the other hand, you work under the assumption that the customer would like to do business with you and only seeks a reason to continue to do so, you'll be inclined to work with the customers to find those reasons. And if you treat your companies as partners in a business relationship, you'll realize that neither you nor they should expect to do business with each other if your products, services, or goals differ.
Agencies shouldn't change partners at a whim, but just as every other industry shifts relationships from time to time, so does the insurance industry. This does not mean that the carrier or the agency is 'bad.' It does mean that agents must be proactive and sensitive to the changes in their carriers, and react accordingly.
By treating your employees as if they care about the success of your business as much as you do, you'll establish a shared relationship with them and use them to help you find the solutions to your problems instead of simply assuming they're the cause of them. Working with, instead of for, agency owners gives employees a sense of being respected. In interviews, most employees express a need for pride in their jobs and their organizations. Most employees want to do a good job. If they aren't performing as well as needed, they need help in determining the solutions-not accusations. Most damaging is the affect that a low-morale owner has on his employees. When employees feel that an owner has given up on the business, they can't maintain their morale. They become clock-punchers instead of fulfilling themselves by helping others.
DEATH BY ASSUMPTION
Focus on the customer instead of on personal goals. Of course, you want to make more money and have more free time. Of course, you want your business assets to grow. But agents who spend their time, money, and effort on customer relationships find that in doing so, they achieve their own goals. Agents who have 'graduated' out of customer contact and spend their time in more personal pursuits soon lose what customer focus they had and suffer Motorola's problems.
Don't assume that the agency is a cash cow to be milked until it's no longer profitable, and then sold.
Beneath the surface issues in a troubled agency lies a bedrock problem. Agents tell us that even if all of their problems are true, they can still make a good living operating as they've always done, and expect their agency to maintain a strong value because of our industry's merger mania. It seems there's 100 buyers for every seller, all attempting to gain economies of scale. However, if the problems of the agency chase customers into the hands of the competition, what's left to sell? Most sales are being predicated on retention of business, and if that's your problem, your agency has less value. Moreover, was it always your intention to sell? If you were retaining your clients and growing, would you still want to? Most owners would either continue the business or perpetuate internally.
Don't assume that the game is over between the independent agency system and the direct writers. Don't give up-the direct writers don't do insurance very well! But they're nothing if not persistent and are willing to market heavily. Marketing works. Without the unique value-added functions that you can provide, the direct writers' heavy marketing will continue to deteriorate your customer base every year. Even mediocre products sell with heavy marketing. However, if you get back into the game and market your agency and its differences, you can regain market share in your own territory.
Don't assume that the banks and Internet companies can provide the same services that you can. On analysis, bank agencies provide neither more nor fewer products and services than they did before the bank purchased them. Once financial institution management becomes involved, client services tend to decline; they're more process driven than most industries. This is an advantage for competing independent agencies. Bank and insurer relationships haven't yet proven to be synergistic for the customer base. Internet companies sell one thing only: price. They're quote machines for Auto and Homeowners. They provide no advice, and customers quickly become aware that they're alone. Independents would do well to stress this when marketing against Internet companies.
CUSTOMER FOCUS
To regain customer focus and differentiate yourself from the competition, pay attention to the three levels of customer focus:
Level One: What the Customer Expects
Customer expectations are usually basic. All customers want the lowest possible insurance costs, coverage for all normal exposures, and quick and efficient processing of their transactions. They expect claims to be handled quickly and to their satisfaction. Can you meet these basic needs?
You might not provide the lowest cost at all times, but most customers expect low cost as a part, not all, of their needs. The lowest cost won't keep a customer if you refuse claims or poorly process requests. Communicate the fact that you can cost-compare many carrier programs to provide competitive quotes, and that you've beaten the direct writers who can quote only their own company. Provide testimonials about your fast, friendly service and claims handling.
Level Two: What the Customer Desires
Once customers are convinced that their basic needs are being met, they begin to move into the next level of expectation. At the next level, they want to be considered as VIP clients, with a feeling of importance conveyed by respectful, friendly treatment. The customer wants to be known and recognized by the agency.
Can your agency know every customer? Direct writers use random servicing; all representatives can assist customers and access historical transactions. Many agencies use transactional filing to post notes on customer files after every contact. But if customers are assigned to one CSR (for instance, in alpha splits) or one team (program teams or large-lines teams), the person to whom the customers speak can actually get to know them and treat them with friendliness and respect customer. Independent agents can do this, and the competition can't. Communicate this difference to your clients.
Level Three: What Thrills the Customer
Level-three service includes everything that clients don't know is available until you tell them. For instance, some agencies have begun giving large clients access to their own customer information via limited-access dial-up facilities into the agency system. Customers can tell if payments were applied and how much is still outstanding on their accounts. Other agencies have certificates printed in the clients' office to heighten their ease of service. In a few cases, clients can request their own certificates online and even print it out on their local printers (unless a problem exists).
'Thrill' the customer by providing services that are a pleasant surprise. Stories abound about agents attending to clients' needs on weekends and evenings. These situations used to be common; now they're the exception. But all the special service in the world won't do you any good if you don't tell your clients about them. When you do something extraordinary, tell them. As Will Rogers said, 'It ain't boastin' if it's true!'
Motorola's deviance off the success track won't spell disaster because its leadership understands the problem and is concentrating on regaining its customer orientation. Similarly, entrepreneurial insurance agents who are attuned to their customers' needs rather than their personal agendas can regain the growth and profit that were common in the industry a few years ago. The key to tuning in to these needs is communications. Unfortunately, communications is often the first thing to shut down when times get tough.
COMMUNICATE WITH CUSTOMERS
Conduct individual meetings with your largest clients to ask them how they can use your agency to their best advantage. These meetings are best conducted in an informal, social atmosphere. Most customers will begin with the obvious: 'Shop my insurance for the lowest cost every year.' It's everyone's Level-One need. Accept that and brainstorm with the client to develop Level-Two and -Three strategies that will add value to your role and cement relationships. Your goal is to head off any need or temptation the client might feel to shop their insurance around.
Conduct group meetings with medium-size clients to develop similar information. The agenda for these focus meetings should be 'Controlling Insurance Costs and Protecting Your Assets.' Provide refreshments and plan the meetings to last no longer than two hours. Issue formal, personal invitations. Don't expect to get a large response, but be aware that the clients who choose to come represent the others who didn't. Prepare a list of open-ended questions to identify this client base's Level-One, -Two, and -Three issues and how you can address them.
Communication doesn't begin and end with the customer; whether times are good or bad, be open and communicative with your employees, too. They can help you-if you ask them. If you shut them out, they'll sense that problems exist and will eventually respond negatively.
Meet regularly (quarterly) with your carriers. Don't permit the drop-in visits by their marketing representatives; they're generally a waste of your time. Instead, visit the branch office and meet with the group that works with your agency (underwriting, marketing, claims, managers). Your questions for carriers should include 'How are we doing?' 'How are you doing?' and 'How can we make our relationship better?'
Don't assume that the alternative-distribution systems must continue to rob independent agencies of their customers, good will, and morale. If that continues, it's because you're unable or unwilling to change to meet the challenge. For 200 years, independent insurance agencies have represented carriers for risk selection and clients for coverage needs and placement. No other competitor is responsive to suppliers and customers. As an independent agent, you're more knowledgeable, more caring, and more capable than the other markets. You simply need to remember what you are, become proactive in representing yourself to your client base, and stop rolling over when faced with single-dimension competitors. Self-fulfilling prophecies and visualization work both ways!