Every year, I see agencies struggling with the problem of how to differentiate themselves from their competition. This is an especially difficult problem for agencies involved in Personal Lines or small Commercial Lines because of the commodity nature of insurance products-but it affects agencies focused on medium-size and large commercial accounts, too.
Agencies meet the problem by designing strategic, tactical, and marketing plans that stress 'high-quality,' 'personal,' 'value-added,' and 'professional' service. But what do these terms mean to the customer? Nothing! Here are some reasons why:
- All agencies tout service as their strength or difference, whether true or not.
Have you ever heard of an agency marketing itself as 'average' or 'good enough'? Just as every car manufacturer finds sources that name it 'best in its class,' all insurance agents tell prospects that they're the 'best' in service, markets, and price. But customers are not stupid. They no longer believe that there's a difference between agencies with which they have no experience. And since they're looking, you can assume that they've had problems with their prior agencies-and any poor experiences with prior insurance agents color their expectations and feelings for all agents. We have to prove ourselves to customers who have had sour experiences with our predecessors.
- Customers assume professionalism and competence in their agents. Otherwise, they wouldn't do business with them.
Most customers understand that a part of their premium dollar goes to pay agents. They're educated further in this by the direct writers who promise to 'cut out the middle man' as a way for customers to reduce costs. Most customers, personal or commercial, who deal with insurance agents expect the agent (and staff) to be better, more professional, and more competent than their most recent agency. They share certain expectations and sometimes have their own unique expectations. One of agents' major problems is that we often try to tell customers what we will do for them, rather than asking the customers what they expect and meeting those expectations. In most cases, customers' expectations fall below the level of service that agents are willing to provide. Giving customers more than they expect is wonderful-but make sure they understand that you're fulfilling their expectations first.
- We don't believe that most customers know the difference between an average, a good, and an excellent servicing agency.
Customers buy a perception of comfort with an individual or a company. That level of comfort remains active as long as the agency doesn't prove that feeling wrong by performing poorly on more than one occasion (most customers will overlook a single mistake). Don't fool yourself into thinking that the customers are dealing with you because everyone in your agency is licensed, CIC or CPCU. They are not. If you have the chance to show the prospect a glowing and friendly personality, your credentials will never be mentioned. And, by the way, what percentage of your customers understand what the acronyms mean?
So if touting your excellent service doesn't matter, if the clients assume competence (whether true or not), and if customers don't know the difference between mediocre, good, and excellent agencies, how can we differentiate ourselves from the rest?
The answer lies in the word 'differentiate.' Of course you want to be better and provide excellent service-but how are you different from your competitors? That's what the client is most likely to see. Since they can't tell the difference between a mediocre, good, and excellent agency (especially before they have any experience with it), they look for differences as an indicator of where to move their business.
Differences that are meaningful for customers don't necessarily seem important to agencies. For instance, customers expect their transactions to be handled quickly and accurately. If you advertise prompt, accurate processing, you're simply meeting expectations-not pointing to a difference. Getting policies issued promptly is another basic expectation that's not really important to most customers. If they trust you enough to feel that they've been taken care of, they don't care whether they get a policy.
The important points of difference are the small things that customers notice and are touched by:
- Does the person who speaks to them know them, or are they constantly being 'looked up'? It's comforting for clients to feel that they're known personally.
- Is the agency staff courteous? How long would you do business with a company that treated you as if your call were interrupting their busy day?
- Your agency is probably busy enough that messages or voice mail must be left occasionally.
- Are messages rare or frequent? It's frustrating to have to leave messages every time you call an agency. To determine how often your agency relies on its message machine, call yourself many times during the day and week, recording whether you got through or had to leave a message. If you're having to leave too many messages, do something about it.
- How fast are messages returned? Customers expect that if a CSR is on the phone when the customer calls, the CSR will return the call as soon as he or she hangs up. They have no idea how many calls come in or how many voice mails are waiting-nor should they care. They didn't call for social reasons, but for a question or problem that needs addressing. Calling the next day may be acceptable to you, as the agency owner, but not to your customers.
- Can you commit to message call-backs within one hour of the first call? Within four business hours? Within one day? Whatever the commitment, put it in writing. Then monitor it (for example, 'In all, 95% of our calls last month were returned within one hour'). A commitment to prompt call-backs is genuine only when it's measured and reported.
- Are you willing to follow up on a customer issue without being asked? If you'd like to thrill your customers, call them when they're not expecting it to tell them the status of a transaction, problem, or claim. It helps them understand that you're thinking about them even when they don't call you.
- Do you shop your customers' insurance products every year? This is a service that many agents are not providing, but which most customers are led to believe is a part of the service provided to them. Independent agents tout their ability to access many markets-as a point of differentiating themselves from captives and direct writers. But what happens to most Personal and Commercial accounts after the first year? They're renewed 'as is,' under the assumption that the carrier continues to be best in pricing and coverage. That may be so-but things may have changed. Customers expect you to acting on their behalf every year to ensure that they're getting the best value for their insurance dollar.
Unfortunately, unless an agency is procedurally set up to do quote comparisons every year, this activity is expensive and time consuming. When programmers established automated Life insurance rating systems that rated hundreds of companies through a simple entry program, it changed Life insurance marketing forever. A similar program should be developed for Personal Lines and simple Commercial Lines (for instance, BOPs) that will permit independent agents or the carriers themselves to take advantage of the general public's direct access to multiple quotes every year. Thus advantaged, the agency will be in a position to fulfill every client's wishes regarding annual rating comparisons by carrier. Of course, this isn't as simple as it sounds. Most companies still have subtle coverage differences that explain rating differences. Property and Casualty comparisons must include rating and coverage comparisons for the customer. These complications are the best reasons for the survival of the Independent Agency System: P/C insurance is so complicated enough that there will always be a need for a trained specialist to analyze policies and recommend one over another.
Customers have three different levels of satisfaction to consider.
- Level 1 satisfaction is meeting the customer's basic needs: getting them the best value, addressing their needs (policies, endorsements) quickly and efficiently, handling claims quickly, and so on. Without satisfying these basic needs, you'll certainly lose your customers.
- Level 2 satisfaction comes from giving customers what they want: all issues handled on the first contact, being recognized personally by the agent or CSR, getting a return call promptly (after leaving a message).
- Level 3 satisfaction results when you perform beyond the customers' expectations, so that they're surprised by your actions.
Most of the points of differentiation discussed here are complex to manage, but simple to implement and pay for. Most clients are more thrilled by the little things an agent does to meet and exceed their expectations than by the expertise and basics that they already take for granted.
Concentrate on implementing one point of differentiation at a time-and don't start a second until you're convinced (1) that the first point of differentiation is in place, and (2) that you've done a good job telling your customers about the difference between your agency and the rest.