Adapted from a presentation at the AMS Users’ Group 2007 National Conference.
Before we get started, I’ll make a confession - I’m a recovering producer. I’ve been through therapy for it. A lot of my therapy dealt with issues of control, of being in charge. Who’s really in charge? That segues nicely into my topic: Gaining control of your agency. There are only three groups of people preventing you from doing this: Producers, staff, and customers. In this article, I’ll offer some suggestions for removing them from the driver’s seat as diplomatically as possible, and putting you back in it.
We have to establish why we come to work every day. We need to understand that we are not in the service business. Although we can give customers perfect service, if a customer has a loss and anything prevents it from being covered properly, our service means nothing. We’re in business to protect people’s stuff, and if we’re not focusing on protection, then we’re not doing our jobs. Quite often, that’s because we’re not in control.
Here’s an example of what we should be doing: I say to a customer (Commercial or Personal Lines), “I need your signature on this bank draft card. We’re putting your premium payments on electronic withdrawal, and let me explain why we’re doing this. If your credit card payment is lost in the mail or delayed and your payment doesn’t get posted, the credit card company is going to charge you a fee. However, if your insurance premium gets lost in the mail or is delayed, your policy will be canceled. If you have an accident, you could lose everything you own. I know I don’t want to put my fate in the hands of the U.S. Postal Service--and I’m sure you don’t either. So please, sign the form.” Do you think you’d have people signing? Yes.
However, suppose a customer says, “Wait a minute. I don’t want to do bank draft.” Your response, every time, should be: “No problem. You can pay me in full.” Then the customer says, “Well, can’t you do monthly?” You say, “OK, here’s how much it’s going to be monthly. I need you to sign this form. It says: ‘The dangers of paying monthly have been explained to me. I understand that I’ve chosen to let the company bill me, that all my billing questions must go directly to the company, that all my payments must be made directly to the company, and that if my premium is late or not received and my policy is canceled, I could lose everything I own.’ So just sign the form.” Is this too strong? I don’t think so.
You can’t let customers decide how you do business, because they don’t know what’s best for them. Some of you are probably thinking, “Wait a minute. I’ve got a half-million-dollar account. You’re telling me I’m going to tell them what to do?”
Let me tell you something - as a rule, it’s not the half-million-dollar account, that’s the problem. It’s the $2,000 BOP on which you’re making $200. However, for accounts of $50,000 or more, we do have some options. If a $500,000 account says, “I want to do something different,” you need to say, “Look, we might go along, but if we do, I want you to sign off on all of this, because it’s not how we normally do business and you could get hurt.” This is called being proactive.
Who’s responsible?
Owners have responsibilities to their organizations. The organization comes first. If it’s not strong, nobody wins. If Jerry works for me and doesn’t do what I ask him, who’s at fault? I am. I can’t blame him if I allow him to disregard my instructions; that’s my fault as a manager. How do we get our staff to do the right thing? I’ve heard owners say, “I want to get people onboard. I want to get people behind my approach to doing business, to see why this is the best way of doing things.” Please understand that the moment you go down that path, you’ve already lost. I have no right to get anybody to think the way I do, whether I’m right or not. The minute I say, “Jerry, I want you to agree with me, I want you to buy in,” what I’m really saying is, “Jerry, I want you to react in a way that won’t make me feel guilty for making you do this.” It’s better to focus on behavior, not attitude. I don’t care what Jerry thinks. If he agrees, that’s great. If he doesn’t, that’s unfortunate, but irrelevant. I want to enforce behavior in our agency - which is to say, I want to enforce the way we do business.
This goes for customers too. If a customer calls and screams and cusses at Debbie, I’m going to say, “Customer, you’re gone. This is not how we do business.” I know of an agency that started from scratch and grew to 150 people in 10 years. The president had a no-tolerance policy. He said, “I don’t care how much business you bring to this agency, if you disrespect another person on our team, you’re gone that very moment. We don’t do business that way.” He wasn’t interested in employees’ beliefs or personalities. He was saying that certain behavior is unacceptable, whether you’re a customer, CSR or producer. When agencies start doing this, profitability goes up, as do employee and customer retention. The agencies start gaining control and start getting rid of problems.
Compensation and control
Let’s talk about staff compensation. We need to base it on three criteria.
- The work you do. If you follow the procedures, you’ll make more money. If you don’t, you’re costing me money and your compensation will reflect this.
- Our profitability. Staff always expects more money. They don’t care whether the money is there or not. However, people need to understand that profitability is something we all need to share.
- Efficiency. You say, “Staff, this is how we do business. If you do it this way and we’re more profitable, you’re going to share in this. If you don’t do it this way, we won’t be as profitable and it’s going to cost you money.”
If I say, “Producer, put the application into the agency management system,” and the producer says, “I don’t want to do that,” I reply: “Fine. Then I’m instructing my CSR to cut your commission in half.” I’m not going to argue. I have control over the accounting, and there’s no way I’m going to pay for inefficiency.
Gaining control of service
What if you never received another phone call for a change request in Commercial Lines? Would this save any time? Would it do anything for our E&O exposure? Here’s what to say:
“Customer, we have a rule. If you want me to make a change to your legal document - i.e., your policy - for your own protection, we require your written authorization.” (Of course, you should adopt the same rule in Personal Lines to handle such things as phone-in requests for changing vehicles on Auto policies.)
Would customers benefit? Yes, they could e-mail or mail or us their change requests on their own schedule. This would also improve accuracy.
So how do you bring this about? First, give new Commercial Lines customers a New Customer Instruction Sheet, which covers procedures for submitting change requests and other matters. Say: “This is how we do business. If you need a change, this is what you’re going to do. Let me explain the benefits to you.”
Having the client sign the New Customer Instruction Sheet informs your staff that this customer knows. So if the customer tries to call in a change and protests that he or she was never told about the agency’s procedures, the staff doesn’t throw the contradiction in the customer’s face; however, they have the confidence of knowing the person has been told - and has acknowledged as much in writing.
This makes it for new customers - but what do we do about existing clients?
How about: “I know in the past we did ‘X,’ but there were problems with this. We’re going to do ‘Y’ in the future, because we care about you.”
For example, you could require customers to provide written requests at least 24 hours in advance for certificates of insurance. An existing Commercial Lines customer might say, “Are you serious?” Your reply: “Yes. One of these days you’re going to be on a job site, waiting to get in, and the computer system is going to be down. The staff is going to tell you, ‘We can’t issue a certificate for you.’ What’s going to happen? You’re going to be mad at me. On the other hand, if you give us 24 hours’ notice in writing, I’ll guarantee that you will never have a problem getting the certificate you need to get on a job site. Anyone who says you can call them anytime for a certificate is lying to you, because computer systems go down. (So do Web sites for self-issuing certificates.) I care enough about you to tell you the truth.”
Similarly, you can change your procedures on Personal Lines phone quotes, so customers will have more realistic expectations: “Please understand, customer, that if you call me and say, ‘I’m thinking about buying this car,’ only the company can give you an accurate quote. We can’t, so we’re going to have to ‘ballpark’ it.”
“You mean you’re not going to give me an exact price?” the customer might say.
“No, I can’t,” you should reply. “It’s not that I won’t - I can’t.” That’s true in most cases.
'Good service’: A dubious value-added
Some agencies make “good customer service” their highest goal. However, please bear in mind that good customer service is worthless if it’s not profitable. What’s more, good service is something that customers expect - like air in the room. They assume you provide it and so don’t appreciate it.
How often have clients moved their business for $50? You say, “Look at all the work we did. Don’t they appreciate it?” No, it’s air. As much as we want to think good service is special, it’s just “air in the room” to clients.
You must rely on something else to hold clients: your knowledge, relationship, and ability to help them protect their stuff. Everybody else is all too willing to give in: “Whatever you say - I’ll drop whatever I’m doing.” You should focus on gaining control and protecting their stuff.
Controlling your time
Here’s how to gain control of your day. First, realize that you have a finite number of minutes at your disposal. Too often, we act as if we have an unlimited amount of time to work.
“I know this probably isn’t the best thing to do,” we say to ourselves, “but I’ll just stay an extra hour today and get caught up,” or “I’ll just come in an hour early tomorrow” - and this becomes a way of life. Sixty minutes an hour for eight hours a day gives you 480 minutes for the day. Choose how you spend them wisely. I’m not trying to create a bunch of clock-watchers; I am trying to create proactive people who make intelligent decisions.
I might say, “Staff, we’re going to stop taking direct-bill payment questions.” The staff says, “But that’s what we’re paid to do--the customers expect it.” I’m not going to disagree with them. In fact, I’ll agree with them. However, I know we have to get revenue per employee up. We only have 480 minutes in our day. We must choose between answering direct-bill payment questions and doing renewal reviews. We can’t do both. Customers can get answers to direct-bill payment questions elsewhere, but not renewal reviews. One doesn’t really protect people, while the other does. If I have to choose, I’m going to choose renewal reviews.
You can stop taking direct-bill questions by using the New Customer Instruction Sheet to explain to new clients that they need to obtain this information from the company. However, what do you tell a 10-year customer who’s used to having you answer direct-bill questions? You explain: “We have a new service for all of our preferred accounts. (Who are these “preferred accounts”? Everybody.) Let me transfer you to the ‘new billing department,’ which has all your up-to-date information.” (Notice we didn’t say, “Let me transfer you to the company,” although this is where we send them.)
What if we could eliminate 50% -- or even just 30% -- of our direct-bill questions this way? I’m not reaching for Utopia; I’m simply saying let’s start gaining control.
Controlling direct-bill payments
Why do people walk into our office to make direct-bill payments? The answer is because we’ve “taught” them to do it because we think we’d better offer them something. However, if that’s the only thing we offer, we’re already in trouble.
Consider putting a sign on the door: “Effective Dec. 1, we will no longer be allowed to accept direct-bill payments in our office.” Hundreds of agencies in all kinds of settings have used this approach - and in every case, it has worked. Not a single agency has lost money. (You’ll notice that I didn’t say “customers - there’s a difference).
After customers read the sign, give them a sheet that says the same thing, and then tell them they have three billing cycles to accept the new system. Come Dec. 1, when they walk in, tell them, “I can’t take your payment.” Imagine the time and money that could save, while lowering your E&O exposure.
We’re not trying to make people mad or run them off. We are trying to say, “This is how we do business - and we’re serious about it.”
Using E-mail to gain control
Have you ever said to someone? “Give me your phone number, so I can check on your question and get back to you with an answer.” Too often, this just leads to phone tag and wastes everybody’s time. Instead, tell the client, “Give me your e-mail address.” Not “Do you have an e-mail address?” or “Would it be OK to e-mail you the information?” but “Give me your e-mail address and I’ll send you the answer.”
I had an agency with about 18 people. I decided to tell them they were no longer allowed to mail anything from the office without first asking the person requesting the information if it could be e-mailed or, if not, if it could be faxed. In the first 90 days of doing that, we cut our postal bill by $1,500.
Let me give you another example of what you can do with e-mail. Use Microsoft Outlook to schedule a date on which you wish to have an e-mail message sent. When a Commercial Lines CSR sends a change request to a carrier, he or she has to follow up on it, which takes up staff time and costs the agency money. Instead, the CSR can use Outlook to schedule an automatic follow-up request in 45 days. Whether the CSR is in that day or not, the company will get the CSR’s message saying: “Where is my endorsement? Please ignore this if you’ve already handled this. Thank you for your prompt response.” Don’t we get stuff like this from companies all the time? We can use this tool, too.
Do you ever ask a customer for a federal tax ID number - then have to follow up to get it? Are you tired enough of this to do something about it? If your customer is using Outlook, you can schedule an event on your Outlook calendar and invite the customer to the event by clicking “Invite.” Outlook will add the event to the customer’s Outlook calendar, so it will pop up and remind him or her that you need the tax ID. Although some of you might think that this is too “in your face” or intrusive, I know agents who are doing it.
The benefits of control
One of our agency clients in California went from $125,000 in revenue per person to $175,000 in about five years, while growing commission income from $2.5 million to $7 million--and the growth was all organic. How? The owner had a vision of how he wanted the agency to run. He told his people: “Folks, I know where we’re going. The train is leaving the station - so get on or get off. He told his customers, “I want every one of you to stay with us. However, the train’s going this way - either get on or get off.”
Stop living in fear of customers and employees, and define your agency’s purpose. Decide who’s in charge of your business/ the answer must be you. Whoever came up with the saying, “The customer is always right” was definitely a customer. When it comes to protecting stuff, the customer doesn’t know what’s best. We do.
I’ve been preaching these message for17 years, and our company has worked with approximately 2,000 agents across the U.S. and Canada. Those who have accepted this message are starting to gain control of their agencies. Their employees are happier and more productive, stress is down, and their customers are satisfied - which means that they’re loyal.
We need to give people what they need in protection while operating our agencies efficiently enough to stay in business. To do both, we must be in charge.