Every agent with whom we speak tells us that their primary product is service. The agency provides such a high level of service to its customers that they not only stay with the agency, but are also glad to refer friends and associates to achieve the same levels of service.
But what happens when the agent removes the rose-colored glasses to find that the service levels for which they express pride could be chasing clients away instead of keeping them and that the wonderful force of inertia is what keeps the clients? The referrals might be due to clients’ telling their friends that their agent’s service 'isn’t too bad,' rather than boasting about 'super service,' as the agent would like to believe.
We’d like to issue one warning and two tests about 'walking the talk' when it comes to providing excellent service to your clients.
WARNING
Don’t boast about your service until and unless you’ve thoroughly tested it. If you or a representative calls your agency 10 times with 10 different issues, problems, changes, or complaints, how many times are you likely to get satisfactory or better service?
The best way of testing service is that simple: Make a series of calls to your agency testing a variety of service issues (claims, fast response and call back, correct feedback and answers, etc.) and gauge the results. Don’t blame employees if the results aren’t to your liking. Use the information to educate your employees about the levels of service that you expect from the agency.
THE TESTS
Measure two things for a 12-month period: the number of existing customers lost (and why) and the real number of referrals made to the agency by your customers. If you can identify the total number of active customers in the agency at the end of any month, start with the next month and keep an accurate count of lost customers in each of your departments (Personal Lines, Commercial Lines, etc.). Make sure your staff records the reasons for loss. Death and retirement (moving) are perfectly reasonable reasons for no longer being insured — nonpayment is not! Treat every nonpayment customer (not just a policy) loss as a preventable loss to the agency. The reason that the customer left is that they didn’t have enough reason to stay. This test also tells you whether your staff even knows if and why their customers leave them.
As we all know, aggressively writing new business while losing existing customers is a recipe for disaster. An agency with which we work claims that 'everyone' loses accounts these days. They’ve lost 15%-20% of their revenue annually and have finally considered counting customer losses. If premium and commission losses won’t convince them that they might have poor customer service, perhaps client losses will. Of course, not everyone loses accounts, and no one has the capacity to absorb all of the accounts that all agencies in a territory would lose if there really was a price war.
The second test, testing referral status, will also either confirm or deny excellent service. The number of new business calls, whether written or not, isn’t a good measure of referral numbers. If many new prospects are coming to the agency through cold call-ins, these can’t be considered referrals. True referrals can be counted by simply asking each caller how they heard about the agency. If they refer you to a customer name or even if they tell you a friend referred them, it can be counted as a true referral — whether or not a policy is written. Remember, we’re trying to determine service quality by the number of times your clients refer their friends and acquaintances to your agency. These are still customer referrals — even if you don’t write the account.
EXAMPLE
An agency that boasted of high service and referral rates found that the total number of referrals in a six-month study was less than 15. The agent stopped the study at this point and retrained and/or replaced the entire service staff over the next two quarters. We conducted a similar study 12 months later and found that the number of referrals had grown to 15 each month! Obviously, if you can identify the ingredients of good service and implement and manage them, you’ll achieve better results.
We haven’t addressed the actual ingredients of a strong servicing agency in this article. We’ve covered this ground many times in many other forms. The ingredients include:
- Expressing a helping attitude to the customer, instead of quoting and order taking
- Providing the requested information quickly and accurately
- Underpromising and overdelivering
The problem that we’d like to uncover for many agents is the misperception that they have high service levels when they don’t. It’s comforting to think of your agency as a high-service agency and that the problems you encounter are systemic problems affecting all agencies. Be aware that the agencies that truly have great service levels don’t boast about it, while the agencies that are suffering, perhaps from low service standards, are very vocal about the poor nature of the customer, carriers, economy, or the industry in general. The next time you’re at an association meeting, note the agents who aren’t vocal about these kinds of problems and get them to discuss how their agencies differ from the vocal majority. You’ll find that strong service is well-managed service and that it has little to do with how many generations the agency has been around or how long the CSRs have been in place. Customer service is transitory. Customers are always looking at what you did in their last contact to gauge their perception of your service.