https://completemarkets.com/Article/article-post/545/Professional-Services-Marketing-A-Strategy-For-Providing-Client-Satisfaction/
Professional Services Marketing; A Strategy For Providing Client Satisfaction
An Overview
Most professional services are highly personal in the nature of the service provided, be it legal, accounting, medical, etc. The consumer of professional services typically will refer to the provider of the service as 'my lawyer,' 'my accountant,' or 'my doctor,' reflecting the highly personal nature of the work. Indeed, the very need for complete confidentiality and confidence denotes the extreme personal nature of most professional services.
To complicate matters, much of the process in professional services is shrouded in mystery for the typical consumer. There are very foreign terms. 'Legalese' is derided in popular press and media as a sort of arcane foreign language meant to keep the commoner from understanding basic concepts of law. The average consumer gets frustrated by the complication of rather simple matters that undergo legal processes. Arcane accounting processes are difficult and misunderstood by the general public. How many times have you had to wait in a doctor's office seemingly forever, only to have the actual examination last only five minutes?
The purpose of this article is to explore services marketing concepts in current terms and apply them in a novel approach to the rendition of professional services. While much of this article makes use of the legal industry as an example, the application of the concepts flows equally with little modification to other professions.
Marketing in the Professional Service Industry
Professionals are simply not taught how to market in the schooling. There is no training in the area of services marketing, and worse yet, no course work offered that even remotely prepares the professional for the most basic aspect of marketing, client interaction. Ask any recent law school graduate whether marketing has anything to do with lawyering, and you'll likely be met with a blank stare. Indeed, I sought continuing education credits from the State Bar of California for course work completed in marketing towards an MBA and was denied recognition of the work for Continuing Education credit, even on appeal. The reason: These lawyers simply didn't see any relationship of marketing to the practice of law, for the client or the attorney! This is simply an example that the role of marketing in the legal services industry remains a mystery to even the most seasoned of professionals. Yet who could deny the client dissatisfaction that builds from simple failure to return telephone calls in a timely manner (or at all).
If we are to go back to the classic literature in the field of services marketing, we see a common theme: The role of marketing in the services industries is to create customer value. For example, how does one create value to a customer in the legal services field? Most of the work of an attorney seems to be spent either destroying someone or their property, or preventing an abuse of some intangible right or asset. Evert Gummeson suggests that the search begins with market research. 'Value is simply quality, however the customer defines it, offered at the right price.' The goal is to find out how the consumer defines quality and what price the consumer is willing to pay for it.
A key issue is whether the customer notices differences in quality between competing suppliers. If the consumer does not notice any difference, then the consumer either does not care about the level of quality or is not educated as to the available options.
I would suggest that without constant client education and attention to client issues (i.e., listening to the client), there will be a lack of communication to a detrimental effect-disharmonious relations between the professional and the client, and probably a soured disposition toward the entire profession.
Indeed, communication is such a large part of professional services that, at least in the legal field, it can be said that communication is the lowest common denominator of the profession; it is, in the most basic sense, what the lawyer is hired to do. Failure to communicate is a failure to execute the most basic function of the job, which is in itself a failure in quality.
Quality Goal: Zero Defections
Studies reflect that it's four times more expensive to obtain new business than to retain existing relationships. Furthermore, the loss of existing business destroys the compounding effect of existing client relations, i.e., personal referrals. Because professional services are by nature personal, this failure can destroy a professional business (and notice the use of the word 'business'-'profession' is the practice of a specialized skill involving a fiduciary relationship, while 'business' denotes a profit-oriented enterprise).
While the service provider typically focuses on providing a level of service that it deems to be high-quality, this focus is misdirected. The issue is not whether the provider is giving superior service, but whether the consumer perceives him- or herself to be receiving it. Some literature suggests that the focus really should be on obtaining and retaining high-quality clients. The purpose behind the search for these clients is that a high-quality client will perceive and appreciate superior service. Clients that are not superior simply won't.
To retain high-quality clients, particular attention should be paid to the individual needs of the client. But how does the professional actually go about discovering and assessing the client's needs? An examination of current marketing technologies and some of the newer techniques (which most professionals have a particular advantage in using over other industries) will provide insight in this area.
Communications Gap
Four potential shortfalls may lead to a gap between what clients expect or perceive and what they actually receive:
not knowing what clients expect in the first place
specifying service-quality standards that do not reflect what management believes to be the clients' expectations
service performance that does not match specifications
not living up to the levels of service performance promoted by marketing communications
In each of these situations, the overall theme of the failures is a lack of accurate communication. Not knowing what the client expects is the most basic of communication failure-the expectation might not be as great as the lawyer perceives, or the expectation may be unrealistically high. A service standard that does not reflect the client's expectations may actually be over-servicing a client. The actual service required by the client may be at a level lower than that being provided, and the client's reasons might not be well known to the professional (for example, lower cost, less paperwork, etc.).
Just as dangerous is to promise the client a certain level of service that cannot be delivered-for instance, providing periodic status reports when a crushing case load does not permit the time to do so.
Finally, advertising or communicating a level of service that you cannot meet is a terrible blow to the professional's credibility, and the exponential effect on negative referral can destroy a practice.
The service point failures may be caused by a client who is unable to express him- or herself accurately for a variety of reasons, but the professional also has a responsibility to develop the communications system with the client more fully.
Understanding Fail Points
'Organizations that are known for excellent service are good at listening to both their customers and their customer-contact employees.'
One of the biggest dangers in client contact in professional services is the personal offense taken by the professional or staff at a time when the frustrated client is simply trying to communicate the need for clearer dialogue and understanding. The technical and complex nature of most professional work causes the professional to focus on situational results rather than the client needs for particular service levels. Staff members, typically the first point of client contact, are particularly vulnerable to attacks of frustration.
Several time-tested marketing techniques may be utilized to gain a more full understanding of the client and the client's expectations.
Traditional forms of gathering marketing data include complaint analysis, post-transaction surveys, ongoing surveys, employee surveys, focus group interviews, 'mystery shopping,' and competitive market surveys. Most of these techniques are not well suited to professional services. But complaints are universal and have particular application to personal services. For the purpose of this article, the focus will be on complaints: why complaints are an important marketing tool, techniques in using complaints to further client relations and to turn a hostile situation into one of positive return.
Complaints
Complaints provide an opportunity not only to study the fail points but to move the customer higher in the satisfaction scale. If the service provider can get beyond the emotional issue of an unhappy client, the learning process can begin.
With respect to products, the frequency range of complaints runs from 20% to 50% of the time, with the average being one-third. There's no indication that the service industry has a complaint ratio any different from that of manufacturers. This represents an alarmingly high ratio of dissatisfied clients. Consequently, attention needs to be paid to developing and maintaining an active process of soliciting client responses and dealing proactively with complaints: 'Learn what the customer expects in quality and performance, and monitor customer response continually.'
A key element of complainers is that 'More than half share their experiences with friends and relatives, and evidence indicates that negative word of mouth can have a major influence on the buying behavior of others.' Studies reflect that 55% to 60% of complaints are resolved to the consumer's satisfaction.
Beyond personal and cultural factors that determine or contribute to the complaint behavior of the consumer are the additional factors of (1) the significance of the event, (2) the knowledge and experience of the consumer, (3) the difficulty of seeking redress, and (4) the perceived probability that complaining will lead to retribution or some other, positive outcome.
The rendition of legal service, for example, is particularly susceptible to each of these factors. Legal events have particular significance to the consumer regardless of the routine nature of the event to the provider. Typically the knowledge and experience of the consumer is limited. Clients will typically have difficulty seeking redress-how many law firms have a consumer service department for receiving and remedying complaints? And quite often, complaints often lead to some price reduction in the service or some other form of comparable remediation. Of course, there's always the threat of a malpractice suit or State Bar complaint.
But complaints can be useful as market research data, and research suggests that a well-managed complaint-handling process can actually lead to increased sales.
Analysis (and resolution) of complaints takes on two time dimensions, with some independent consequences.
Real-Time Complaints
Real time complaints are those that are displayed at the time that the client or consumer is engaged in the actual service delivery process. In the legal industry, this typically occurs over a duration of time: during the pendancy of a single case, or over the course of numerous matters of representation.
Real-time complaints present two significant advantages over complaints received 'after the fact': a greater ability to recover the customer, and a greater ability to actually learn what the fail point was.
The ability to recover the customer at the point-of-service failure is a significant advantage. The real-time complaint process has an inherent ability to bring a hostile situation to a favorable outcome. 'There is significant, convincing evidence to support the principle that making a sincere effort to rectify problems will noticeably increase consumer assurance that the firm really cares. Not surprisingly, satisfaction and intent to repurchase are strengthened in the process.' Bottom line: It shows the client that you truly care.
The ability to learn about the fail point is greater with real-time complaints because memory is fresher and there's less opportunity for other factors to influence the consumer's behavior.
After-The-Fact Complaints
After-the-fact complaints are more limited in their market research potential. The passage of time may allow the interference of intervening factors, which might not be communicated or recognized. There is also a more limited ability to recover the client in after-the-fact complaint situations because the consumer has an opportunity to brood over the complaints and ferment greater dissatisfaction.
After-the-fact complaints also have a unique quality rooted in human behavior: Seemingly minor irritants may take on much greater importance and significance as the duration of the complaint process lengthens.
Still, after-the-fact complaints have market research value. They are just harder to obtain or use toward a positive outcome with the particular complaining client.
Complaints as a Profit Center
The Technical Assistance Research Program Institute (TARP) report argues that complaint handling should be seen as a profit center, not a cost center, and created a formula to help companies relate the value of retaining a profitable customer to the overall cost of funding an effective complaint-handling unit. The study showed positive returns on investment in the complaint-handling and remediation process.
Flow Charts
Christopher Lovelock suggests charting the service process to identify potential fail points, including both the 'front-stage' and 'back-stage' processes. 'Front-stage' processes are those that the client or customer can readily see and come in contact with-receptionist activities, receipt of correspondence and documents, face-to-face contact with the professional and staff, etc. 'Back-stage' processes are those that the client doesn't see but nevertheless affect the quality of service that the client will receive: telephone conversations with others related to the client's cause, preparation of documents, court appearances (in law) where the client is not present, and so forth.
Lovelock touts the preparation of flowcharts to examine the service process. Flowcharts help identify links in the chain of service and identify where weaknesses may exist, or points where failure may occur. A flow chart would be created for each type of service operation. For instance, one would be created for the receipt and forwarding of a client telephone call to the attorney. Or a separate chart may examine the process of setting appointments, or the preparation of a patient for examination. (Flow-charting in this manner also has an unintended benefit: helping the service provider examine and eliminate inefficient processes.)
A specific kind of flow chart, 'control charts,' display performance over time against specific quality criteria. A 'control chart' is typically a fishbone chart or diagram that shows the cause and effect of factors that might be related to a specific problem. This type of charting helps the service provider narrow the possibilities of service point failure causation to expedite remediation strategies.
Client Involvement
Flow-charting helps the service provider see where the client or customer is involved in the service-provision process. These are not only 'front-stage' points of possible failure but also points at which client participation needs to be optimized to facilitate client satisfaction and productive results. When customers (or clients) are deeply involved in the service production process, managers should be examining how customers' inputs can be made more productive.
There are three strategies to increasing the productivity of customer inputs to the service production process: changing the timing of customer demand (that is, shifting demand away from peak times), involving customers more in the production process, and asking customers to use third parties (specialist intermediaries).
The timing of customer demand can be easily related via the peaks-and-valleys nature of legal work. Phone calls are a prime example.
To the lawyer it seems as if everyone has problems all at the same time, and of course, everyone needs to have an answer yesterday. Voice mail has the ability of smoothing out the peaks and valleys by permitting the service provider to gather telephone messages and then return calls at the time of day the service provider directs. There's no reason why the client or customer cannot be advised in the voice mail greeting that his or her call will be returned during a certain period of time, so that they can be prepared for it. Alternatively, the client may advise of a different time when the lawyer could call if it's not possible to receive a call at the appointed time. This system permits the lawyer to control the timing of demand, and makes the lawyer look responsive to the client's service needs. Voice mail permits the flexibility necessary to change the return call time on a daily basis so that the service provider may enjoy a flexible schedule.
Involving the consumer more in the service production simply entails having the client do more for him or herself to accomplish the goals for which the professional was hired in the first place. For example, the preparation of a civil complaint need not be entirely done by the lawyer-much of a civil complaint contains stock language that for one reason or another has become traditional or 'necessary' and if left out could have disastrous results. There's no valid reason why a document with the necessary form language cannot be provided to the client so that the client can put the nature of the dispute in his or her own words. Of course, the lawyer will need to intercede with proper formatting. But the point is that if the client is involved in the process, he or she will obtain a much greater appreciation for the lawyer's work that goes into the preparing the document. Involving the consumer may consequently also cut the labor and cost of the service provider, though just as easily increase the cost. But generally, client involvement at this level gives the consumer a better understanding of the process and greater satisfaction in the outcome.
Asking the client to use the services of specialist intermediaries also increases the productivity of customer inputs to the service production process. This involves delegating one or more of the support functions to third parties. In the legal services industry, many lawyers feel threatened by paralegal services, which are able to provide many of the same services that a lawyer provides at a much lower expense. I advocate the use of paralegal services (and not a firm paralegal/employee) for delegation of non-lawyer duties such as preparing answers to interrogatories, preparing form documents, and general assistance. The consumer will appreciate his or her economic interests being first (rather than the lawyer's), and this will free up the lawyer from performing low-margin work.
The Current State Of Technology
Traditional marketing research usually consists of written surveys, telephone surveys, focus groups, and variations of these themes. These market research techniques have various shortcomings that are difficult or impossible to overcome: lack of candor, inability to monitor, inability to ask follow-up questions, low return, the potential for irritating people and thus alienating them, an inability to ask follow-up questions, and stale memories. Such research may end up being nothing more than a tracking study. Yet the professional is in a unique position relative to other industries because of the fiduciary and confidential relationship established when hired. The idea is to take advantage of these unique relationship qualities to implement the newer marketing technology of storytelling (which Jungian psychologists have been using for years).
The purpose of story telling is to get inside of the nonverbal communication. 'Just think, for example, of the last time you made eye contact with an attractive stranger. A whole range of feelings washed over you, and at that moment it would be hard to argue with the hoary notion that at least 80% of all human communication is nonverbal.'
The methodology of story telling in a marketing context involves drawing metaphors out of people to elicit their true feelings. Gerald Zaltman, Harvard Business School professor, has set up a working laboratory of metaphors. He asks consumers to spend a few weeks thinking about how they would visually represent their experiences with a company and then asks them to cut pictures from magazines that convey their feelings. Later, some subjects come to the lab and tell stories about the images and the connections between them.
A case study worth repeating: Du Pont Corp. turned to Zaltman because they thought that the standard line they were getting in their market research from women, that they wore pantyhose because they felt they had to and that they hated it, was inaccurate. Zaltman conducted storytelling market research, and the results were surprising: ''As we kept probing into the emotions behind the choice of these photos, the women finally began admitting that hose made them feel sensual, sexy, and more attractive to men,' says [Glenda] Green [a marketing research manager at Du Pont]. 'There's no way anyone would admit that in a focus group.''
Quicken and QuickBooks financial management software was originally the product of market research on non-customers. Intuit Corp. targeted non-customers to examine how they worked-leading to the invention of Quicken and QuickBooks. Intuit later instituted a 'Follow Me Home' program: Marketers and engineers peer over customer shoulders to see how they fare in their attempts to get the software installed and use the software. This program was eventually expanded where microcassette recorders were left at the homes of customers so that anytime customers got irritated they could simply press RECORD and file their complaints.
The benefits of storytelling from a marketing standpoint are a more accurate recording of the consumer's true feelings and a less expensive marketing research program. 'Gerald Zaltman claims that he stops hearing much that's new after 15 or 20 people have passed through this metaphor lab.'
The implications in professional services are enormous. The professional is in a daily position to elicit stories from the client, and in fact that is what the professional does a great deal of the time. The stories that the professional garners, though, are usually about the reason for consultation rather than the state of the professional services the client is receiving. The professional can use the service process, with client involvement, to solicit on a regular basis client feelings toward the service process. Some stories may be general in nature and some may be focused more on the anger inherent in the clients' problems, but all of them relate a story to how clients perceive the process as either helping or hurting them, and these stories have direct consequence to the perception they have toward the services being rendered.
For example, during the preparation of a complaint, the client may be asked how he or she felt writing the story down in a legal context. Was it demeaning? Was there anger? Did it help displace some negative feelings? This sort of investigation has broad application across the service provision process.
Conclusion
The retention of business needs to be a priority of the professional services provider. Retention of clients not only is cheaper than finding new ones, but has an exponential effect on subsequent referrals. At the same time, the practitioner needs to recognize that...
https://completemarkets.com/Article/article-post/873/Pulling-New-Clients-To-The-Professional-Services-Firm/
Pulling New Clients To The Professional Services Firm
PULLING NEW CLIENTS TO THE
PROFESSIONAL SERVICES FIRM
by John Graham
It's taken long enough, but the professional services field has discovered marketing or, perhaps more nearly accurately, the value of marketing. So if you're waiting for word-of-mouth to attract new clients, you have a long wait ahead of you.
Take a look around at who's marketing what.
Business consultants are marketing mavens. In fact, some of the largest advertisers in the Wall Street Journal are consulting firms. The number of business books authored by consultants keeps climbing. For example, a popular book on the value of chief executive officers is a thinly-veiled promotional piece for a major financial-services firm. A book-length quarterly journal published by a big management consulting company presents an intriguing and attractive mix of fact and opinion to position the company as the expert.
Several of Boston's largest law firms have gone to casual dress codes. Rather than hide this not-so-subtle change, the firms made sure they got national news coverage to recruit eager young lawyers and attract laid-back technology clients. Some more aggressive personal injury lawyers are abandoning their high-priced high-rise offices for shopping malls to be more approachable and accessible to prospective clients.
The walls of restraint are tumbling down. To be sure, stodgy tombstone ads still announce the appointment of partners in law and accounting firms. The debates over 'the ethics of marketing' are mostly irrelevant and marginalized, though.
Some professionals of all types - accountants, lawyers, financial planners, dentists, doctors - believe they're a little above everyone else in business. Some believe the quality of their work is the only marketing that matters.
Actually, marketing is perfect for professional services. That sponsored book has one goal: to make believers out of readers, some of whom will recommend hiring the financial-services firm it touts. The title of the book names the targeted reader - the CEO, the decision-maker who says, 'Let's get this company in here.'
By definition, that's good marketing: creating customers who want to do business with their company and no one else. Effective marketing harnesses the customer creation process.
Successful professional services marketing can be summarized this way: Be perceived as the solution to the problem when the customer has a need. The principles of marketing professional services are all the same for the international firm and the small local company alike. Here are the objectives:
Marketing lets a professional services firm pre-establish a relationship with a client. For example, referrals are rarely based on detailed inquiries into a particular firm's competence. Usually the selection of a lawyer, doctor, or accountant is a low-involvement decision. Someone says, 'I know a great CPA firm,' and that's recommendation enough. Whether the firm has the necessary expertise fails to become an issue.
How many times do people engage a law firm to handle a particular problem without even asking if it has expertise in that field? This process is inefficient and often brings in less-than-optimum clients.
The basic marketing task is to pre-establish a relationship with a prospect to become their professional of choice. Without recognizing it, the prospect has made a buying decision, often long before they have a specific need.
Marketing builds the perception that a professional services firm is the leader in its field. Marketing can be extremely powerful in this area. Clients gravitate to successful professionals. For example, a dentist specializing in implants has impeccable credentials but is less than successful. Another dentist who lacks the experience and credentials of the first one has an extensive implant practice. Why the difference? The second dentist, who has made a commitment to marketing their services, is perceived as the leader in the field.
In professional services, it's essential to be recognized as the expert, the cutting-edge leader.
Marketing pulls clients into the professional firm's orbit. The goal is to be perceived as the professional of choice by client and prospect both. Clients like to act as if they have a close relationship with a professional services provider, regardless of whether they actually do: They refer to 'my' doctor, lawyer, accountant, insurance broker, and so forth.
Marketing helps cement the client relationship. This is essential because professional relationships are more vulnerable now than they were in the past. Accounting firms can't depend on keeping the same client companies for decades, and other professionals have the same problem. To retain your clients' business, you must keep making them feel that engaging your services was the right decision.
The quality of your work is important, of course. But competence alone doesn't build relationships. Client relationships must be reinforced continually, or the client will eventually make a change. Marketing lets you communicate the reasons that selecting your firm was wise.
These techniques can help a professional services firm best utilize a marketing strategy:
Marketing helps create the right identity.Many professional services firms cling to a dull, stodgy identity. Massachusetts attorney Thomas Montminy, whose firm specializes in collections, wanted to communicate a positive, businesslike image. The firm's logo features a contemporary 'M' that becomes an upward line on a graph - a subtle suggestion that collections are up. The logo's bright, attractive colors make it stand out among the less contemporary designs of the firm's competitors.
The objective is to create a brand identity, one that evokes specific feelings. The objective of Montminy's law firm was to position itself as innovative, effective, and aggressive to distinguish it from others in the field.
Marketing lets you present the firm as a specialist. There will always be generalists, but more clients seem most comfortable with specialists. Professional services firms often neglect to take advantage of their experience in working with certain client groups or industries. Yet marketing this expertise properly offers the opportunity to build solid boutique business. The national accounting/consulting firms present themselves as specialists in a broad range of fields to attract clients.
Smaller firms can use this strategy, too. An accounting firm with four or five clients in a particular industry can build on that base. For example, it can create a brochure and separate letterhead for this segment of its business.
Build a marketing database. The marketing database is perhaps the most crucial component of a professional services marketing program. The database helps the organization maintain its focus on the clients it wants and its activities to build relationships with prospects and maintain them with current clients.
The database should include present and past clients, prospects, and media and industry contacts. Build your prospect database by identifying those who best fit your client profile. For example, a law firm with expertise in environmental law should list companies, agencies, and organizations that can benefit from its services.
Engage your prospects and clients. More than anything else, effective marketing is discovering ways to engage customers and prospects. This requires an in-depth understanding of what these groups want and expect.
For example, a marketing services firm wrote an article called 'Fourteen Ways to Waste Your Marketing Dollars' about its experiences with prospective clients over the years. Dozens of executives responded with calls, letters, and e-mail messages. Most of them began, 'We've done them all!' This is engagement - connecting with the prospective customer.
You can best engage your prospects and customers with a multifaceted marketing program that presents your firm in a variety of venues at the same time. The impact of the whole program will be greater than the sum of the individual tactics.
A multifaceted program might include the following:
A firm newsletter. The content should help and inform the reader. Put the names of professionals in your organization on individual articles to help the reader associate knowledge and expertise with specific people.
A quarterly publication is generally adequate. However, a one-page email newsletter lets you present late-breaking information and offer additional information, such as a report or study.
By-lined articles. One professional services firm gets most of its new business leads by writing by-lined articles for trade and business periodicals.
Professional services people work with ideas and information, so they're in a unique position to share their thinking with others. This is what makes by-lined articles such an effective marketing tool.
Ads and promotions masquerading as articles are a waste of time - editors are charged with giving their readers valid, helpful information.
When a by-lined article is published, its value is enhanced. It has earned third-party endorsement, and it can be reprinted and used in a direct mail program to cultivate prospects.
Advertising. Professional services firms should advertise. Don't try to sell yourself - it's more effective to advertise to build brand awareness. There are two basic guidelines for good professional services advertising:
a. Write every ad from the prospect's viewpoint. Unless the ad connects with the readers' specific needs, it's a waste of money.
b. Include an offer in every ad, such as the free marketing pamphlet 'Twelve Questions to Ask Before Signing a Merger or Acquisition Agreement.' You'll develop leads with this interactive approach.
An informative Web site. A Web site is one of the most effective ways to engage prospects and customers. But a Web site isn't much benefit if it isn't dynamic and doesn't get updated often. One firm received an e-mail asking why the usual rotation of articles on its Web site had stopped. The person who wrote the message said they looked forward to the articles and was disappointed not to find them. Of course, the firm began a proper rotation schedule.
An effective Web site carries helpful information, tells visitors about a company, and encourages interchange and requests for information.
The most pressing marketing issue when it comes to Web sites is promotion. A major source of advertising revenue for The Wall Street Journal, for example, is from companies spending millions of dollars attempting to attract customers to their Web sites. Any cost of a Web site must include an adequate promotional budget.
These are just a few of the effective marketing techniques that professional service firms can use successfully. As part of a consistent, unified marketing effort, they attract prospects to you.
Today marketing isn't a luxury for professional services - nor is it an option. It's a necessary element for building a stronger professional practice.
More importantly, an effective marketing program frees professionals to do what they do best - give clients top-quality service instead of squandering time looking for new business.
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https://completemarkets.com/Article/article-post/2287/Producer-Success-Lesson-12-Professional-Image/
Producer Success Lesson 12: Professional Image
Nothing happens until somebody sells something. To make sales happen, IMMS.com Key Sales Consultant Randy Schwantz has created a comprehensive series of 43 Producer Success Lessons. Used singly or in combination, these powerful tools can help your producers build their skills - and grow their sales.
A huge man saw a sign in the window of a bar reading 'Bouncer Needed.' He walked in and asked, 'You hirin' bouncers? I'm the best - as professional as they come.'
The bartender said, 'What makes you so professional?'
The man replied, 'I can spot trouble from a mile away - watch this.' He walked over to a loud, obnoxious drunk at the end of the bar, lifted him, and threw him out the back door. He came back to the bar with a satisfied smile on his face.
'So, you can see,' he said, 'I know how to do this stuff. What else do I need to do?'
'Talk to the owner,' the bartender answered.
'Great, where can I find the owner?'
'He's coming in the back door right about now.'
Have you ever been so caught up in presenting what you thought was the correct image that you made a silly mistake like this? Many people who regard themselves as professionals have a view of professional behavior that doesn't fit their style - so they either behave in a way that to them is unprofessional but comfortable, or they meet their own standard of professional behavior but they're uncomfortable. Neither scenario contributes to top performance.
What is a Professional?
One description of a professional is someone with extensive specialized knowledge and high standards of client confidentiality, such as a lawyer, doctor, or banker. They often surround themselves with layers of 'professional image' intended to impress others.
What do you really want from such professionals? Not their fancy office or their degrees from Harvard - you want their specialized knowledge to be used to solve your problems. So what a professional is really someone with the extensive specialized knowledge and communication skills to help solve clients' problems.
People Buy from People They Trust
Notice that this definition doesn't mention expensive offices and Harvard degrees on the wall. I also didn't include trappings such as three-piece suits, Rolex watches, and snooty attitudes. These bits of veneer are fine, and you may want to use them to your advantage. But people put on the veneer to impress clients, and what clients care about is expert knowledge.
Did you ever go to a doctor with whom you immediately felt comfortable? It was probably because the doctor was friendly, asked you questions, and listened. Now think about a doctor you didn't like. Was it because they were stuffy and 'professional?'
Instead of imitating someone you've seen and heard about, try being yourself.
Are you unprofessional in some way? Go back to the definition. Would being sincere and open build trust? Of course it would. In fact, taking someone else as a role model will almost certainly inhibit you, causing a breakdown in your ability to communicate and actually reducing trust in the relationship you're trying to build.
The true professional is not someone with a pinstriped suit and highfalutin talk. True professionals are those who know their business, know their clients, and deliver what they promise when they promise. True professionals can be trusted because they are trustworthy, not because they act 'professional.'
The Criteria for Professionalism
We've established that trust is the key ingredient in a professional relationship. What can you do regularly to ensure that that bond of trust will remain in place? Here are some ways:
Know the insurance business
Know your clients (MVPs, Commercial producers, Risk Managers, executives)
Solve problems
Deliver results
Knowing your business means knowing all aspects of it. You should be able to discuss almost any product or program. You should know all your markets, how to fill out forms, and what coverages are available. Stay on top of what your competitors are doing. Read constantly. According to one efficiency expert, reading about your area of interest for one hour every day will give you these results:
In one year, you'll be recognized in your company as an expert.
In two years, you'll be well-known throughout your industry as an expert.
In three years, you'll be a nationally recognized expert in your field.
If you really love the insurance business, reading about it is entertainment, not a chore! You're in a much better position to help your clients when you're the expert.
Knowing your client means really understanding what makes them tick. Ask questions, and really listen to the answers. Spend time getting to know their insurance needs so you can make the best recommendations possible. The more time you spend listening to their problems, the better able to offer solutions you'll be. That's really all we have to build value in the insurance business - effective use of time. One of the most effective uses of your time is getting to know your clients' real needs and desires as they relate to your business.
Solving problems is different from selling products. Some sales training courses euphemistically refer to hard-core selling as problem solving, but that just ain't so. When you're manipulating and pressuring clients, you're not solving their problems - you're creating more for them. Don't be fooled into believing your clients and prospects don't know what they need. They know. Getting them to tell you is the challenge. The only way to uncover that real problem and then offer the ideal solution is to question, question, question. Only when you really understand the client's pain can you offer the right medicine.
Speaking of medicine, there's no reason your solution has to be an extremely technical, hard-to-understand prescription. Stay away from jargon and technospeak when presenting your solution. Clients don't care about that - they care about results.
Delivering results means being on time, on budget, and on top of it. You must do what you say you'll do every time. Failure in this area even once can ruin a relationship. This goes for little things, such as returning phone calls, as well as bigger things, such as presenting proposals on time. Everything you do either moves the client closer to their goal or hinders their progress. Do you insist on results - every time?
Take This Personally
The true professional is able to move from a business relationship to a more personal relationship without a hitch. That's because there isn't supposed to be a wall between the two types of relationships. Business is personal. So feel free to be yourself, and devote the energy you were putting into your 'professional image' to listening to your clients and getting the results they want.
Exercises
List courses that will increase your insurance knowledge. Plan to attend them in the next few months.
Mentally play back your last five interviews. For each one, focus on three areas: rapport building, questioning, and listening. Rate yourself from 1 (low) to 4 (high) in each area. During the interviews, did you ever feel so intimidated that you relied on your technical knowledge rather than your communication skills? Commit to improving in each area.
...
https://completemarkets.com/Article/article-post/2427/Join-Forces-With-A-Life-Professional/
Join Forces With A Life Professional
Harlan Warthen provides a simple, field proven, cost-effective program that you can use to produce a consistent flow of highly qualified Life and financial services leads, as well as a significant number of cross-line sales.
The concept of a P/C agency working with a Life professional isn’t new. However, up to this point, these relationships have seldom produced a steady and consistent flow of leads because no one ever decided who would do what and when. With all of the best intentions, the partnership becomes hit-and-miss at best, and never produces a consistent flow of leads.
THE INSURANCE INDUSTRY: THINGS CHANGE
The insurance industry has undergone a dramatic change. Clients today are completely different from those we dealt with just a few years ago; they’re well informed and can access an unprecedented level of insurance resources through the Internet. The ways in which insurance products are solicited and purchased have also seen dramatic change. Phone solicitation is almost non-existent, thanks to “No Call Lists.” Each year the number of insurance products purchased over the Internet increases.
Although buyers of insurance products and services are still there, the sales strategies that we once used are no longer effective. Industry studies indicate that 15% of all households will purchase some form of Life and financial service within the next 12 months. If you use the Rule of 72, 100% of all insurance purchasing households will purchase Life or a financial service product in the next seven years from someone. It’s no longer a question of “if” — but “when”! Another study by the IIABA found that 70% of households polled were not aware of all of the products and services that their primary P/C agent offered. The study also pointed out that if the client knew what was offered they would have considered purchasing them from the agent.
You have to ask yourself what’s gone wrong — and the answer is plenty! It doesn’t make any difference whether you’re a P/C agent or a Life agent or; it’s harder to do business for a lot of reasons.
Clients are buying insurance and financial services from somebody. P/C agencies have these clients, but lack a process to solicit them effectively — while Life professionals need qualified clients. In this situation, joining forces makes sense for everybody concerned.
THE ROLE OF A PROFESSIONAL ADVISOR
Our industry continues to become more complex and requires a level of knowledge that might be impossible to attain. If your client asks for advice on Life insurance or financial services, you face a dilemma. Can you realistically assume the role of an advisor? Personally, I don’t think you can. The level of additional knowledge, training, and licensing required to make a recommendation in an area outside of your expertise can be staggering. To fulfill the role of an advisor, you must be able to recommend a professional advisor, either within your agency or from an outside source.
When polled, clients say they would prefer to do business with a single insurance professional for advice and answers. Clients don’t necessarily need their primary agent to be able to provide the service or product, but they want to be referred to someone who can. Unfortunately, insurance has become so specialized that neither P/C agent nor the Life agent can provide accurate advice for the other discipline. We can no longer be all things to all people; and even if we could, the level of knowledge and licensing requirements make it virtually impossible. The P/C agents and the Life/financial services professional need each other. To provide clients with access to a full array of insurance products and services, you need to create a strategic alliance with a Life professional based on trust and professionalism.
TYPES OF ALLIANCES
These alliances come in two forms:
An External Alliance between your agency and a Life General Agency or an Independent Life Agency.
An Internal Alliance between your agency and a Life Specialist.
Each of these types will work, as long as there’s agreement between the parties up front. In essence, the agreement determines who has responsibility for individual tasks and when those tasks will be performed. The choice is which type of alliance would be the most beneficial to you and the interests of your clients. Here’s an example of each type:
EXTERNAL ALLIANCE
A Life General Agency or an Independent Life Agency alliance with a P/C agency is essentially the same; both would be considered external alliances. The major difference is the size of the organization. The Life General Agency has a tendency to be the larger of the two. In most cases, they would have access to significantly more resources, several layers of management supervision, and many more agents. Independent Life Agencies operate the same as Life General Agencies, but usually on a smaller scale; they don’t necessarily have one primary Life insurance company, but broker policies to a number of companies.
INTERNAL ALLIANCE
An internal alliance involves your agency hiring an experienced in-house Life specialist who has access to Life and financial service products through your agency’s existing Life company appointments. This specialist should have an above average level of Life and financial services experience and hold at least their Series 6 and 63 licenses, as well as an advanced designation (CLU, ChFC, etc.)
A MATTER OF TRUST
Building a strong alliance between your agency and a Life specialist must be based on trust. You need to trust the specialist not to jeopardize your existing clients by “hard sell” tactics; the specialist must trust you to provide qualified leads. This mutual trust requires both parties to understand the benefits that each will enjoy.
MAKING THE ALLIANCE WORK
As was mentioned earlier, there’s nothing new about Life specialist arrangements with a P/C agency. Everything starts out great, with each party sending business to the other. If forming such partnerships makes so much sense, why have most of them failed? First, no one puts together a plan or process for developing referred leads on a regular and consistent basis. Second, no one determines who’s accountable for what and when. Finally, and most important, the P/C agency doesn’t perceive that the Life specialist brings any added value to the relationship.
Make no mistake: Making your alliance with a Life specialist work will require time and patience. Although the relationship might be difficult at times, both parties will enjoy a dramatic long-term payback.
HOW THE ALLIANCE WORKS
This strategy is built around a “Client Coverage Survey” that will identify what products and services the client is interested in. Your agency doesn’t have to implement a new marketing plan because the survey is completed at the end of every client service request. The Client Coverage Survey will produce leads in a volume that you’ll have a hard time believing: Although results will vary, this sales strategy can produce three or more applications per week.
BUILDING A WORKABLE AGREEMENT
To build a successful, mutually beneficial alliance, you’ll need to
Do your homework to select the right partner
Analyze the client base
Create a written Alliance Agreement that will deal with:
Compensation
The accountabilities and responsibilities of each participant
Housing the Life specialist
Covering additional operating expenses
Other factors to consider include your agency’s: (1) premium volume; (2) Number of policyholders/ households; (3) percentage of Personal Lines and Commercial Lines business; (4) renewal ratios; and (5) resources.
MAKING A COMMITMENT
Last, but far from least, all participants must commit to making the alliance work. As so often in life, your commitment will determine whether you’ll succeed or fail. I guarantee that you’ll succeed if you commit to implementing the process as it was designed. If you want to change it down the road, be my guest — but keep in mind that my system works the way it was written. Consider doing it my way first before you decide to reinvent the wheel.
EXPECTATIONS
Make no mistake: an alliance with an in-house Life specialist will work to everyone’s advantage. The potential results from a well-structured alliance are enormous A Life specialist can expect to produce consistently 75 to 150 new Life applications per year. In addition to new Life revenue, your agency can expect 10% to 30% in additional cross-line sales, as well as improved retention — all with a minimum amount of effort.
Establishing a strategic alliance between your agency and a Life specialist is a WIN/WIN situation for all concerned.
...
https://completemarkets.com/Article/article-post/201/Professional-Designations-For-CSRs/
Professional Designations For CSR's
Education is often termed a 'ticket to success'-and with good reason! More and more career-conscious agents and their office-support personnel are attending professional development programs.
Since 1987, nearly 18,000 people have enrolled in these three major industry education programs:
Certified Insurance Service Representative (CISR)
Certified Professional Service Representative (CPSR)
Accredited Customer Service Representative (ACSR)
People who participate in such programs gain practical knowledge that gives them an edge on the job and improves their professional image.
The programs are offered through a series of one-day courses in major cities across the country. The training varies in format, testing, and prerequisites, but all require continued education once the designation is earned. The specifics of each program are outlined below, along with a phone number to call for more information.
CISR
This program consists of five one-day courses covering personal residential property, Personal Auto exposures, Commercial Property coverage, Commercial Casualty insurance, and agency operations. Participants must pass all five exams to earn the designation. The program has been offered by the Society of Certified Insurance Service Representatives since 1987. Call (512) 346-7358.
CPSR
Coordinated by National Association of Professional Insurance Agents (PIA), the program features nine one-day modules in three areas: Personal Lines, Commercial Lines, and agency-operation skills. Participants select from three learning tracks, tailoring the training to their job responsibilities. To be awarded the CPSR designation, individuals must have at least two years' agency/industry experience and pass the exams in at least six of the modules. The program is offered through PIA state and regional associations. Call: (703) 836-9340.
ACSR
This program includes nine day-long modules, with the option of Personal Lines certification (five courses), Commercial Lines certification (six courses), or certification in both areas (all courses). Developed by Independent Insurance Agents of America (IIAA), the program covers technical, account-selling, and professional skills. Candidates are tested by the state association upon completion of the courses for the desired certification. Call: (703) 683-4422.
If you haven't pursued any of these professional development opportunities, consider what they can do for you and your professional image. Talk to your superiors about the possibility of attending.
CSR FORUM's can contribute to your knowledge base, too! In fact, participants in THE CSR program may soon have the opportunity to earn continuing education credits. Stay tuned for more details....
https://completemarkets.com/Article/article-post/940/PREMIUM-AUDITORS-PROFESSIONALISM-IN-PRACTICE/
https://completemarkets.com/Article/article-post/1737/THE-AGENCY-MISSION-STATEMENT/
The Agency Mission Statement
THE AGENCY MISSION STATEMENT An agency mission statement is a simple outline of the agency's overall goal. It should be phrased in terms of meeting the needs of current and potential clients, and should indicate your business emphasis. The mission statement can address the type of service you want to offer and the clients you wish to attract, and/or it can outline your agency goals in a general manner. If you address the client and prospective client, since you can then also use your mission statement in advertising and brochures. Here's an example of a client-driven mission statement: 'It is the mission of XXX Agency to provide professional services and programs to our clients in keeping with our published service standards. Our service standards are given to all clients and represent our written commitment to those high standards. The written commitment is backed up by our staff of professionals, who are being exposed to training and developmental programs on an ongoing basis.' There are many different versions of mission statements. Whatever is used should highlight positive agency features and make some form of commitment. Here are samples of mission statements from a few successful firms: STAEBLER MISSION STATEMENT To achieve security and prosperity for our clients and ourselves through ongoing, rewarding and supportive relationships, by providing insurance and financial services. COMPANY POLICY We will achieve the Mission Statement: With highly qualified, sincere, caring and motivated staff and By continually assessing and improving our service and products ANCHOR PACIFIC GROUP MISSION To be the vanguard of innovation by combining an array of Life, Health, voluntary employee benefits, Property/Casualty, and Workers' Compensation plans into creative, dynamic and cost-effective programs-designed, marketed, underwritten, and serviced by a single source. TRISSEL GRAHAM & TOOLE, INC. DAVENPORT, IOWA MISSION STATEMENT Our mission is to continue to be the most successful independent insurance agency in the Quad Cities. Our objective is to NEVER lose an account as a result of poor service. We recognize the inevitability of occasionally losing an account to price, for we cannot control the pricing of our competitors. We can and will control the service we provide to our clients. If we attempt to place ourselves in our client's position and try to treat the client as we would like to be treated, we will succeed. ULRICH VOORHEES WARNER ASSOCIATES OUR MISSION To provide superior insurance, risk management, and related services for a selective clientele. We will be recognized by our clients and suppliers as a highly respected, innovative, and professional sales organization that maintains excellence in all areas of interaction. We will foster a corporate culture that stimulates, recognizes, and rewards employees for achieving and exceeding individual and corporate goals. THE LIEBERT GROUP STATEMENT OF MISSION Our mission is to be the best insurance agency in the New York metropolitan area. As a sales organization, we are committed to growth and longevity. This will be achieved by obtaining the highest level of profits, by providing our customers with the best insurance protection for their individual needs. We will maintain the highest level of honesty and professionalism in dealing with our customers on an individual basis. We will reserve a high sensitivity to their needs. We will actively solicit new clients that fall under our underwriting standards and sales objectives. We will service our existing clients as if each is our most important account. We will maintain the highest level of honesty and professionalism in dealing with our companies through our marketing, underwriting, claims handling, and accounting. We will strive toward open communication with our underwriters and their managers. We will treat all employees as our most important asset by providing equal employment opportunities, creating a learning and challenging environment and encouraging ongoing education to allow all employees the opportunity to grow within our company. We are committed to full automation within our agency and complete interfacing with our companies. We will strive to maintain leadership in our community by supporting our... local organizations. GHA We are an employee-owned sales and service organization providing cost-effective Property & Casualty insurance, risk management, and financial services. OUR MISSION: To fulfill the changing needs of current and prospective clients, while striving for the highest level of professional excellence in our products and services. To provide an atmosphere of teamwork and employee participation with opportunity for professional growth, personal satisfaction and financial security. To build and maintain long-lasting, consistent and profitable partnerships with insurance markets. To enhance shareholder value by increasing our client base, dedicating ourselves to increased productivity and profitability consistent with long-term earnings-per-share growth. We will accomplish our mission with leadership that will ensure perpetuation of our corporate culture. We will adhere to rigid moral and ethical standards in all our dealings, as we meet the challenges of the future. We are confident in our ability to create and maintain a GHA Team that is the very best at what we do. SPARKS INSURANCE, INC. Welcome to Sparks Insurance, Inc. We are a company that works together as a TEAM. We will: 1) Strive to develop individual and office professionalism. 2) Set and achieve sales and growth goals. 3) Create, establish, and perform efficient work habits and methods. 4) Strive for a unified and pleasant working environment. And last but not least: 5) After accomplishing all of the above, the Sparks Insurance team should become more profitable, and we will endeavor to pass a portion of these profits on to the team members. MISSION STATEMENT: Sparks Insurance, Inc. is a full-service insurance agency committed to providing the best in coverage and service for its customers at a competitive price. We will secure all types of insurance coverage using risk management techniques for both Personal and Commercial lines customers. We will provide a pleasant work environment with opportunities for education, personal enrichment, and career advancement. We expect our employees to be professional, ethical, motivated, and concerned for the client and the agency. We will be a profitable, growth-oriented agency. We will have an annual goal of at least 15% growth in revenues without sacrificing service to our existing clients or profitability to our companies. We will offer our services in those geographic areas where we can achieve the previous mentioned commitments. ROSS & YERGER'S GOAL To be the ultimate firm in the insurance profession, regarded as second to none in serving the interest of our clients MISSION STATEMENT Ross & Yerger is committed to... providing our clientele the highest-quality insurance and services that address risk management, bonding, employee benefits, and financial planning needs. serving the needs of individuals and businesses that are financially stable and seek long-term relationships. attracting and retaining employees with absolute integrity who are intelligent, dedicated, motivated, and committed to the highest standards of professionalism. providing the necessary training, support and motivation so each employee develops his or her maximum potential, including attaining the appropriate professional designation. serving others by encouraging involvement in civic, charitable, educational, and political affairs. maintaining profitability to ensure the continuity and perpetuation of the firm. Saginaw Underwriters, Saginaw Financial Planners, Inc. & SURCO MISSION STATEMENT The mission of Saginaw Underwriters, Saginaw Financial Planners, Inc. and SURCO is to provide professional insurance, financial, and real estate services to the Greater Saginaw area; To help each of our employees develop to their maximum potential so they may feel completely fulfilled personally as well as a part of the Saginaw Underwriters team; Furthermore, for Saginaw Underwriters to operate in the most efficient method possible, to earn a reasonable profit for the company and retain enough earnings so that the company can grow and prosper in the future; Each employee is encouraged to spend a reasonable amount of their time in community service to help our community be a better place in which to live. HORTON INSURANCE AGENCY, INC. MISSION STATEMENT FOR THE 90s To become a strong, regional, full-service agency by maintaining an aggressive sales posture; adhering to the highest standards of excellence; and providing a broad range of products to fiscally sound industries regarding their business and personal insurance needs. Our desire is to communicate a passion for service to our community, our companies, our customers, and our staff. We want our firm to be the epitome of professionalism, teamwork, integrity, and conservative business practices. We believe that our people are the key to the success of our organization. We feel a great sense of responsibility to continue a sound growth pattern that will enable each of our employees to achieve at their maximum level. We are committed to rewarding our employees by providing educational opportunities, benefits that protect them both now and in the future, and an environment that encourages growth as people, as well as employees. In summary, we believe that we have a sacred trust to protect our customers, encourage the growth of our employees, and achieve a reasonable profit. Our success will be measured against these principles. PERSONAL LINES OTTAWA MISSION STATEMENT Our clientele is our life line. We are here to serve them professionally with integrity. We must continually improve on product knowledge to remain competitive. Our goal is to write new business; however, a bigger goal and one that really proves our competence is retaining business. With this in mind, a good attitude must be developed to serve our clients and convey their requirements to the insurers. STRATEGY 1) Prospecting will be increased from [YEAR] on single-line accounts. Also, Murray has and is calling all good cancelled files to see if we can re-quote. This will generate leads in [NEXT YEAR]. 2) We will use brochure drop-offs where appropriate. 3) Chris is working with one property management company to prospect tenants' policies. Results will be monitored. 4) We will continue to encourage Commercial producers to write Personal Lines. Murray will continue to attend Commercial Lines meetings. 5) [NEXT YEAR] risk counts will be followed closely to determine growth. We anticipate these to be accurate this year. 6) Compu Quote is to be installed February [NEXT YEAR]. This will assist prospecting and free up Personal Lines producers to write more business. 7) Advertising in the Ottawa Carleton teachers bulletin has commenced. Results will be reviewed for analysis. Same for advertising done in Century 21 bulletin. COMMERCIAL LINES OTTAWA MISSION STATEMENT We want to be a department that provides professional and innovative attention to our customers. We want our clients to consider us an important part of their business. We want to create and nurture an environment that is harmonious, supportive, and friendly. We want to work to ensure the ongoing prosperity and growth of our company, as well as that of our insurers, so that we too may prosper. STRATEGY 1) Continue use of sales centre to develop leads. 2) Continue IMMS tapes to help generate sales ideas. 3) Establish an exclusive jeweler block program with Gore (first quarter). 4) Establish a farm equipment program in January [NEXT YEAR] through Gullivers. 5) Analyze company results and review companies we wish to support. 6) Continue to encourage Personal producers to write Commercial Lines. 7) Continue IIS as a source of income. RHODES & WILLIAMS LIMITED (Toronto) MISSION STATEMENT Rhodes & Williams Limited's mission is to be the very best at helping people and companies protect all their assets. To be a well-recognized insurance brokerage in the province of Ontario for offering professional advice and management of insurance services. To be a well-recognized and profitable insurance brokerage. STRATEGY 1) Continue to account sell. 2) Use more Yellow Pages advertising. 3) Improve service to our existing book to maintain clientele. 4) Continue to offer Life or Group to all Commercial accounts. 5) Review availability of purchasing a small producer if one became available. 6) Continue to watch expenses closely for savings needed to be profitable. BHJ, Inc. We Believe:'BHJ, Inc. is a group of professional people specializing in the sale of insurance and real estate with a common goal of profitability earned through sound and ethical business practice, while benefiting the community, our employees, and their families.' POTTS, DAVIS & CO. POTTS, DAVIS & CO is the leading independent insurance agency in the mid-Willamette Valley. We are committed to the professional sale of quality insurance services, focusing our efforts in Salem, Portland, and the surrounding areas. We are dedicated to growth and profitability for the continued security of our clients and employees. Policy Statements WE WILL conduct ourselves with honesty and integrity. WE WILL recommend and provide coverages that meet the protection needs of our clients. WE WILL represent quality markets on behalf of our clients. WE WILL provide opportunities for the professional growth of our employees. WE WILL treat people with courtesy and respect. WE WILL place coverages that provide insurers an opportunity for profit. WE WILL total-account sell. WE WILL provide complete, accurate submissions to our carriers. WE WILL support the growth and development of our community by encouraging employee involvement. WE WILL seek and represent clients whose business provides us an opportunity for profit. WE WILL follow and enforce our agency credit policy. WE WILL maintain an environment that encourages the highest and best use of each employee's individual strengths and skills for the overall corporate good.
https://completemarkets.com/Article/article-post/2149/DOING-YOUR-DUTY-PROFESSIONAL-CONDUCT-E-O-AND-YOU/
Doing Your Duty: Prof
essional Conduct,
E&O, And You
DOING YOUR DUTY: PROF
ESSIONAL CONDUCT,
E&O, AND YOU by Roy Phillips and Rick Old
en
ett
el
Ev
ery ag
ent, and
ev
ery ag
ency, has sp
ecific l
egal duti
es to its insur
eds and insur
ers. Th
e U.S. judicial syst
em has always shown th
e fl
exibility of a contortionist. In th
e 1960s and 1970s, it app
ear
ed to tol
erat
e litigation. How
ev
er, sinc
e th
e 1980s, th
e syst
em has mad
e a turn to th
e right. B
ecaus
e som
e stat
e l
egislatur
es ar
e frustrat
ed by f
ed
eral court int
erpr
etations contradicting th
e wish
es of th
eir constitu
ents, th
ey hav
e b
een working to r
ev
ers
e th
e dir
ection of th
e judicial syst
em. M
eanwhil
e, Congr
ess sits on th
e sid
elin
es struggling to impl
em
ent its own ag
enda for tort r
eform. But r
egardl
ess of th
e obstacl
es individual jurisdictions hav
e s
et to bar th
e r
ecov
ery of damag
es, your ag
ency has a duty to m
eet c
ertain prof
essional standards of car
e. With this fact in mind, h
er
e ar
e som
e obs
ervations about what constitut
es such conduct, how failur
e to m
eet th
e standards can l
ead to
errors and omissions (
E&O) claims, and what you can do to pr
ev
ent such claims. As you r
ead this articl
e, k
eep in mind that
each jurisdiction has its own id
eas about what is corr
ect or incorr
ect ag
ency conduct. Your first duty is to und
erstand th
e nuanc
es of th
e applicabl
e court d
ecisions in your stat
e. If you think that sounds lik
e a disclaim
er, you’r
e right. Duti
es to Insur
eds In most jurisdictions, to
establish a caus
e of action for n
eglig
enc
e against an insuranc
e ag
ent, a plaintiff must show that: A duty was ow
ed to th
e plaintiff-insur
ed. Th
e d
ef
endant-ag
ent br
each
ed that duty. Th
e br
each was th
e proximat
e caus
e of damag
es. What duti
es do ag
ents ow
e th
eir custom
ers? On
e court d
efin
ed th
em this way: “An ag
ent ow
es his cli
ents th
e gr
eat
est possibl
e duty. H
e is th
e on
e th
e insur
ed looks to and r
eli
es upon. . . . Th
e insur
ed looks to th
e ag
ent h
e d
eals with to g
et th
e cov
erag
e h
e s
eeks, with a sound company that can and will promptly pay claims wh
en th
ey ar
e du
e. It is his duty to k
eep his cli
ents fully inform
ed so that th
ey can r
emain . . . insur
ed at all tim
es.” This d
efinition calls on ag
ents to prob
e for and id
entify th
eir insur
eds’ n
eeds and conc
erns. Aft
er
examining many
E&O actions, w
e’v
e found that many ag
ents hav
e fall
en on th
eir own swords simply by sup
erimposing th
eir id
eas, n
eeds, and conc
erns upon th
e voic
el
ess insur
ed. In fulfilling th
eir r
esponsibility, b
e sur
e to docum
ent th
e r
esults of n
eeds-analysis conv
ersations. A good axiom: If som
ething is important to th
e insur
ed, it d
es
erv
es to b
e explor
ed and docum
ent
ed in d
etail. An ag
ent also has a duty to us
e r
easonabl
e dilig
enc
e in placing th
e r
equ
est
ed insuranc
e and to inform th
e cli
ent promptly if unabl
e to do so. In addition, an ag
ent has a duty to notify insur
eds of th
e expiration of th
eir polici
es (
exc
ept for dir
ect-bill
ed r
en
ewals) and to pass on any information p
ertaining to
expiration dat
es that’s int
end
ed for th
eir custom
ers. Practically sp
eaking, an ag
ent has a duty to r
en
ew a custom
er’s policy, r
eplac
e th
e policy with on
e from anoth
er company, or notify th
e custom
er of a non-r
en
ewal so th
e custom
er can obtain insuranc
e els
ewh
er
e. It’s important to r
em
emb
er that
each jurisdiction has tim
e fram
es for giving notic
e of non-r
en
ewal. Many of th
es
e r
equir
em
ents ar
e stat
ed in mandatory
endors
em
ents to various policy forms us
ed in
each stat
e. Ag
ents also hav
e a duty to inv
estigat
e th
e solv
ency of an insuranc
e company with which th
ey plac
e a cli
ent. On
e l
egal d
ecision h
eld that, in th
e ev
ent of an insur
er’s insolv
ency, an ag
ent is not liabl
e for an insur
ed’s unpaid claim as long as th
e insur
er was solv
ent wh
en th
e policy was procur
ed. How
ev
er, th
e ag
ent could still b
e h
eld liabl
e if, at a lat
er tim
e, wh
en th
e insur
ed could still b
e prot
ect
ed, th
e ag
ent l
earn
ed — or by
ex
ercising of r
easonabl
e dilig
enc
e should hav
e l
earn
ed — of facts that would put a r
easonabl
e ag
ent on notic
e that th
e insur
er pr
es
ent
ed an unr
easonabl
e risk. Many jurisdictions hav
e statut
es that impos
e a high
er d
egr
ee of car
e on th
e plac
em
ent of an insur
ed’s cov
erag
e with non-admitt
ed carri
ers. Som
e statut
es also plac
e a duty upon th
e ag
ent to s
eek admitt
ed carri
ers for th
e plac
em
ent first and, if unsucc
essful, to advis
e th
e insur
ed of plac
em
ent with a non-admitt
ed insur
er. Ag
ents also hav
e duti
es arising from stat
e lic
ensing r
equir
em
ents. Th
e statut
es
explicitly stat
e what th
ey r
equir
e of ag
ency p
ersonn
el involv
ed in insuranc
e acquisition. Th
e lic
ens
e d
efinition of an ag
ent cl
early stat
es that anyon
e involv
ed in acquiring insuranc
e must b
e t
est
ed and th
en lic
ens
ed. Aft
er b
eing lic
ensing, and in tand
em with th
e lic
ens
e cod
e, all lic
ens
ed p
ersonn
el must m
eet th
e stat
e’s r
equir
em
ents for continuing
education. Som
e stat
es hav
e “grandfath
er
ed” ag
ents who r
ec
eiv
ed th
eir lic
ens
es b
efor
e a c
ertain dat
e. How
ev
er, in our opinion,
ex
empting anyon
e from r
egular continuing
education pos
es a dang
er to an ag
ency. Som
eon
e in your ag
ency, pr
ef
erably a principal, should ov
ers
ee th
e continuing
education of
each
employ
ee. Th
e mom
ent you sign an application to b
ecom
e a lic
ens
ed insuranc
e ag
ent, you assum
e a duty to p
erform s
ervic
es to any and all futur
e insur
eds. Among oth
er things, this m
eans that you hav
e an impli
ed duty to: B
ecom
e prof
essionally awar
e of your products and mak
e ev
ery
effort to communicat
e that knowl
edg
e to
ev
ery individual in your organization; Apply that knowl
edg
e to
each cli
ent’s r
equir
em
ents, which you’v
e gath
er
ed by r
es
earching th
e cli
ent’s busin
ess and p
ersonal activiti
es; S
eek th
e appropriat
e product(s) to fill thos
e n
eeds; Communicat
e th
e availability and oth
er p
ertin
ent issu
es for
each product pr
es
ent
ed, using writt
en and oral communications that would b
e ordinarily und
erstandabl
e to th
e cli
ent; Insist on acknowl
edgm
ent wh
en
ev
er th
e cli
ent r
ej
ects your opinions conc
erning
exposur
es that you think r
equir
e tr
eatm
ent; Prop
erly apply for, r
ec
eiv
e, r
evi
ew, and transmit s
el
ect
ed polici
es to th
e cli
ent,
ensuring continuity through all four actions; Docum
ent th
e actions in st
eps on
e through six, and b
e pr
epar
ed to
ensur
e that chang
es ar
e mad
e in a tim
ely mann
er on b
ehalf of th
e cli
ent.; and B
e pr
epar
ed to show that you hav
e establish
ed int
ernal ag
ency proc
edur
es that indicat
e a “r
easonabl
e int
ent” to control actions tak
en und
er st
eps on
e through s
ev
en. W
e b
eli
ev
e that th
es
e abbr
eviat
ed st
eps ar
e among th
e important
el
em
ents that mak
e up an ag
ent’s “duty to p
erform.” W
e’v
e arriv
ed at this opinion aft
er r
evi
ewing doz
ens of cas
es
ev
ery y
ear. Duti
es to Insur
ers Ag
ents also hav
e duti
es to th
eir insur
ers. On
e authority d
efin
ed this duty in th
es
e t
erms: “An ag
ent ow
es th
e insuranc
e company h
e r
epr
es
ents a fiduciary duty that includ
es loyalty and good faith, int
egrity of th
e strict
est kind, fair, hon
est d
ealing, and th
e duty to not conc
eal matt
ers which might influ
enc
e his action to pr
ejudic
e th
e company.” In addition, th
e ag
ent ow
es th
e insuranc
e company th
e duty to comply with its guid
elin
es, polici
es, and proc
edur
es for issuing polici
es. Many courts hav
e h
eld that any p
erson who solicits an application for insuranc
e shall b
e r
egard
ed, in any controv
ersy b
etw
een an insur
ed and th
e company, as th
e ag
ent of th
e company, not as an ag
ent of th
e insur
ed. D
espit
e b
eing an ag
ent of an insur
er, an ag
ent do
es not hav
e th
e pow
er to waiv
e, chang
e or alt
er any of th
e t
erms or conditions of an insur
er’s application or policy. Caus
es of
E&O Claims L
et’s consid
er a f
ew
exampl
es of how br
eaching th
es
e duti
es can l
ead to
E&O all
egations. Our cli
ents in th
es
e cas
es ar
e usually th
e ag
ents (d
ef
endants), although w
e hav
e r
epr
es
ent
ed insur
eds and carri
ers in doz
ens of cas
es ov
er th
e last 10 y
ears. Our job is to wad
e through th
e volum
es of pl
eadings, d
epositions,
exhibits, int
errogatori
es, and caus
es of action that such cas
es g
en
erat
e to find answ
ers to four qu
estions: Did th
e ag
ent fail to satisfy a l
egally impos
ed duty to p
erform on b
ehalf of th
e insur
ed (or insur
er)? Did th
e ag
ent r
epr
es
ent th
e goods and s
ervic
es h
e or sh
e provid
ed to hav
e charact
eristics, us
es, or b
en
efits th
ey did not hav
e? Did th
e ag
ent fail to disclos
e information about a policy to induc
e an insur
ed to purchas
e it? Had such information b
een disclos
ed, would th
e insur
ed hav
e r
ej
ect
ed th
e policy? Did th
e ag
ent
engag
e in any unconscionabl
e conduct? H
er
e ar
e a f
ew cas
es from our fil
es that d
emonstrat
e common br
each
es of ag
ents’ duti
es. On
e of th
e most pr
eval
ent is failur
e to obtain prop
er cov
erag
e, as th
es
e two cas
es show. Cas
e 1: Th
e insur
ed had ask
ed th
e ag
ent to find appropriat
e cov
erag
e for his fur-cl
eaning firm. Unfortunat
ely, th
e ag
ent did not obtain insuranc
e cov
ering th
e bail
ee exposur
e that com
es with cl
eaning and storing valuabl
e fur it
ems. R
esult: Finding for th
e plaintiff (th
e insur
ed). Cas
e 2: Th
e insur
ed, a swimming pool subcontractor, r
equir
ed G
en
eral Liability and oth
er cov
erag
es to maintain his busin
ess r
elationships with his cli
ents (g
en
eral contractors). A C
ertificat
e of Insuranc
e was issu
ed to a g
en
eral contractor indicating that th
e insur
ed had all th
e cov
erag
es r
equir
ed by th
e g
en
eral contractor’s contract. Th
e g
en
eral contractor r
eport
ed a loss arising from th
e insur
ed’s work. Th
e loss r
esult
ed in discontinuation of und
erground utility s
ervic
e to a major manufacturing plant. Th
e insur
ed did not hav
e appropriat
e cov
erag
e for th
e und
erground prop
erty damag
es. Th
e g
en
eral contractor’s insuranc
e carri
er r
espond
ed to th
e loss, and th
en subrogat
ed against th
e insur
ed. Th
e insur
ed th
en su
ed th
e ag
ent. R
esult: Finding for th
e plaintiff (th
e insur
ed). Failur
e to obtain prop
er cov
erag
e accounts for mor
e than 50% of all loss
es r
eport
ed to
E&O carri
ers. A similar, but slightly diff
er
ent,
error is th
e failur
e to obtain r
equ
est
ed cov
erag
e, which accounts for 20% of such claims. H
er
e ar
e a coupl
e of
exampl
es: Cas
e 3: Th
e insur
ed instruct
ed his ag
ent to r
evi
ew his insuranc
e and d
et
ermin
e wh
eth
er h
e was ad
equat
ely cov
er
ed for th
e cons
equ
enc
es of having to mov
e his pr
emis
es aft
er a prop
erty-insuranc
e loss. (Do
esn’t this sound a bit lik
e Tim
e-
El
em
ent cov
erag
e?) A loss occurr
ed, but Tim
e-
El
em
ent cov
erag
e had not b
een purchas
ed, so
extra-
exp
ens
e moni
es w
er
e not in plac
e to hir
e th
e mov
er, l
eas
e th
e n
ew location, put in th
e phon
es, bring in n
ew inv
entory, and notify th
e insur
ed’s custom
ers of th
e chang
e. G
etting back in action rapidly was crucial for th
e insur
ed’s busin
ess of s
elling upscal
e formal gowns to high-school s
eniors who w
er
e graduating within th
e n
ext f
ew w
eeks. R
esult: Finding for th
e plaintiff (th
e insur
ed). Cas
e 4: Th
e insur
ed ask
ed th
e ag
ent to obtain cov
erag
e that would pay first-dollar claims to his cli
ents in th
e ev
ent that th
eir prop
erty was damag
ed through th
eft or vandalism. H
e was willing to pay for th
e additional cov
erag
e sinc
e h
e was in th
e busin
ess of s
ervicing M
erc
ed
es-B
enz
es, Rolls Royc
es, Jaguars, BMWs, and oth
er
exp
ensiv
e cars. Vandalism occurr
ed on
e w
eek
end, and th
e insur
ed was forc
ed to sp
end thousands of dollars r
epairing 11 v
ehicl
es l
eft in his car
e. Primary Garag
ek
eep
ers Liability insuranc
e was not in plac
e to r
espond to th
e claim, but you can gu
ess what was: th
e ag
ent’s
E&O policy, of cours
e! R
esult: Finding for th
e plaintiff (th
e insur
ed). Th
es
e four cas
es d
emonstrat
e th
e n
eed for continuing
education. All of th
es
e E&O loss
es could hav
e b
een pr
ev
ent
ed if ag
ency p
ersonn
el had b
een train
ed to r
ecogniz
e th
e sourc
es of cli
ents’ pot
ential claims and know th
e products availabl
e to cov
er th
em. Th
e final two caus
es of
E&O claims addr
ess
ed in this r
eport ar
e failur
e to bind cov
erag
e and failur
e to obtain r
en
ewal cov
erag
e. Whil
e th
es
e r
epr
es
ent only 10% of claims r
eport
ed, th
ey d
emonstrat
e th
e n
eed for
establishing standard op
erating proc
edur
es within an ag
ency. A Syst
em Is th
e Solution Wh
en
errors or omissions occur in an ag
ency, it’s oft
en b
ecaus
e employ
ees don’t p
erform tasks th
e sam
e way
each tim
e. To achi
ev
e uniformity, your ag
ency must hav
e a “syst
em.” Your ag
ency manag
em
ent syst
em coordinat
es s
ev
eral int
err
elat
ed syst
em compon
ents. Sp
ecifically, th
e syst
em provid
es th
es
e s
ervic
e compon
ents: Locat
es pot
ential cli
ents (mark
eting compon
ent) Gath
ers data and analyz
es n
eeds (risk-manag
em
ent compon
ent) Coordinat
es risks with products (cov
erag
e compon
ent) Approach
es th
e mark
etplac
e (plac
em
ent compon
ent) Pr
es
ents findings to th
e cli
ent (proposal compon
ent) Impl
em
ents s
el
ect
ed products (application compon
ent) Arrang
es for paym
ent s
el
ection (accounting compon
ent) Maintains int
erim s
ervic
e (s
ervic
e compon
ent) R
evi
ews chang
es in cli
ent profil
es (r
en
ewal compon
ent) Maintains quality of staff training (training compon
ent) B
ecaus
e th
es
e syst
em compon
ents ar
e int
err
elat
ed, it’s vital to us
e proc
edur
es that pr
es
erv
e th
eir int
egrity. First, it’s important to d
efin
e “automation.” If th
e comput
er databas
e includ
es only accounting information, th
e ag
ency isn’t r
eally automat
ed. R
em
emb
er that accounting is only on
e syst
em compon
ent. Th
e truly automat
ed ag
ency is driv
en by a singl
e databas
e that includ
es all cli
ent information r
equir
ed to p
erform th
e tasks associat
ed with th
e 10 syst
em compon
ents. Onc
e th
e ag
ency manag
em
ent syst
em is in plac
e,
ev
eryon
e in th
e ag
ency must obs
erv
e c
ertain rul
es. If Mos
es had b
een an insuranc
e ag
ent, th
er
e would hav
e b
een thr
ee additional commandm
ents: Thou shalt consist
ently p
erform all proc
edur
es th
e sam
e way
ev
ery tim
e th
ey’r
e carri
ed out. Thou shalt docum
ent all custom
er transactions, id
entifying dat
e, tim
e, r
ecomm
endation or action, r
esultant action, and follow-up; and Thou shalt not allow anyon
e to circumv
ent or d
estroy th
e syst
em. Th
e thr
ee groups of off
end
ers most lik
ely to violat
e th
es
e commandm
ents ar
e th
e ag
ency’s principals, produc
ers, and long-tim
e employ
ees who hav
e an “anti-syst
em” attitud
e. What can b
e don
e about th
em? Bas
ed on th
e th
eory that ag
ency principals think th
ey actually op
erat
e th
eir ag
enci
es, w
e can assum
e that th
e enlight
en
ed on
es will
eith
er s
eek training to b
ecom
e syst
em-lit
erat
e or d
ep
end on som
eon
e who has this training for all transactions. Outsid
e produc
ers gath
er data out of n
ec
essity, but th
e int
egrity of this data isn’t always r
eliabl
e. Th
e solution:
Equip produc
ers with appropriat
e forms that r
efl
ect th
e r
equir
em
ents of th
e syst
em – and l
et th
em know that using oth
er “forms,” such as cocktail napkins, is as br
each of th
e syst
em. As for syst
em-loathing
employ
ees who hav
e b
een with th
e ag
ency sinc
e th
e original tabl
ets cam
e down from th
e mountain, giv
e th
em a cl
ear m
essag
e: Adapt or l
eav
e! To find out if your syst
em is working, audit th
e flow of transactions through th
e 10 ag
ency s
ervic
e compon
ents. Hav
e this audit don
e by an obj
ectiv
e obs
erv
er. In oth
er words, don’t l
et folks audit th
eir own trails, so that th
ey can l
earn th
e str
engths and w
eakn
ess
es of th
eir subordinat
es and id
entify training n
eeds. Th
e audit format should r
efl
ect your ag
ency’s proc
edur
es and obj
ectiv
es. For
exampl
e, if your policy is to off
er umbr
ellas to
each Comm
ercial account, th
e audit should d
et
ermin
e wh
eth
er this policy is b
eing impl
em
ent
ed.
Ess
entially, th
e audit ch
ecklist should mirror th
e task list constituting
each syst
em compon
ent. Your ag
ency’s syst
em can b
e as simpl
e as a not
ebook containing standard op
erating proc
edur
es or as
ext
ensiv
e as your n
eeds dictat
e. Th
e k
ey is to hav
e a syst
em. Innovation, spontan
eity, and cr
eativity hav
e th
eir plac
e in ag
ency manag
em
ent, but not in th
e ar
ena of daily insuranc
e transactions. With so much at stak
e, variation is no virtu
e — which is why parachut
es ar
e pack
ed th
e sam
e way
each tim
e! Roy L. Phillips, CIC, CPIA, can b
e r
each
ed at Dan R. King & Associat
es in Houston, (713) 667-0333,
ext. 227,
e-mail
[email protected], or ...visit www.kingphillips.com. Rick L. Old
en
ett
el is a partn
er at Old
en
ett
el & McCab
e, Attorn
eys at Law, in Houston. Adapt
ed, with p
ermission, from Am
erican Ag
ent & Brok
er magazin
e.
https://completemarkets.com/Article/article-post/472/Online-Education-For-Risk-And-Insurance-Professionals/
Online Education For Risk And Insurance Professionals
According to a Wall Street Journal article, there’s been a dramatic increase in the number of executives returning to classrooms to 'brush up on traditional management skills and to learn new ones.' In the risk management and insurance industries, this is nothing new. Whether it’s a required continuing-education course, or a CPCU class, risk and insurance professionals have always pursued higher education.
For years, classroom courses that prepare students for national exams have been available throughout the nation. Some students, though, don’t have the time or the patience to sit through a weekly three-hour course for 18 weeks. That’s why the Institutes, Risk and Insurance Management Society (RIMS), and other organizations have created online exam-preparation courses that offer risk and insurance professionals more educational options than ever before.
RIMS’ ONLINE ASSOCIATE IN RISK MANAGEMENT (ARM) COURSES
I was intrigued when I heard that RIMS was offering online exam-preparation courses for the ARM series. My classroom experience with the ARM 54 course was less than engaging, as I spent the requisite instructional time confined in a small classroom listening to an instructor ramble on about many topics unrelated to risk management.
I passed the national exam for ARM 54, but wanted to self-study for ARM 55 and ARM 56. Knowing my tendency to procrastinate, I looked for a course with structure to help me avoid cramming the night before exams. RIMS’ new online course for ARM 55 was just the ticket. I enrolled online, paid the fee, and within 24 hours had a user name and password to enter the Web site. RIMS’ easily navigated Web site contains all the needed study information. Online courses are divided into four sections:
Schedule: assignment and exam schedules
Media Center: course materials and exams
Discussions: students’ bulletin board forum for posting thoughts and answering instructors’ questions
Profiles: instructor and student profiles
RIMS’ online learning environment is somewhere between the two extremes of traditional classroom learning and self-study. Instead of dominating the learning environment with a lecture, the instructor serves as a facilitator, laying out the coursework weekly and leaving it up to the students to download the material, study, and take the quizzes. Students must be highly motivated.
The success of RIMS’ online learning environment relies on active student participation. When class began, the discussion area was very active. The instructor posed questions and most students followed up with their thoughts. It was interesting to finish an assignment, jump online, and instantly read other students’ solutions. But after a few weeks, the number of postings dropped and the instructor had to send weekly e-mails to solicit participation. I sometimes waited days before receiving a response from the instructor or other students to my postings in the discussion area. My interest in the course began to wane and I visited the Web site less and less.
When it was time for the national exam the online classroom allowed me to go back and review discussions and assignments. I studied the course materials and sent e-mails to the instructor asking for help in certain areas. With his help, and a review of materials on the Web site, I passed the national exam.
Overall, RIMS’ online learning experience served its purpose. Students who take online courses must remember that it’s up to them to stay current with the assignments and discussions. Aside from the ARM series, RIMS offers other courses, including Fellow in Risk Management test-preparation courses, general risk courses such as Managing Business Risk and Small Business Risk Management, and skill-enhancement courses which focus on improving basic business skills.
CPCU ONLINE SERIES
The American Institute for CPCU recently teamed up with Blackboard.com, an online learning provider, to create an e-learning environment that’s very similar to RIMS’ online educational program. They divide the 'classroom' into three main sections that lead students through their daily activities: announcements, calendar, and tasks.
Claire Reiss, director of the Grants and Research Program at the Public Entity Research Institute, recently completed the online course for CPCU 8-Accounting and Finance, possibly one of the most difficult CPCU courses. As a working mother of two, Reiss appreciated that the course helped prepare her for the exam in a way that fit her schedule. Instead of sacrificing one night per week for a classroom course, Reiss studied online whenever and as often as she liked from her home.
The best part of the course for Reiss was having someone to turn to with questions: 'The teacher was very helpful and responsive. She provided thoughtful responses to our answers to assigned questions, quizzes, and the practice final. She also provided lecture notes that highlighted the main points of each assignment and gave us some advice about how to focus our efforts.' Overall, Reiss enjoyed the course and says it adequately prepared her for the national exam, which she passed.
THE FUTURE OF ONLINE EDUCATION
Claire Reiss and I had similar experiences and outcomes in our online learning adventures. Both RIMS and CPCU provided ways to study on our own time and at our own pace; yet we both noticed that the interactivity of the programs was virtually nonexistent. The format has potential for discussion among students, but lacks the urgency and leadership of a traditional classroom environment that promotes expression of ideas.
Creating the feel of a traditional learning environment online is nearly impossible because it requires more bandwidth (very rapid connections) than most people currently have to deliver the audio, video, and animation required for an interactive educational experience.
Nevertheless, one online education company appears to be ahead of the curve. Corpedia, a Phoenix-based e-learning company specializing in Web based business management and compliance education, uses streaming audio and creative animation to teach courses. I recently completed a one-hour course titled 'Recognizing and Preventing Employment Discrimination,' a look at the laws, history, causes, and other issues surrounding employment discrimination. I was thoroughly impressed with the course’s in-depth content and streamlined visual presentation.
Corpedia presents the material with audio and visual cues that make it interesting and easy to follow. Exams test your knowledge throughout the course. The learning experience is somewhere between watching a training video and sitting through a live presentation. Students can rewind, fast-forward, or pause the lesson at any time. In addition, users can completely stop the course and return later. The course remembers where you left off. The programs also have some nice features for managers who require employees to take the courses. The employer can monitor each employee’s performance and progress, and keep online records of who took which courses.
Although Corpedia’s class catalog focuses mostly on general business management training, many of the topics apply to risk management professionals, particularly such sections as safety, health, legal compliance, and workplace issues.
CONCLUSION
Online learning is in its infancy and far from replicating the interactive experience of traditional classrooms. Nevertheless, students taking online courses benefit from the ability to study anywhere at anytime. As with traditional classroom environments, students must be highly motivated to learn the material, stay abreast of the latest assignments, and join in discussion groups to reap the full benefits of learning online....
https://completemarkets.com/Article/article-post/1997/GROW-REVENUES-OR-SHRINK-EXPENSES-HOW-TO-IMPROVE-AGENCY-PROFESSIONALISM/
Grow R
ev
enu
es Or Shrink
Exp
ens
es: How To Improv
e Ag
ency Prof
essionalism
GROW R
EV
ENU
ES OR SHRINK
EXP
ENS
ES: HOW TO IMPROV
E AG
ENCY PROF
ESSIONALISM by
Elizab
eth Mill
er Although w
e’v
e s
een many ag
enci
es
enjoy tr
em
endous profits ov
er th
e y
ears,
Elizab
eth Mill
er b
eli
ev
es that th
e pot
ential for growth r
emains v
ery high. With strat
egic acquisitions, strong sal
es
efforts,
effici
ent proc
ess
es, and good
exp
ens
e manag
em
ent, th
er
e’s no r
eason why ag
enci
es can’t continu
e to incr
eas
e th
eir profitability. Most busin
ess prof
essionals und
erstand that th
er
e ar
e only two basic ways of improving profitability: Grow r
ev
enu
es and/or shrink
exp
ens
es. In th
e insuranc
e industry, growing r
ev
enu
es can b
e don
e in s
ev
eral ways (such as acquiring a n
ew ag
ency, incr
easing rat
es and
engaging in good, old-fashion
ed s
elling).
Exp
ens
e savings can com
e about in many ways, from improving th
e effici
enci
es obtain
ed through automation to adjusting th
e comp
ensation packag
es for diff
er
ent
employ
ees. R
EV
ENU
E GROWTH Acquisition activity has r
emain
ed a major growth strat
egy in th
e industry. During th
e past f
ew y
ears, about 13% of ag
enci
es hav
e acquir
ed anoth
er ag
ency. How
ev
er, th
e siz
e of th
e acquisitions has shrunk. On av
erag
e, th
e growth in r
ev
enu
e obtain
ed from acquisitions w
ent from $525,000 in 2000, to $550,000 a y
ear lat
er, p
eak
ed at $833,000 in 2002, and th
en dropp
ed off significantly to slightly mor
e than $500,000 in 2003. Although th
e industry is still using acquisitions as a growth strat
egy, th
e fact that av
erag
e r
ev
enu
es from acquisitions ar
e down substantially m
eans that profits won’t grow as quickly as r
ev
enu
es. This is b
ecaus
e th
e av
erag
e organization tak
es about
eight months to consolidat
e op
erations from n
ewly acquir
ed subsidiari
es, r
egardl
ess of th
e siz
e of th
e acquisition. B
ecaus
e th
e tim
e to consolidat
e r
emains constant, small
er acquisitions tak
e long
er to r
ealiz
e profitability. W
e might b
e hitting a lull in acquisitions, as th
e inv
entory of s
ell
ers is shrinking. R
ec
ent tr
ends show that larg
er firms rank
ed ag
ency or book acquisitions s
econd or third in futur
e growth strat
egi
es, whil
e produc
er r
ecruitm
ent cl
early r
emains th
e l
eading strat
egy.
Ex
ecutiv
es in many industri
es op
erat
e und
er th
e assumption that bigg
er is b
ett
er and oft
en go to gr
eat l
engths to show growth. I’d advis
e th
em, “Don’t grow for th
e sak
e of growing. A larg
er top lin
e do
esn’t always incr
eas
e profits.” In th
e Ind
ep
end
ent Ag
ency Syst
em, cli
ent sal
es grow th
e top lin
e, but mor
e importantly,
effici
ency will grow th
e bottom lin
e. Wh
en s
ervicing your cli
ent bas
e, it’s important to und
erstand th
e cli
ent’s industry and cr
eat
e workflows that will maximiz
e automation, whil
e s
erving th
e cli
ent with as f
ew st
eps as possibl
e. Ag
ents oft
en fail to und
erstand th
e idiosyncrasi
es of c
ertain industri
es. As you
ent
er n
ew mark
ets, b
e awar
e of diff
er
ent s
ervic
e issu
es, and plan accordingly. Insuranc
e ag
ents and brok
ers act as int
erm
ediari
es b
etw
een insuranc
e carri
ers and consum
ers in providing risk prot
ection. Th
e busin
ess partn
ers on both
ends of th
e insuranc
e transaction can mak
e chang
es that th
e ag
ent and brok
er must d
eal with. Som
e carri
er chang
es might r
evolv
e around th
e risk app
etit
e bas
ed on loss tr
ends. Th
e consum
er’s n
eeds might chang
e as th
eir busin
ess
evolv
es. As a s
ervic
e provid
er, ag
ents and brok
ers n
eed to look at th
eir books on a r
egular basis and b
e r
eady to sh
ed unprofitabl
e busin
ess. Wh
en r
evi
ewing your book, first look at th
e av
erag
e n
et r
ev
enu
es that a cli
ent sal
e g
en
erat
es, and th
en
examin
e th
e work r
equir
ed to s
ervic
e this typ
e of cli
ent. Hop
efully, you’ll b
e pl
easantly surpris
ed. If not, ask yours
elf why you’r
e writing this class of busin
ess. B
e awar
e of th
e entir
e cli
ent r
elationship whil
e you ass
ess th
e profitability of writing for a c
ertain mark
et. If you’r
e s
ervicing a cli
ent as an accommodation for oth
er busin
ess opportuniti
es, r
evi
ew th
e profitability of th
e entir
e cli
ent r
elationship, not just a singl
e product. Profitabl
e r
ev
enu
e growth should b
e th
e main focus of ag
ent and brok
er activiti
es. Look to cr
eat
e a workforc
e that’s driv
en by profit, not just sal
es. D
efin
e, communicat
e, and monitor your organization’s goals and obj
ectiv
es cl
early. If you hav
e a small boutiqu
e ag
ency, you n
eed to support sal
es and s
ervic
e efforts that fall within a w
ell-d
efin
ed scop
e of busin
ess. If th
e ag
ency is cr
eating a n
ew nich
e as a growth strat
egy, you must
educat
e produc
ers on this lin
e and cr
eat
e comp
ensation plans that will motivat
e produc
ers to s
ell it. Ov
er tim
e, complac
ency might s
et in. Many produc
ers r
each a point at which th
eir r
en
ewal book h
elps th
em sustain a comfortabl
e lif
estyl
e, without th
e effort of trying to grow th
eir book. Your comp
ensation packag
es should continually motivat
e produc
ers to incr
eas
e th
eir sal
es. Cr
eat
e a “pay-for-p
erformanc
e” atmosph
er
e, whil
e maintaining a strong support t
eam for produc
ers. Mak
e th
e t
eam r
esponsibl
e for r
et
ention, allowing produc
ers mor
e tim
e to s
ell. P/C produc
ers in small
er ag
enci
es t
end to b
e jacks-of-all-trad
es and sp
end mor
e tim
e s
ervicing th
eir
existing book than soliciting n
ew busin
ess. This also holds tru
e of v
ery larg
e ag
enci
es, which look at produc
ers mor
e as risk manag
ers than sal
esp
eopl
e. Th
eir cli
ent sal
es calls t
end to involv
e mor
e consultation than s
elling. M
edium-siz
e firms g
en
erally hav
e th
e most aggr
essiv
e sal
es forc
e, in which produc
ers hav
e historically focus
ed
equally on s
ervicing
existing cli
ents and soliciting n
ew busin
ess. SHRINKING
EXP
ENS
ES
Exp
ens
e savings com
e in two forms: tangibl
e (m
easurabl
e) and intangibl
e (unquantifiabl
e). Tangibl
e exp
ens
e savings can b
e as basic as r
en
egotiating your offic
e suppli
es or as compl
ex as r
eallocating spac
e to accommodat
e mor
e work in a small
er ar
ea. Intangibl
e savings ar
e usually mor
e compl
ex and g
en
erally involv
e how work is proc
ess
ed. Don’t b
elittl
e chang
es that you can’t quantify. Mor
e effici
ent op
erations that might not b
e m
easurabl
e can improv
e your productivity significantly. Ag
ents and brok
ers m
easur
e productivity by commission r
ev
enu
e p
er
employ
ee. This figur
e should av
erag
e b
etw
een $100,000 and $150,000 — and
ev
en high
er in larg
e firms. Although th
e Ind
ep
end
ent Ag
ency Syst
em has adopt
ed a vari
ety of automation tools during th
e past f
ew y
ears that should’v
e improv
ed productivity significantly, productivity gr
ew only about 3% from 2002 to 2003. This is about half th
e 6% annual productivity gain r
ealiz
ed b
etw
een 2000 and 2002. Som
e s
ectors of th
e ag
ent-brok
er industry
ev
en witn
ess
ed a d
ecr
eas
e in productivity. D
espit
e th
e robust capabiliti
es of ag
ency manag
em
ent syst
ems, many ag
ents and brok
ers hav
en’t r
ealiz
ed productivity gains b
ecaus
e employ
ees,
esp
ecially produc
ers, hav
e r
esist
ed automation. Sinc
e produc
ers ar
e usually th
e starting point of any n
ew busin
ess transaction (“nothing happ
ens until som
ebody s
ells som
ething”), it’s
ess
ential for th
em to
embrac
e th
e automation solutions availabl
e. Until produc
ers agr
ee to us
e th
e ag
ency manag
em
ent syst
em, it will b
e difficult to impl
em
ent automation fully. Int
egration of acquisitions can chall
eng
e many buy
ers. Aft
er a purchas
e clos
es, obstacl
es to tackl
e includ
e: (1) consolidating op
erations; (2) bl
ending th
e cultur
es of th
e two organizations; and (3) clarifying and communicating th
e chain of command. Although consolidation is usually th
e easi
est to achi
ev
e and will yi
eld th
e larg
est boost to th
e bottom lin
e, many organizations try to bl
end th
e cultur
es and
establish r
eporting r
elationships b
efor
e th
ey consolidat
e. This approach do
esn’t work as w
ell. Wh
en making an acquisition, b
e pr
epar
ed to mak
e th
e tough d
ecisions — or don’t do th
e d
eal. P
eopl
e ar
e not only your most valuabl
e ass
et, th
ey’r
e your larg
est
exp
ens
e. You n
eed to mak
e good choic
es, announc
e th
em quickly, and th
en g
et on with th
e r
est of th
e proc
ess. Y
es, th
e consolidation of op
erations will usually yi
eld an ov
erall r
eduction of workforc
e,
esp
ecially in th
e administrativ
e ar
eas — and that’s tough to fac
e. But d
ecr
easing ov
erh
ead salari
es will incr
eas
e profit margins. And isn’t incr
eas
ed profits on
e of th
e r
easons you mad
e th
e acquisition in th
e first plac
e? Today, w
e’r
e in th
e midst of a soft mark
et. As pr
emium hik
es slow, it will b
ecom
e mor
e important to boost your bottom lin
e by shrinking
exp
ens
es. Ag
enci
es that r
einv
est
ed th
eir high profits g
en
erat
ed during th
e hard mark
et in p
eopl
e and t
echnology will b
e b
est position
ed to produc
e profitabl
e growth in th
e n
ear futur
e.
Elizab
eth Mill
er is a vic
e pr
esid
ent with Busin
ess Manag
em
ent Group (BMG), a consulting firm that has b
een h
elping ind
ep
end
ent ag
ents and brok
ers for mor
e than 20 y
ears. To l
earn how BMG can assist you, visit www.bmgconsulting.com, call toll fr
ee at (800) 772-0208, or contact th
e author dir
ectly
emill
e[email protected]. R
eproduc
ed, with p
ermission, from Prof
essional Ag
ent magazin
e. ...