Change is a pain. I know. I own an insurance agency. Commission cuts (gashes, in some cases), the Internet, underwriting processes, the direct writers...you get the point. Insurance carriers (whether you are a "captive" or an "independent") try to understand and react to the change, well after the change has occurred. The wheels of corporate America turn ever so slowly. I write this to convince you why we should embrace these and other challenges we face as Agency Owners.
To this, I unfortunately have to ask you to do that which we have already agreed is a pain...to change. Not change in a physical sense, as our companies seem to continuously force on us, but change in a mental sense. In order to thrive in our business today, it is absolutely vital that you as an Agency Owner (not an Agent-there is a huge difference!), must have an open mind and not turn away any opportunity for agency growth without first fully investigating its' merits and detriments. Not every suggestion or idea presented here is for everyone. That's OK. You must realize however, that unless you are swimming, you are simply treading water. Those that tread water, eventually:
Drown (go out of business, etc.) or;
Get rescued (are forced to sell or merge).
The headline carried on the National Underwriter a few years ago basically forecast that by 2003, 20% of the Independent Agency force would disappear. Now that it is 2009...how far off do you think it was? They would quit, sell, or merge. I know I didn't like any of those three options, especially if forced to do any of them. If I wanted to thrive, let alone survive, I knew the "same old way" of doing business wasn't going to work anymore. You may agree or disagree with individual points, but all in all, each of my "secrets" is driven by three caveats:
Pro-activity
Positive Mental Attitude
Keeping it Simple
I write this with the intention of preserving and perpetuating the Agency system of insurance distribution. If you do not fully believe that our way or life (goodness knows, it's not a job!) is just as important to our clients lives as their doctors, attorneys, and accountants, then stop reading here. I do not believe that we will be replaced by the Internet or the direct writing companies. I do believe, however, that if we do not do a better job of satisfying more of our clients needs and desires, someone else will. Insurance, especially personal lines property and casualty is becoming a commodity. We cannot let this happen. As soon as our customers think of their auto and fire coverage as a commodity, we as agents are expendable. We need to give people reasons to need an Agent/Agency. If we do not, we are doomed.
Secret #1
You are not an insurance Agent.
I repeat, you are not an insurance Agent. Yes, according to the state in which you are licensed you may be, but I am not writing of the technical definition. You are the owner of an Insurance Agency. Preferably, you are a business owner. If someone asks me what I do for a living, I answer in that way. If an application or form requires that I write-in my "employer" or "employment", I complete the blank with "business owner", not Agent, or self-employed for that matter. "Self-employed" connotes that you work for yourself (and your income). "Business owner" relates that your business (even it is only you presently) works for you to generate income. The difference is far greater than simply the syntax.
THIS IS A MINDSET CHANGE
Simply stated, the self-fulfilling prophecy dictates that you are what you think you are. You must believe in yourself and your abilities, or nothing I can relate to you will make a difference.
Many of us who are also life insurance Agents, have heard some version of the "money making machine" anecdote as an illustration of the necessity of life insurance to a skeptical prospect. If you haven't, it goes to the effect as follows: " If you owned a machine in your garage or basement, that each year turned, whirled, and clicked and eventually spit out $40,000 (or an amount relative to the respective prospect) you would surely insure it as you would your home or your cars, wouldn't you? Of course you would. Then why don't you believe in life insurance? You are that money making machine, Mr. or Mrs. Prospect. The point as it pertains to this chapter is two-fold. First, and most obvious, is the fact that you, as an Agency/Business Owner, have the same "machine" in you. Secondly, to thrive in our industry today and tomorrow, not only must you insure the machine but you must also feed the machine. This is your business. You have two investment vehicles to feed your business, time and money. If you are not willing or able to invest money to help your business, then for goodness sake, invest the time! The time you spend on developing your business, or your store (s), if you will, will always be returned to you, with interest, assuming it is good time and conducive to the pro-activity caveat. We all realize that time is money, but efficiency is profit. We all also know that it is better to work than to work hard. I, however, believe that working hard is just as good, depending on your perspective. What I mean by this is simply that you should work smart to ensure that your business works hard. I would rather make $500,000 working on my business at a self-determined level of direct involvement, than 2, 3 or 4 times that in a situation where my business "runs" me! This is your business, treat it and nurture it as such.
Secret #2
Give your Agency a "check-up".
One of the first steps to working as an "Agency Owner" and not an "Agent" is to tighten or oil the service "engine" of your machine and possibly overhaul it. The biggest reason that we, as an Agency force, are able to even maintain, let alone grow our client bases, is our service. If you are losing more clients than you are adding, it is time for some diagnostics and possibly an overhaul at the very least! Think about it for a moment, if price were the sole determining factor in our Agencies, most of us would be out of business, or at best, struggling to constantly align ourselves with the lowest carriers at the given time. We've all heard it before..."service sells". If service sells, then "sell service". The statistics I have read or heard indicate that it is ten times easier to keep or retain a customer than it is to get a new one. I have acquired many clients in my career, even though our price may have been higher. I do this by simply educating the prospect, not to the point of expertise, but at least with a working knowledge of why a higher deductible may be better for them in the long run statistically, or why insuring the value is vital. They won't get this personal attention from a direct writer or the Internet-based insurers. We have, as I am sure many of you have as well, lost clients to these distribution systems, only to have them return for that personal service.
I did an informal survey a few years ago of our new clients. I wanted to know why they switched their coverages to our Agency. Surprisingly, though not to me, price was rarely one of the reasons. In order, the top three reasons were:
" I haven't heard from my agent in ten years".
" I called the Agent's office at 2:30 in the afternoon three days ago, got their answering machine, left a message and still have not heard back from them".
"We had a claim so we called the Agent's office, only to be given an 800 number to call".
Granted, money does indeed talk, especially if customers can look at triple-digit savings on their insurance premiums. However, our mini-survey confirmed one vital thing: People value service. I would also like to add that people embrace personal service. Everyone in your Agency has to realize this every time the phone rings. The most valuable asset to your business is your customer. I realize how basic this is, but it never hurts to state it again. Customers appreciate quality service. My next secret tells you how to use appreciation of your satisfied customers to help grow your business.
Secret #3
Leverage your clients via referrals.
I do not mean reactive referrals, where you wait for the phone to ring. You must pro-actively pursue referrals by initiating a formal referral program in your Agency. Promulgate it. You have to let your client know about it or it won't work! Our program is simple: "Send us 5 referrals and dinner (or a gift card) is on us"! Here is how it works: When a client sends us a referral, we log it in the computer and send them a thank-you note indicating how many they have sent. At the 5th referral, we call and thank them and then send them a gift card. We don't require 5 sold leads, just 5 referrals. We don't limit it either. My attitude is that we'll sell at least 2 of the 5, sometimes 3. (Our records reveal it eventually turns out to be 3.5 of 5). Depending on the location of your Agency, you can do the math on the value of 3 sales. I am sure you will agree it is much greater, not even considering renewals, than the $25 gift card.
In 4 years of existence, our program has generated nearly 700 referrals, resulting in nearly $23,000 of new commissions. We have paid out $650 in gift cards. A very solid return on investment I would say. Admittedly, we could do as everyone else could, a better job of letting our clients know about the program. We include the phrase "send us 5 referrals and dinner is on us" in almost all of our correspondence. It is stated on our "on-hold" message (which I highly recommend). We should always mention it at the end of sales appointments, but sometimes forget. We also really need to improve on mentioning it at the end of a service call. We all know referrals build a strong foundation for an Agency. With this in mind, formalizing the referral process will position your Agency for further client leverage. This leads in to my next secret.
Secret #4
Diversify your income streams by leveraging your clients into other services.
Your client base, when looked upon as a referral generating entity, is very powerful. Once you have established a formal system of referral perpetuation, it is time to look again at the client base for other sources of revenue to your Agency. Obviously, you clients have insurance and protection needs that your Agency can provide. For a moment, stop thinking of your Agency as an "insurance" Agency and picture it as a turnkey operation for any type of financial need or service. Depending on your mindset, this may be tough to do. Remember to open your mind and you'll be amazed at the possibilities. Your clients also need services such as: mortgage loans, auto financing, legal services (including estate planning), tax and/or accounting services, retirement planning, financial planning, even college-funding help. They are going to buy these services somewhere. Why not at their convenient "insurance " Agency. Our Agency is currently working on establishing departments (or Profit Centers, as I call them internally) that assist clients in all of these above areas. Some departments, such as our Mortgage Loan and College Funding Departments are physically separate stand-alone operations. Some are simply relationships with other businesses such as we "plug" our customers into contacts with an Estate Planning Attorney or a trustworthy local accountant. Technically, no revenue is exchanged, but referrals are genuinely reciprocated. In addition, our Financial Service Center, which is a part of the Agency itself, routinely will coordinate meetings with the "legal" and "tax" Departments with mutual clients.
Outside departments such as these are pre-screened as they pertain to our Agency goals. Before we send any client to them, we are comfortable with their respective abilities to ensure that they nurture and enhance our relationship with that customer, and not detract from this relationship in any way. Other services, such as College Funding, we offer to our clients on a direct referral basis to a company that offers services such as financial aid planning and assistance. We contract with the company for a referral fee per buying customer. All we do is send the lead. Initially, you may think that all of these ancillary services may create too much administrative headaches for the Agency. On the contrary, considering each of these services has natural lead-ins to one or more of the other, it is quite simple to record and track activity not only in hard copy files, but also in our computer's client management software.
Since each Agency is different, it would not be effective to give examples of how you should embrace the "Profit Center" or departmental approach to increasing Agency revenue. Keep in mind that there is no magic answer. I would advise that you don't add more than service at a time. I would also advise that if you are thinking of adding another service line other than mentioned here, make sure that it is conducive to producing leads and therefore, income to at least one of the others. In other words, I don't think selling donuts would be good for a "Profit Center". It would detract too much from the main goal of the Agency: to provide quality financial services and products all under one roof. By the way, don't try to be the expert in all of these areas. There is simply too much to know. It's better to work at developing the Departments and letting them worry about the details. What a great lead-in to Secret #5.
Secret #5
Don't work IN your Agency, work ON your Agency.
How much money did you make last year?
How many hours a week do you work?
Multiply the hours by 52 weeks per year...
Divide the dollar amount made last year by the total hours worked last year...
Your hourly wage is the total: _______________________
Remember this wage every time you do the filing, answer the phone, process a piece of business, handle paperwork, etc. Chances are you could pay someone a lot less than this wage to handle these types of duties in your office. I am not in any way suggesting that these tasks are unimportant. They are vital to the operations of the Agency. I am simply pointing out that your time is very valuable. Your "job" as the business owner is to grow the business. It is significantly more effective to grow the business by working ON it and not IN it. In other words, how effective can you be at driving income into the Agency when you are doing work that you can pay ¼ of your hourly wage to have done for you? You can't! Many "one-person show" Agents will say that they can't afford to hire a staff person. My answer to that is that you cannot afford NOT to! If you truly want to thrive let alone survive, invest in quality people by paying them a fair wage, training (or paying someone to train them), is step one.
No one succeeds alone. A quality, solid team will out perform the best loner every time. Our staff is paid about 20% more than their peers in the industry. I know it is a cliché, but you really do get that for which you pay. Attitudes are better, turnover is less, and most importantly, my "job" as the business owner is immensely simplified knowing that my team handles 99% of the daily operations. This allows me to do many things to help the business grow. From nurturing our Profit Centers to hiring quality sales people, to selling when I want to sell...our team makes it happen. The business basically runs itself. Sure I need to tighten a belt here, squirt some oil there, but overall it runs itself. How? Well that is Secret #6!
Secret #6
Simply systematize. It is the only way to fly!
When I first started as an Agent, I did it all; answer phones, file, quote, process, handle claims, etc...we all do. As my business started to grow, I realized that we had to grow efficiently or risk alienating our existing customers due to service concerns. The only way to accomplish efficient growth is by systematizing your processes. We have simple, easy-to-duplicate systems for nearly every process in the office. For instance, when a prospect calls the office for a quote, every staff person knows exactly what to do, from completing the initial fact finder, to checking driving records, to quoting and to setting the appointment. They are trained to handle any question or objection. Another great example is how the Agency handles a claim. We have a designated Claims Liaison, who quite simply, serves as the liaison between the customer and the handling company. This allows for the customer to contact the Agency before submitting the claim to determine if the claim should be submitted in the first place. The liaison is then able to assist the customer with the filing, handling and completion of the claim.
If this is your one moment to shine, to make that delivery on the promise the customer purchased a while ago, then it deserves the time and attention a liaison can provide.
Our day-to-day activities are planned in advance by the follow-ups on our automated calendar system. There are a plethora of these on the market today.
Each member of our staff has their own calendar, which they log and follow up with on a daily basis. We also have a team calendar, which allows for the same idea, just on an Agency basis. We plan our work and work our plan. You simply cannot grow without systemization. Organization is one thing, systemization is another. As I see it, you can organize and still not get anything accomplished. Systematizing forces things to happen in an organized way!
Secret #7
Remember: Everyone is a customer (or client)!
Your customers (I prefer "client", as it indicates a relationship, whereas "customer" tends to relate "transaction") are not just those who pay premiums. Your customers are also your staff, your underwriting team, company management, even claims personnel. Every entity that comes in contact with your Agency is a customer.
You treat each "paying" customer with respect and quality service. They in turn pay the premiums, which drive income into your Agency. However, your Agency deals with the other aforementioned "non-paying" customers just as frequently. By treating these non-paying customers just as well, you not only demonstrate the positive mental attitude that is vital for your success, you also make it a heck of a lot easier to get things done. In other words, it never hurts to be thought of in a positive manner by the underwriting department, the claims department, or any entity that also interacts with your "paying" customers. Even a third party claimant, who may have been involved in an accident with one of your customers, is a great opportunity to turn a trying time in to a buying time, depending on how your Agency treats this person. Respect and empathy will go a long way in not only assisting the claimant, but also in potentially making this claimant a paying customer. The proverbial "Golden Rule" is by far the easiest way to summarize Secret #7...do unto others as you would have done to you. Life would be a whole lot better, and easier, if we all adhered to the Golden Rule. Imagine how applying it to your Agency everyday would impact your bottom line. Do the right thing!
Hopefully, the secrets I have shared will assist you in your Agency's endeavor of growth. Remember, to survive is to live, to thrive is to grow. Stay focused, be proactive and keep it simple. And always have a positive mental attitude. With these benchmarks of performance, anything you desire is possible.
Tim Norris
National Real Estate Insurance Group, LLC
2008
888-741-8454
tim@nreinsurance.com
