Tag Archives: technology

Posted on

Creating a Marketing Strategy Will Boost Your Business

The reasons for having a marketing strategy in place to help your agency function effectively

 

It is important for any sized agency to make sure they have a marketing and promotional strategy. For those that might not let’s start by defining what a strategy is?

A strategy is simply future planning that helps you achieve your goals and objectives. So, a marketing strategy is a marketing plan designed specifically to accomplish your marketing goals for some period.

For instance, a marketing objective could be to become a market leader in your respective niche by delighting your customers. Therefore, the strategic plan would include comprehensive marketing research and creating a marketing plan to fulfill your customer’s needs. All organizations must have some clear marketing goals, which needs to be coupled with a marketing strategy to execute your goals.

Posted on

An Open Letter to Independent Insurance and Benefits Agencies

There comes a time for every business when it must make adjustments, embrace change, and reinvent itself. Occasionally, circumstances arise that bring an entire industry to just such a transformational moment. For the insurance industry, and our individual businesses, that time is now.

Some may not want to believe it and others may choose to ignore it, but for all those who are in denial, they may be doing so at their own peril.

An industry in crisis

We are at a defining moment for the independent agency system. Profits are being attacked, growth is a struggle, future revenue streams are uncertain and the result is a level of panic not seen before. The most concerning thing of all is that most agencies don’t seem to have a plan for how to deal with the lack of control they have over their businesses. As a result, there is an almost vulture-like strategy driving agency acquisitions, a development that seems to be gaining momentum and threatening the very survival of the independent agency system.

This isn’t just a personal opinion or observation. This is the collective opinion and observation of a group of 10 industry/agency consultants who recently came together for a somewhat unprecedented meeting. On most days, this is a group of competitors; either competing directly for the same clients or, at the very least, competing for the discretionary time and money of the same agencies. However, it was out of mutual concern for the future of the industry that this group came together in the spirit of “coopetition.” Rather than retreating into separate corners and competing more fiercely for the shrinking ranks of agencies, this group has made the decision to work together to help keep the ranks of independent agencies as large and successful as possible.

An industry worth saving

This is an unbelievable industry that has been rich with personal and financial rewards for those willing to make the investment. We are provided with great income opportunities, have more work/life balance than most other professions, work with diverse and interesting business owners, and perhaps best of all, we have the potential to make a significant impact on the businesses of those clients.

In fact, this industry has been so generous to independent agencies that it could be argued that the generosity itself has helped create many of the problems we now face.

We do not see the demise of this industry as inevitable. In fact, this group believes the best days of independent agencies still lie ahead. We know the independent agency system can survive; however, the surviving businesses will look different than they do today. What we don’t know is how large those ranks are going to be because the change is starting with a needed cleansing of the industry, something which is already happening.

We have put ourselves in this precarious position. As we just said, many of our problems as independent agencies are self-created (or, at the very least, have been tolerated). All businesses must control two critical elements:

  1. What it is they sell to their clients.
  2. How they get paid for what they sell.

Because the industry has been so financially generous, most agencies have allowed those critical parts of their business to be controlled by a third party, the insurance carriers.

Also, because of the generous financial rewards provided by the industry, it has allowed agencies that deliver marginal client value to find disproportionate levels of success. We know this is a bit harsh but, if you are being honest with yourself, you will agree that if all an agency does is place an insurance policy and then fix the resulting problems, they have been way overpaid. It is these agencies that have helped fuel an unfavorable stereotype for our industry and gained us little support in the court of public opinion.

It is not this part of our industry we are looking to protect and save. That would be a fool’s effort. Instead, we are looking to save those agencies who are able and willing to take control of their businesses and whose mission is to truly improve the business of their clients. That is an industry worth saving.

Now is the time to act

While we believe there is a great future ahead for these agencies, the future glory days are not guaranteed, not by a long shot. Each of us in this group has varied ideas as to how agencies will take part in that glory, but we are unified in our belief that it will require something drastically different than what has been done in the past.

And, as we all know, change is never easy and the right kind of change is rarely quick. While we also have differing opinions as to how much time agencies really have to save themselves, we are all in agreement that now is the time to get started and significant progress needs to be made within the next 12-24 months.

Focusing on the wrong target

Most would agree that this is a time of unprecedented challenges for independent agencies. Sure, some of the challenges are obvious: health care reform, exchanges, and a slow recovery from the recession, to name a few. As we talk to agency owners, it is these challenges that are getting the most attention.

However, as real as those challenges are, we don’t see those as the most critical challenges: these issues are merely exposing the underlying frailty of the independent system, a frailty that has been a ticking time bomb and whose clock is winding down.

A failure to address and correct the real issues will bring an end to the independent agency system, at least as we know it today.

Common agency challenges

Identifying those foundational issues was a primary focus of our recent meeting. The consensus of our group is that the following issues are leaving agencies vulnerable and exposed to the impact of the current (and emerging) market and industry conditions.

Too many agencies do not have an answer for these industry trends:

  • Carriers are starting to limit the number of agency contracts.
  • Carriers are writing policies net of commission, leaving the agency to negotiate their own fee.
  • Where commissions remain built in, they are being slashed.
  • After the cleansing of the industry removes the mediocre performers, the remaining competition will be potent and fierce.
  • The Patient Protection and Affordable Care Act (PPACA) and the resulting Exchanges will drive many smaller businesses out of the medical insurance business.
  • While the commission slashing is currently focused in the health side of the business, it could be a false sense of security to think other lines of insurance are immune to reduced commission schedules.

Too many agencies (both benefits and P&C) have left themselves vulnerable in the following ways:

  • There is no unique sales process. Most are still competing with a spreadsheet and look just like every other agency to the prospect/client.
  • Growth is overly dependent on the owners to produce.
  • With the owner focusing on growth, there is not enough work being done “on” and leading of the business.
  • There is too much dependency on the placement of an insurance product as the only value delivered to clients, and therefore, the only opportunity to get paid by those clients.
  • Most agencies lack a vision as to what the agency needs to become in order to survive.
  • As businesses, agencies are largely controlled by the insurance carriers. It is the carrier who controls the product being sold and determines the compensation for the sale.
  • Agencies are having difficulty creating non-insurance solution revenue streams.
  • We’re seeing industry shifts in buying behavior: consumer-centric at the individual level and single-source (benefits, HR, payroll) at the employer level.
  • There is little relevant differentiation between agencies (better service and a list of value-added services are not differentiators).
  • There is a lack of effective recruiting, interviewing, selection, and training processes leading to too many poor hiring decisions.
  • The stereotype of the industry (not trusted and seen as delivering marginal value at best) is difficult to overcome.
  • Most agencies have little to no effective sales management.
  • There is a disproportionate dependency on the smaller groups most threatened by the above listed industry trends.
  • Compensation programs are misaligned with the behaviors needed to drive new revenue, often rewarding a “protect what I have” mentality over a “go get more” mentality.
  • There are too many silos within the typical agency – Sales vs. Service, Producer vs. Producer, Department vs. Department, Leadership vs. Everyone else, etc.
  • All too often, there is a lack of accountability to results, especially for producers. Agencies have to be willing to fire poor performers, including producers.
  • Agencies create a service culture instead of a sales culture with their compensation programs and their accountability structures (or lack thereof).

In all areas, the constant among the problems seems to be a lack of systems and processes.

The cost of doing nothing

We know we aren’t the only ones who recognize the existence of these challenges. Unfortunately, many agencies who see the direness of their circumstances are still not taking appropriate action. The reason for lack of action usually comes down to the difficulty of change but also the cost of addressing the problem in terms of both a financial and time investment. However, the cost of doing nothing and trying to stay the course would be the costliest decision of all.

Agencies who don’t change their course will watch their financials and their structure deteriorate before their eyes and are likely to be out of business in short order. The current path will lead to:

  • Little, if any, top line growth.
  • Eroded profit margins at the bottom line.
  • Disintermediation, either because of carrier selectivity, exchanges, technology, or new and unexpected competitors.
  • Talented staff leaving and difficulty attracting new/replacement talent.
  • Competitive acquisitions at distressed prices.

There isn’t one solution for everyone, but everyone needs to find a solution. Being honest, there are self-interests in this group for issuing this letter. After all, our own success is dependent on this industry remaining strong and viable. However, we got into this side of the business because we like to help others succeed, and success now includes a fierce belief that now is the time to fight for our survival. This is an industry worth saving and fighting for, but it is a fight in which we must all engage together.

If in reading through the list of challenges, you feel you are one of the vulnerable and exposed, we encourage you to take control and start addressing your situation now.

There are basically two courses of action:

  1. Tackle this problem on your own, or
  2. Seek out help.

For most, and especially for those who haven’t yet started making changes, we believe the limited time frame to put answers in place makes tackling this on your own the wrong approach.

We suggest you align yourself with someone who can help you put the answers in place. Of course, as a group of consultants, we would love the opportunity to discuss with you how one of us might help. But we also freely admit there are plenty of other consultants and resources out there to whom you may turn, and we will even suggest some places for you to look.

Another option may be to align yourself with a peer group of agencies who are committed to fixing the same challenges and are working together towards common answers. We see successful agencies every day, agencies who are more optimistic about their future than ever before. Find one of these agencies as an example; there’s no need to reinvent the wheel.

The unacceptable response is to stick your head in the sand and pretend everything is going to be okay. Most of us don’t like the current course of the industry, so we need to be the ones who start steering the ship.

This is our defining moment; now is the time to take action.

What do you think? Is the industry in crisis? Leave your thoughts and comments below.

————————————————————————————————————————

The following are the consultants who met in Atlanta and who have committed to doing their small part in helping protect the independent agency system.

  • Agency Growth Mastermind Network – Nelson Griswold
  • The Anderson Agency Report | The Anderson Network – Steve Anderson
    Leading Authority on Insurance Agency Technology Productivity and Profits
  • The Brokers Broker – Kyle Hodges
    Helping brokers deliver unique wellness and marketing strategies for the 100+ market
  • Daymark Advisors – Jack Kwicien
    Trusted advisors to the insurance industry – Consulting, mergers & acquisitions, and charting the course for the future for brokers, carriers, and enabling technology firms
  • HR Technology Advisors – Joe Markland
    HR Technology Advisors is a leading provider of HR and Benefits Technologies for benefits brokers and their customers
  • iC3/The Intellectual Capital Coaching Corporation – Rick Bauman
    Helping Brokers succeed by building A Passionate Enterprise
  • Marsh, Berry & Company – Rob Lieblein
    Your Partner for Financial Consulting and Mergers & Acquisitions
  • Q4Intelligence (Formerly Benefits Growth Network) – Kevin Trokey & Wendy Keneipp
    An agency transformation network
  • The Wedge: Insurance Agency Sales & Management Training – Randy Schwantz
    Revolutionary Technology for Sales Team Development – Grow Your Agency Value, Grow Your Wealth
Posted on

The Cost of Inertia Has Gone Up

“We are now at the dawn of a profound technology-driven transformation that will make the changes we have experienced over the past 25 years seem small and slow.”
-Daniel Burrus, January 2009

I have used the above quote in many of my presentations over the last two years. Like many of you, I lived through the technology-driven changes over the past 25 years, and they hardly seemed small or slow. Yet the changes we’ve seen in the last five years have been dramatic: Facebook, Twitter, LinkedIn, the Kindle, iPhones, iPads, and the list goes on.

The world adopts technology and new ideas at a much faster pace than ever before. Just a few weeks ago, Facebook introduced a new profile feature and Google introduced an ebook store. Millions of people immediately adapted and adopted these new options. In fact, we have come to expect this kind of dynamic change.

This fast pace has created opportunity for some and has been the demise of others. But human beings — and the way we work with and manage each other — have not changed and have adapted nearly as quickly as needed.

The big question for agency leaders today is how they handle the implementation of technology inside their organizations and try to help their employees adapt and succeed. The leaders of the future will likely be those who are flexible enough to move with these fast changes.

What does this mean for you? As a leader, you still need to know where you want to take your organization, but you no longer have the luxury of planning the trip all the way to its final destination. Do you remember the 5- and 10-year plans? Today, those plans are a big waste of time.

If you’re going to survive this new faster race, you will have to be able to adapt-quickly. In the “good old days” business plans plotted the course from A to Z by connecting all the dots and creating a linear path that was easy to follow. A connected to B, B connected to C, and so on. In this transformed economy, A connects to B, but C might be something completely different than it was just a few months ago. As a matter of fact, C might not exist at all. Unless you’re able to live with ambiguity and embrace and anticipate change, you’re going to be left behind.

What are the implications? More than ever before, organizations have to know who they are and what they want because the “how” of their plans will be a constantly moving target. This can be frustrating for many, but it’s also exciting and dynamic for those who want to embrace change, try new ideas, and discard ideas and systems that stop delivering results.

The cost of inertia has just gone up. Way up.

Posted on

Data Wants to Be Free

A recent article in National Underwriter listed the top 10 technology trends for insurance companies. One of the trends was “Web Services and SOA Tools.” Here is how this trend was described:

“P/C insurers operate a large ecosystem of systems and applications that integrate for seamless processing. In the past, companies had to hard-code integration between systems, which was costly, time-consuming, created challenges when applications were replaced and integration had to be redone, and was often difficult to overhaul due to technology incompatibility. The use of Web services/service-oriented architecture (SOA) enables companies to deploy services instead of using one-to-one integration. These technologies will help insurers improve their straight-through processing (STP) capabilities and reduce integration costs.”

While the article was specifically addressing insurance companies and their internal operations, it also applies to the agents selling those companies’ products.

Agencies have struggled with creating “seamless processing” between the agency information contained in an agency management system, carrier internal processing systems, and other third-party applications an agency might elect to use to streamline their operations.

The days of information being trapped within the agency management system need to disappear. Vendors should not be the gatekeepers of that data and hold agencies hostage. They can no longer limit or control how, and under what circumstances, an agency has access to their client and prospect information. Client and prospect data want to be free of the artificial borders and boundaries that still exist.

Web services and SOA are two examples of technologies that are already in place that make it much easier to allow different systems to communicate and share data. Web services are simply a standardized way of integrating Web-based applications using open standards over an Internet protocol backbone.

Other industries are rapidly implementing Web services and open architectures to extend their reach and allow third-party developers to extend the core platform. Examples in other industries include:

  • Salesforce.com: This company has grown over the last 10 years to become a standard for selling cloud computing and software. Part of this growth is a result of the AppExchange, a marketplace for third-party developers who have created over 1,000 applications and services that extend the utility of the Salesforce CRM and the Salesforce.com platform.
  • Apple iPhone: There are now over 100,000 applications that iPhone users can download and use on the iPhone platform. As you may have heard, Apple tightly controls the types of applications it allows in its store. Yet, these third-party apps have made the iPhone one of the top mobile devices.
  • Infusionsoft: This is the marketing platform I currently use to manage all of my marketing activities. It comes with an extensive application programming interface that allows anyone with some programming skills to move information into and out of the cloud database. This provides me with great flexibility to customize their platform to meet my specific needs.

The above examples are just a few. These industries understand that you can’t control and keep clients simply by holding their data hostage. If you have created a good platform that performs well, then you only add more value for existing clients by opening access to that platform.

Agency system vendors and insurance companies need to stop talking about open access and, instead, take concrete steps to open access to data for the agents they serve.

Posted on

Strategy First; Technology Second

In a previous post I stated the case for why an agency that wants to grow must have a comprehensive marketing system. I ended with this paragraph:

Technology is available to help you manage your marketing system. The first step is to understand the need for marketing. Then, create a marketing strategy for the agency, implement that strategy, and monitor its effectiveness. If you do all of these things, you can’t help but become more successful.

As a result of recent conversations I’ve had with various people within the insurance industry, I want to emphasize that creating an effective and engaging Web site is only 25% of what’s necessary to be successful in growing your agency. The questions I’m receiving now from agencies include, “Can you recommend a Web designer?” or, “Can you help me with search engine optimization?” The first question should be, “What marketing strategies can we implement that will help us grow a profitable book of business?”

Technology doesn’t market. A Web site doesn’t sell. These are simply tools that help an agency support a well thought out and developed marketing strategy. Strategy should always come before technology. Only after the strategy is created should you look for the technology tools that will help support and implement the strategy. When this process is reversed, the likelihood of failure is much higher.

Your Web site could have the best design and most compelling content and engaging video, but if you don’t have a strategy in place for what to do with the prospects who visit your site, you will fail to convert them to clients. What is the strategy that will bring prospects to the point when they finally make a buying decision? All the technology in the world is useless if it doesn’t result in a sale.

Opportunity awaits

I fully support industry initiatives like the new Personal Lines Growth Alliance. There is tremendous opportunity for an agency to build a high margin and profitable book of personal lines and small commercial business. And technology is playing a significant role in making this possible.

A successful personal lines and small commercial strategy needs to include at least four elements:

  1. Keep: Keeping the business that you already have is the core of a profitable book.
  2. Upgrade: Adding additional coverage to existing policies is the most profitable revenue you can generate. It also goes a long way to enhance your E&O protection.
  3. Round Out: Adding new lines of coverage or policies cements your relationship with clients and helps you retain them longer.
  4. Get More: New business generation is an important part of the overall process.

Notice that generating new businesses (#4) is only one-quarter of the overall strategy of building a profitable book. The other three items will generate more profit than just relying on obtaining new business.

Remember, make sure you have a strategy first. Then—and only then—look for the tools to implement your strategy.