Change can be a painful process. I’m aware. I run an insurance agency. You can find the information you need on the internet, underwriting, commission cuts, and direct writers. Insurance companies, whether you’re an “independent” or a “captive”, must understand the changes and respond to them as soon as they occur. Corporate America’s wheels turn slowly. This is why I believe we need to embrace the challenges we face as agency owners.
To that end, I must ask you to change what we already agree is a pain. We are not asked to change in a material sense as our companies constantly force upon us, but in a mental way. It is vital that you, as an agency owner (not an agent), are able to succeed in today’s business. You must be open-minded and not refuse any opportunity to grow your agency without fully exploring its merits and pitfalls. Some ideas and suggestions may not be suitable for everyone. It’s okay. But you must remember that swimming is not the best option. The ones who tread water eventually will:
Do not drown (go out-of-business, etc.). Or, get rescued (forced to sell or merge).
A few years back, the headline on the National Underwriter predicted that 20% of the Independent Agency force would be gone by 2003. It is now 2009…how far away do you think that was? They would either sell or merge. I knew I didn’t like any one of these options, especially if I was forced to. I was determined to succeed, let alone survive, by avoiding the same old business model. While you may disagree with some points, I believe that each of my “secrets”, regardless of their effectiveness, is driven by three caveats.
- Pro-activity
- Positive Mental Attitude
- Keep it simple
This letter is written with the intent of maintaining and perpetuating the Agency system for insurance distribution. If you don’t believe in our way of life, (goodness knows it’s not a career), then stop reading. a vital part of our clients’ lives, just like their lawyers, accountants, and doctors. I don’t believe the Internet and direct writing companies will replace us. However, I believe that if we don’t do a better job satisfying our clients’ needs and wants, someone else will. Insurance, particularly personal lines property and casualty, is becoming a commodity. This cannot continue. We as agents cannot allow this to happen. We must give reasons why people need an Agent/Agency. We are doomed if we don’t.
Secret #1
We are not an Insurance Agent.
You are not an agent of insurance. Yes, depending on the state where you are licensed, you may be an insurance agent. However, I am not defining the technical term. You are the owner or operator of an Insurance Agency. You are the owner of an insurance agency. When someone asks what I do for my living, I respond in the following manner: If I am asked to fill in my “employer” and “employment”, I answer with “business owner”, not Agent or self-employed. The term “Self-employed”, means that you are self-employed and earn your own income. The term “business owner” refers to your business, even if it is just you at the moment, that generates income. The difference goes beyond syntax.
THIS IS A MINDSET CHANGE
Simply put, self-fulfilling prophecy states that you are only what you believe you are. You have to believe in yourself and in your abilities. Otherwise, nothing I can relate will make any difference.
Life insurance agents are often familiar with the story of the “money-making machine”, which is a way to show a skeptical prospect the importance of life insurance. It goes like this: “If you had a machine that turned each year, clicked, and spun out $40,000 (or a number relative to the prospect), you would insure it just as you would your house or cars. You would. Why don’t life insurance make sense to you? Mr. or Mrs., you are the money-making machine. Prospect. This chapter has two main points. The first and most obvious is that as an agency/business owner, you have the same machine in you. To thrive in today’s and future industry, you need to insure the machine, but also feed it. This is your business. There are two options for funding your business: time and money. You don’t have to spend money to grow your business. Instead, you can invest your time. If you are able to invest the time in developing your business or store(s), it will be returned to your account with interest. Time is money but efficiency is profit. This is something we all know. It is always better to work hard than to work. Depending on your perspective, I believe that hard work is equally good. This simply means that you need to work smart in order for your business to succeed. I’d rather make $500,000 by working directly on my business, at my own level, than spending 2, 3, or 4 times as much in a business that runs for me. Treat your business as your own, and take care of it.
Secret #2
Give Your Agency a “check up”.
To be an “Agency Owner” rather than an agent, one of the first steps is to oil and tighten the engine of your machine. Our service is the most important reason we as Agency staff can maintain and grow our client base. It is time to have a diagnostic and perhaps a complete overhaul if you’re losing clients more than you are adding. For a moment think about this: If price was the only determining factor for Agencies, many of us would be out-of-business or struggling to find the lowest carriers at any given time. It’s a common saying …”service sales. Service sells. According to statistics that I’ve seen or heard, it’s ten times easier for a company to retain or keep a customer than to acquire a new one. In my career, I have acquired many clients, even though their price was higher. This is done by simply educating prospects, not to the point where they are expert, but with at least a working knowledge of the reasons why a higher level of deductible might be more advantageous in the long-term statistically or why insuring the property’s value is essential. This personal attention will not be provided by a direct writer, or an Internet-based insurance company. As I’m sure many of your clients have experienced, we have lost clients to these distribution networks only to see them return for the personal service.
A few years back, I conducted an informal survey of new clients. I wanted to find out why they switched to our Agency. Surprisingly, but not surprising to me, the main reason was never price. These were the top three reasons.
- “I have not heard from my agent for ten years.”
- “I called the Agent’s office at 2:20 in the afternoon three days back, got their answering machine, left messages, and have yet to hear back from them.”
- “We had a claim, so we called the agent’s office. We were only given an 800 number to dial.”
Money does speak, and customers have the opportunity to save up to triple-digits on their insurance premiums. Our mini-survey revealed one thing. People value service. Personal service is also something I’d like to emphasize. Every call to your Agency should be a reminder of this. Your customer is the most valuable asset of your business. This is a simple statement, but I think it’s important to reiterate it. Customers value quality service. The next secret is how to make customers happy and grow your business.
Secret #3
Refer your clients.
This does not refer to reactive referrals where you wait for the phone ring. In order to encourage referrals, you must be proactive and create a formal referral program within your Agency. It should be promoted. It is important to inform your client about the program or it will not work. The program is very simple. We ask for 5 referrals. Dinner (or a gift certificate) is yours! This is how it works: Every referral sent by a client to us is recorded in the computer. We then send them a thank you note with a list of how many they have sent. We call the client to thank them for their referrals and send them a gift certificate. We only require 5 referrals, not 5 sales leads. We don’t limit it either. We’ll sell at most 2 out of 5 times, sometimes even 3. It turns out that it was 3.5 of 5. You can calculate the value of three sales depending on where your Agency is located. You will be able to agree that it is far greater than the $25 gift certificate, even if you consider renewals.
Our program has been in existence for 4 years and generated almost 700 referrals. This has resulted in close to $23,000 in new commissions. We have given out $650 worth of gift cards. This is a solid return on investment. Although we could do a better job in letting clients know about this program, it is something that we should have done. In almost all correspondence, we include the phrase “send 5 referrals and dinner will be on us”. It is also mentioned in our “on-hold message” (which I highly recommend). It should be mentioned at the end sales appointments. However, sometimes we forget to mention it. It is also important to mention it at the conclusion of service calls. Referrals are a great way to build an Agency’s foundation. This is why it is important to formalize the referral process in order for your Agency to gain more client leverage. This brings me to my next secret.
Secret #4
Diversify income streams by leveraging clients into other services
When your client base is viewed as a referral-generating entity, it can be very powerful. Once you have created a referral system, it’s time to examine your client base again for additional revenue sources. Your clients will have protection and insurance needs that your Agency can meet. Stop thinking of your Agency only as an insurance agency and think of it as a complete operation that can provide any financial service or product you need. This may seem difficult depending on your mindset. You’ll be amazed at all the possibilities if you open your mind. You can also provide services to your clients, such as mortgage loans, auto financing and legal services (including estate planning), taxes and/or accounting services. Retirement planning, financial planning, college-funding assistance, and even tax planning are all possible. These services will be purchased by them. Why not at their “insurance” Agency? Our Agency is currently establishing departments or Profit Centers to assist clients in all these areas. Some departments, like our College Funding and Mortgage Loan Departments, are separate physical operations. Some departments are relationships with other businesses, such as when we “plug” customers into contact with an Estate Planning Attorney and a trusted local accountant. Although referrals can be reciprocated, there is no exchange of revenue. Our Financial Service Center, which is part of the Agency, will also coordinate meetings with the “legal”, and “tax” Departments to share mutual clients.
These outside departments are also pre-screened to ensure they fit our Agency goals. We ensure that we feel comfortable with the abilities of each individual before we refer any client to them. This is to ensure that we have a long-lasting relationship with our customer and that their contribution does not diminish it. We offer other services to our clients, such as College Funding. This is done on a direct referral basis with a company that provides financial aid planning and assistance. The company will pay us a referral fee for each customer we refer. We simply send the lead. At first glance, it may seem like all these ancillary services are too burdensome for the Agency. Considering that each service has a natural lead-in to another, it’s quite easy to track and record activity in both hardcopy files and in our client management software.
Each Agency is unique so it wouldn’t be practical to show examples of how to embrace the Profit Center or departmental approach to increasing Agency revenues. There is no one-size fits all solution. You shouldn’t be adding more than one service at a given time. If you’re considering adding another service, ensure that it can produce leads and thus, income for at least one of these other services. Also, selling donuts is not a good idea for a Profit Center. This would be a distraction from the main purpose of the Agency, which is to offer quality financial products and services all under one roof. Don’t pretend to be an expert in every one of these areas. There’s simply too much information. It is better to focus on developing Departments than worrying about the details. This is a fantastic lead-in to Secret #5.
Secret #5
Don’t work IN your Agency, work ON your Agency.
What was your annual income?
What number of hours do you work per week?
Multiply the hours with 52 weeks per annum…
Divide the dollar amount by the number of hours worked in the previous year…
Your hourly wage is the total: _______________________
This wage should be remembered every time you file, answer the telephone, process paperwork, or handle business correspondence. These types of tasks are not likely to be performed by someone who is paid less than the wage. These tasks are not considered trivial. These tasks are essential to the operation of the Agency. Your time is valuable, I’m just pointing this out. As a business owner, your job is to grow the company. It’s much more efficient to work ON the business than IN it. This means that you cannot be as effective in driving income into the Agency if you do work that you can only pay 1/4 of an hour for. You can’t! Many agents who are “one-person shows” will claim that they cannot afford to hire staff. I can’t answer that question. You can’t afford not to invest in people who are capable of thriving and even surviving. Training them or paying someone to teach them is the first step.
Nobody succeeds by themselves. The best team is the one that works together well. Our staff are paid 20% more than the average worker in the industry. It is cliché, but you do get what you pay. My team manages 99% of my daily operations, which makes my attitude and turnover better. This gives me the opportunity to do many things to grow the business. Our team is responsible for making it all happen, from nurturing our Profit Centers to securing quality salespeople to selling what I want to sell. The business runs on its own. It is possible to adjust the belts and add oil, but it all runs on its own. How? That is Secret #6!
Secret #6
Systematize. This is the only way you can fly.
My first job as an agent was to answer phones, file, quote and process claims. This is what we all do. My business grew and I realized the importance of efficient growth. Otherwise, we could lose our customers because of service issues. Systematizing your processes is the only way to achieve efficient growth. The office has simple, repeatable systems that cover almost every step. Every staff member knows what to do when a prospect calls to request a quote. This includes checking driving records, filling out the initial fact checker, and setting up the appointment. They have the ability to answer any objection or question. Another example of how the Agency handles claims is another great example. The Agency has a Claims Liaison who, quite simply, acts as the liaison between the customer’s company and the agency. This allows the customer to contact us before submitting a claim in order to decide if it is appropriate to do so. The customer can then be assisted by the liaison in filing, handling, and completing the claim.
If this is your chance to shine, to fulfill the promise you made a while back, it’s worth the attention of a liaison.
The automated calendar system keeps track of our follow-ups and helps us plan our day. These are just a few of the many available today.
Each staff member has their own calendar. They log it and keep track of the progress on a daily basis. A team calendar allows us to keep the same idea going, but on an Agency basis. We plan our work, and we execute our plans. Without systemization, you cannot grow. Systemization is a different thing from organization. It is possible to organize but not accomplish anything, as I see it. You can make things happen by systematizing!
Secret #7
Everyone is a client (or customer)!
Customers (I prefer the term “client” because it implies a relationship while “customer” tends relate to “transaction”) aren’t just those who pay premiums. Customers can also be your employees, underwriting staff, company management and even claims personnel. Every entity that comes into contact with your Agency, is a customer.
Each “paying customer” is treated with respect and high quality service. Your Agency generates income by paying the premiums. Your Agency also deals with these “non-paying customers” just as often. Treating non-paying customers equally will not only show the positive mental attitude necessary for your success but also make it much easier to accomplish things. It’s always a good idea to be regarded positively by your claims department, underwriting department, and any other entity that interacts with your “paying customers”. If you treat a third-party claimant who was involved in an accident that occurred with your customer, it is possible to make a difficult time a buying opportunity. Respect and empathy can go a long ways in helping the claimant as well as making them a paying customer. Secret #7 can be summarized easily using the “Golden Rule”. Do unto others what you would do to yourself. The Golden Rule would make life much easier and more enjoyable. Imagine the impact it would have on your Agency’s bottom line. Do the right thing.