It’s 2010 and it’s time for insurance agents to look at their businesses and make some tough choices and changes if they’re going to grow, or maybe even survive. As consultants to insurance agencies, we echo the message that has been delivered over and over in recent months by the agent associations and business leaders in our industry. That message: Change is coming and you need to get in front of it, or you won’t be able to catch up to it.
But there are so many things that have been written and spoken about regarding the changes that agency owners need to be aware of, we thought a summary of a few important focus areas would be useful as we enter a new year and a new decade. In no particular order, these are the key issues we see facing insurance agencies that owners need to address today:
Reliance on Fees
ISSUE: The consumers are getting smarter, the bureaucrats are getting more involved, and even the carriers are poised to reconsider longstanding views of “get ’em if you can”. If your agency is relying on broker fees, endorsement fees, payment fees, or other fees that make up a substantial portion of your income (like more than 20%), you are at risk of taking a big hit sometime in the near future.
WHAT TO DO: Sell insurance and keep clients on the books. Sounds simple enough, but many agencies are so locked into collecting fees as part of their business model, they would rather not sell a policy to a new client than lower or waive their fee. So what business are these agencies in? That’s what insurance commissioners are asking and that’s why politicians are seriously looking into how they can eliminate fees altogether. Agency owners need to invest in building their book of business, holding onto clients by expanding renewal and retention efforts, and rewarding staff for writing more policies that increase commissions, not for collecting the most fees.
ISSUE: Agency owners can find every reason imaginable why business is bad, but rarely look at how they run their own house as the primary reason. Hoping to sell more or telling your staff to sell more is like standing still at the gym and waiting for the pounds to fall off. Nothing is going to happen until you do something to make it happen. But very few agencies have invested the time or effort to become true sales organizations, and until they do they will always write about the same amount of business as they always have, or less. And with the competitive landscape among insurance agencies today, there is no such thing as simply staying the same
WHAT TO DO: It all starts at the top. As an owner or manager, what you do, what you say, how you approach clients, how you interact with staff, what time you show up to the office, how you’re dressed…all of these have a direct impact on sales. When you lead by example, motivate your staff with positive feedback and training, and create competition and incentives, sales increase. Period. It’s been proven many times. All of those things require attention in order to create an environment that thrives on growth and hitting measurable targets.
In one agency we were working, the staff was bemoaning the sales numbers and the fact that it was a slow day, and a manager chimed in, “Yeah, it’s always slow on Tuesdays.” With that kind of negative statement, the manager just conveyed to the staff, “Don’t worry about it. Relax. Don’t push yourself. There’s nothing you can do to increase sales today.” That may not be what he meant to convey, but that’s what the staff heard. Ask yourself how many times your staff has heard you saying things like, “‘We can’t beat their rates”, “The phones just aren’t ringing”, “There’s too much competition in this area”, “I hope this economy gets better”, “We’re doing everything we can but the numbers just aren’t improving”. Real leaders in real sales organizations never think or say things like that.
Marketing and Advertising
ISSUE: Investing in old traditional forms of media and advertising is like throwing money away, but many agencies haven’t figured it out yet. Agency owners pour thousands of dollars each month into phone books, door hangers, mailing lists, free newspapers, and other types of advertising that the consumer is simply not paying attention to anymore. Ask yourself these questions: If you didn’t know your ad was in that newspaper laying at every bus-stop, would you ever pickup that newspaper? And when was the last time you needed a product or service and relied solely on the phone book to find it?
WHAT TO DO: Move your marketing dollars out of old methods and into things that are much more visible for today’s consumers. Create a logo and use it everywhere possible. Build a website with good information that search engines can find when people go online and search for insurance in your community. Get involved in social networking and blogging so you can become visible to an entire generation of consumers who have never used a phone book or looked at a classified ad to buy anything. Improve the signage at your office or store front. Approach other local businesses for mutual referral programs and offer existing clients incentives for referrals. Generating a buzz, branding, and visibility for your agency is essential to surviving and growing.
Sources of Revenue
ISSUE: Agencies have fallen into the trap of putting all of their eggs in one basket because they are comfortable selling “one thing”. By not diversifying their income from multiple sources, the agencies experience a lot of highs and lows instead of having a stable stream of revenue.
WHAT TO DO: Learn something new. Get comfortable with a line of insurance you’ve never sold before and then get your staff comfortable with it. Agencies don’t quote or sell Homeowners, Life, Commercial or other lines of insurance because agents haven’t been trained on it. People do what they’re comfortable doing. And if you have 1,000 auto insurance clients, what you really have is 1,000 clients who need all kinds of insurance, but you’ve only sold them auto. Add other products to your agency that your clients need and but have to go elsewhere for now. DMV Registration, Pre-Paid Legal, Health Insurance, and Tax Services are all examples of products that agency owners can pursue and generate revenue from.
If you could use some help getting started with any of these new directions, please contact us for a free phone consultation.