This month I want to challenge you with a theme we’ve often discussed:
What’s the cost of doing nothing?
This applies to those who consistently do the same old, same old and brings to mind two of my favorite adages: “If you always do what you always did, you’ll always get what you always got,” and “What got you here, will keep you here.” The strategies, tactics and behaviors that you’ve used to get your agency where it is today probably won’t continue to serve you in the future because the world is changing so rapidly. Consequently, the cost of doing nothing new continues to skyrocket. So if you’re unable or unwilling to take the initiative to start doing things differently, there’s a good chance you will eventually kill your agency. While I doubt that anyone really wants to kill his or her agency or deliberately sets out to do so, there are plenty of ways to destroy an agency. Here are the top five agency killers.
If the only thing you offer your clients is the risk transfer mechanism known as insurance, you may be killing your agency. It makes no difference whether it’s personal lines, small commercial or large commercial lines, or benefits/life insurance. If all you are as an agency is an “app filler,” the only thing you have to offer is insurance. If all you’re doing is filling out an application with the same information the previous agency used, and your only solution is to sell the client insurance, you’re going to kill your agency.
Furthermore, if you are not doing risk assessment and risk management plans, you’re not going to differentiate yourself in the crowded marketplace and you will kill your agency.
You’re in the commodity business. As you know, commodity decisions are based solely on price.
No doubt you’ve heard, “If you live by the sword, you die by the sword.” The same is true of priceonly selling. If you live by price, you die by price. My greatest concern is that if the only thing you do to differentiate yourself is price, you’re vulnerable to being replaced by a direct writer or an online portal.
Not only for personal lines, but also commercial and benefits. Already, there are handfuls of portals for small to medium-sized commercial accounts. One website even claims to have 20,000 commercial lines customers already. And, I’m sure you’ve heard of Zenefits on the benefits side of our business. If the only value you bring to a client is product and price, sooner or later others will be able to match what you offer and top it by being faster or cheaper. I predict it will be sooner rather than later if this practice continues to accelerate, particularly as Google and Amazon enter the fray in earnest.
It’s amazing to me that agencies will spend multiples of hundreds of thousands of dollars on automation and not use/train/demand that the system be maximized. Unfortunately, many people view automation as a glorified accounting system and get discouraged when they don’t immediately know how to use its most valuable functions. So they revert to writing notes on paper that they’ll have to enter into a system they don’t really know how to use. That’s like having $100,000-a-year employees who show up on the job every now and then and aren’t held accountable for their individual productivity.
I attended the Network of Vertafore Users (NetVU) conference last March and was impressed by the number of great new applications designed to drive an agency’s productivity. Yet when I inquired, I found that fewer than 20% of the agencies with a Vertafore system attended the user group’s annual conference. That just blows me away! If I still owned an agency, I’d get involved and insist that my staff get involved with the users’ group on a local, state and national basis. Whatever problems you’re having at your agency, some other user in one of the 50-plus breakout sessions at that conference has had the same experience and has found a solution to the problem. Net VU’s tagline “Users helping users” sums it up. Active NetVU members are more than happy to share their wealth of knowledge.
Why is it that some agencies in the same geographic area have CSRs handling only $300,000 in revenues while others in the same exact market with the same products and same types of customers have their people handling $600,000 in revenues? Automation is the key to it. If you’re spending the money on automation and you’re still “overstaffed for growth” (i. e., your revenue per employee is less than $200,000), that’s a big red flag. So unless you really want to kill your agency, you simply cannot—okay, should not—allow employees to use the system at their own pace and in their own way. There must be an “agency way” of doing business. Period.
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