January 19, 2009 by Steve.

One of the most important jobs of an agency owner or manager is to look into the future and try to understand the trends that will influence the organization. As I tried to think about the major trends I expect to see over the next year, I realized that there is really only one: changes in how you communicate with your prospects and clients.

There are different labels being applied to these communication changes: Web 2.0, social media, blogs, and wikis, to name a few. The model most agencies currently use is based on a client purchasing relationship. With social media, you no longer just want prospects and clients who purchase products. You want to create long-term friends and fans. This change—from creating clients to creating fans—is hard to appreciate and understand.

But understand you must. This trend will affect every area of your agency’s operations. Here are just a few thoughts on areas that it might change.

Marketing: Marketing becomes less of a sales process and pitch and more of an open dialogue and conversation between you (the agent) and your potential prospect. Friends and fans of the agency will do more “marketing” for the agency among their peers than any marketing program could create.

For example, one agent sells boat insurance in 40 states. He has recently begun participating in a discussion forum for bass fisherman called BassBoat Central. He’s answering other users’ insurance questions, posting interesting information about insurance topics, and is becoming viewed as the boat insurance expert. He does not give a direct pitch to write their insurance. Yet his participation is creating “friends and fans” who will lead to increased business.

Client service: The trend of client self-service is well established and many agencies are already embracing this trend. An agency using social media tools will open up a conversation not just between agency and client but also between clients. An open forum where clients can post messages about how well you provide customer service would be one implementation of this concept. How scary is that!

New employees: Using these tools is second nature to the younger employees you will hire. They come out of college with these skills already in place. Yet, when they are hired by an agency, their access to these tools is blocked. In order to keep these new employees, the agency must undergo a mindset change as well as learn new management skills.

I am personally taking steps to learn and understand how this social media trend affects all of us. My first step is a new Web site for TAAR. The site has been completely redesigned and in the next few months, I will be introducing additional social networking tools that subscribers can use to easily communicate with me and other subscribers.

I’ve also established a presence for TAAR, as well as a personal presence, on many of the social networking platforms currently available. You can follow me on Facebook, Twitter, FriendFeed, Tumblr, Flickr, LinkedIn, and my blog. I’m not sure yet which of these will ultimately be the best platform to use. But I am committed to experiment and learn.

A small, but rapidly increasing number of insurance professionals are also experimenting with social media. I think you should be among them. I am committed to helping you by sharing with you what I’m learning as I go through this process. Take a deep breath and dive in.

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December 23, 2008 by Steve.

One of my passions is helping insurance agencies be successful and profitable. As I mentioned in my editorial last month, the current economic conditions have some agency owners questioning their ability, at least over the short term, to be both profitable and successful. In today’s economy, it’s extremely important for you to distinguish yourself by selling your value.

Sometimes value is how an agency utilizes technology to improve internal operations and provide better customer service. Sometimes value is how an agency positions itself in the marketplace and how it competes with other agencies.

Recently, I came across another strategy for selling your value. A friend of mine (not in the insurance business) recently recommended that I read Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne. The subtitle of the book is: How to create uncontested market space and make the competition irrelevant.

Red vs. blue oceans
The authors use the oceans as a metaphor for the marketplace where all businesses compete. There are two types of oceans: red and blue. Red oceans represent all the industries in existence today. This is the known market space. Blue oceans denote all industries not in existence today. This is the unknown market space.

In red oceans, industries and competition are well defined and well accepted. Companies compete by trying to outperform their rivals so they can grab a greater share of the existing marketplace. The competition can get bloody (hence, a red ocean).

Blue oceans, on the other hand, represent new, untapped marketplaces where there is currently little or no competition. The authors argue that most new blue ocean opportunities are created from within red oceans by expanding existing industry boundaries. In blue oceans, competition is irrelevant because the rules of the game have been changed.

The authors use several well known companies as examples of how strategies were created that completely redefined the industry. One of these companies is Cirque du Soleil, created in 1984 by a group of street performers. If you have attended one of their productions, you can easily understand blue ocean strategies. Cirque du Soleil took the best of Ringling Bros. and Barnum & Bailey Circus (red ocean) and completely redefined the circus experience and made it into a new industry (blue ocean).

As I read the book I kept wondering how an insurance agency could take these concepts and apply them to their organizations. Can an insurance agency make the competition irrelevant by changing the rules of the game? Ringling Bros. Circus had been around for over 100 years. Cirque du Soleil created a new way to experience the joy and wonder of a circus and millions of people now come to see their performances.

Once the concept of blue oceans is established, the authors describe a systematic process that any organization can use as a blueprint to look for (or create) blue ocean opportunities within their existing marketplace.

The concept of making your competition irrelevant is very intriguing. Most agencies fight for clients in a red ocean. That competition can be brutal and very unprofitable. How would your agency completely redefine your marketplace and make competition irrelevant? As you complete your planning for 2009 this book may help you think about the possibility of redefining a new marketplace without competition.

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December 2, 2008 by Steve.

People tend to choose passwords that are easy to remember. That can be very dangerous because it makes it easier for a hacker to break the password. The following passwords are most common. If you use one of these, change it immediately:

Password, 123456, qwerty, abc123, letmein, monkey, myspace1, password1, link182, (your first name)

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November 24, 2008 by Steve.

It’s hard to read the headlines without thinking about the future of your agency. Many agencies wonder what business will be like over the next 12 to 24 months. Due to the soft marketplace over the last couple of years, insurance agencies have already had to create plans to address lower premiums—and thus, lower revenues.

Premium reductions continue to average about 12%. As sales volumes are reduced and as businesses cut back on payroll, you can expect further reduction in premiums. I am not an investment wizard, nor can I predict the future. Still, it seems likely that agencies will continue to see reduced revenue over (at least) the next 12 to 18 months.

This may sound like doom and gloom, but it’s also an opportunity to face the situation head-on and create a plan to survive these difficult times.

Following are a few suggestions to get you thinking about how to create a strategic plan that will move your organization forward during the next 12 to 24 months.

Communicate with clients: Many of your clients have the same concerns as you about how current economic conditions are going to affect them. Now is the time for you to be proactive. Provide extra information and services that will help them manage their businesses better. Partner with a local CPA to provide a seminar on cash flow management. Seek companies that can help your clients with their marketing programs. Basically, do anything possible to let your clients know that you’re an advocate for them. This will go a long way to build loyalty with your clients.

Marketing: Acquiring new clients has always been an important part of running an insurance agency. Now, it’s even more so. Explore new target marketing niches. Explore new marketing tools that are available, such as using the Internet to attract prospects and look for new revenue sources. Agencies that continue to foster a sales-focused mindset seem to be able to grow regardless of current economic conditions.

Back office: Make sure that you are as effective and efficient in your back office operations as possible. Concentrate on getting any technology projects that are currently underway finished as soon as possible. Utilize all the tools available to streamline operations. Don’t allow staff’s resistance to change to derail projects.

Staff training: This is one of the least expensive options available. Make sure your staff is fully trained to use your existing hardware and software systems.

While times are certainly challenging, independent agents have shown again and again that they are resilient and can weather most storms. It won’t be easy. But continuing to maximize your technology investment will go a long way to help you weather the storm.

Posted in Marketing, General, Opinion | Print | 1 Comment »

October 16, 2008 by Steve.

During a recent presentation, I noticed a younger person in the very back of the room working on his computer as he was listening to me talk. (And no, he wasn’t taking a continuing education class.) During one of the breaks, he approached me and said, “We have to talk.”

He explained that he had started a new agency less than two years ago that concentrates on personal lines coverages for individuals with high net worth and high valued homes. He had two additional full-time employees and did not have a physical office. He was receiving most of his leads through Internet lead aggregators, such as Netquote and InsureMe.

As I listened to this “20-something” describe his insurance agency, I was struck by his creativity and willingness to expand beyond what had been done in the past. I’ve since started an e-mail conversation with him so that I can explore how he uses technology to support his organization. I wanted to know how he tracks client information. He uses Salesforce.com. Following are some excerpts from one e-mail conversation:

Q: What’s lacking in current agency management systems?

A: Mostly, they are all commercial insurance driven. (And rightfully so… with their distribution model and the fact that 99% of agencies are general in nature… they’d be foolish to make a niche product for personal lines.) If I have to choose to create workarounds in an existing commercial agency management system or just build one from the ground up using my exact terms and processes, I prefer the custom ground up idea.

The major plus of an existing agency management system would be company integration… upload/download. Because I’m so niched… my primary company barely does anything with upload/download as it is. If I download partial information, I’m really not that much better off than downloading nothing. In the end, if I have to log into the company portal to get “real” up-to-date information… download isn’t that impressive. Not to mention that we have a low target for number of accounts… say 300 to 400. With that low number, using a people-driven process to move data from the company to our system isn’t all that impractical… particularly if we move to outsourced/overnight processing either overseas or in our own backyard (i.e. $12 per hour to look at all the changes posted in [the carrier] system and to move that data into our agency management system).

Q: What are the advantages of SalesForce.com?

A: SalesForce’s “Long Tail” model is its biggest strength. Because SalesForce is simply a platform without a predesigned set of usage guidelines, their focus is keeping the main infrastructure on the cutting edge. I’ve been thinking of it like a box of Legos. They’re constantly adding pieces that we can add to our custom build, so long as we don’t “misuse” pieces. The most exciting part is the SalesForce App Exchange. People can build their own apps and customizations and sell them to people using SalesForce. This means if a guy in India wants to make a few bucks, he can build a .wav to text converter that works seamlessly inside SalesForce.

Bottom line

Traditional agency management systems will be around for a long time. Yet, how many young people are entering the industry without preconceived notions of what a data management system should be? Certainly one young agent does not create a trend. That said, this agent is using (and will use) whatever technology platform he can find that will help run his business.

Posted in Cool Tools, General, Agency Management Systems, Opinion | Print | 2 Comments »

September 18, 2008 by Steve.

As increasing numbers of people use the Internet to find information, savvy producers or staff members should begin creating an online presence. You may need a personal Web site or blog (which can function like a Web site), especially if you will be job hunting anytime soon.

Many recent articles say that, increasingly, job recruiters are placing a heavy emphasis on applicants’ online presence. “Online presence” means how active one is on the Web, including personal Web sites, blogs, published articles, etc. A personal Web site can also be a great way to introduce yourself to potential clients. Writing about risk management issues and the solutions you have created will help you stand out in the crowd of other agents.

If searching for your full name online comes up with nothing, consider buying a FirstNameLastName.com domain. You can create a simple Web site on the domain by publishing copy that explains who you are and what you do—basically a résumé site. Start a blog on that domain or establish a free hosted one on services like WordPress.com and link to it. There’s literally nothing to lose except a few dollars for the domain and hosting. Having a Web site gives you the added benefit of being able to link to your site when commenting on other blogs. This is another great way to gain exposure.

Posted in Cool Tools, Marketing, General, Benefits Management Systems, Agency Management Systems, Opinion | Print | No Comments »

September 2, 2008 by Steve.

Approximately 80 people gathered in Vail, Colo. in July to spend 2½ days exploring how the insurance industry can bridge the many gaps that stand in the way of continued success. I always return home from HIGH-TECC amazed and humbled.

I am amazed by the creativity, passion, and willingness to explore new ideas that is demonstrated by the people who attend. I’m also humbled by the knowledge and breadth of experience that is represented in such a unique group of people. I received the following from one attendee. It’s just one example of the creativity and open-mindedness I saw.

HIGH-TECC to-do list

I am looking forward to setting up my iGoogle and Facebook pages, using GoToMeetings, and uploading a Flip video to YouTube. Or, maybe I’ll use Silverlight for the HD and agree to work on my “Pillow Talk” blog. Hmmm, I wonder what actress to “walk onto” that page, as I contact Greenleaf with a Jott. I’m sure that name will get plenty of hits, but will West Bend approve?

I better actually accomplish some business before the week goes by! So, I will definitely iDictate, order DYMO Stamps, and follow up with Postful and FlyDoc to get certificates automatically rolling out. Now, if I could just stop Twirling and Twittering with my wiki…

To get all of this done before Friday, I may need to hit Provide Support to Get Satisfaction. Ahhh, maybe in a Second Life. Where did I put that Amazon Kindle?

— Jim Tuisl, “Satisfied HIGH-TECC customer”

That letter may seem a little weird—but every bolded word is a product, Web site, or service that we discussed during HIGH-TECC.

This year, I opened HIGH-TECC with a general session titled Communicate, Collaborate, Connect. It is my belief that the insurance industry as a whole needs to embrace new communication technologies that are already being used by younger generations. During the session, I highlighted several reasons for my belief and delved into specific technology and ways it is being used by others to create relationships in an electronic world.

I explored social networking sites such as Facebook and Twitter. I talked about how wikis can be used to facilitate conversation and collaboration. I ended the session by showing AVIVA insurance company’s Second Life Island. (Second Life is a 3-D virtual world created by its Residents.)

Agencies and companies need to explore and experiment with these types of communication options to determine how these technologies can and should be used to further customer interaction and enhance business.

The conversations ranged from “this seems really stupid” to “if college graduates are using these tools, we should learn how to use them—especially if we want to hire the younger generations.”

That’s what HIGH-TECC is all about: helping the industry explore what tools are on the horizon and how to use them to make your organization more effective. Make sure you don’t miss out next year. Mark your calendar now for HIGH-TECC 2009, July 19 to 22 in Vail, Colo.

Posted in Marketing, Events, Cool Tools, General, Agency Management Systems, Benefits Management Systems, Opinion | Print | No Comments »

August 28, 2008 by Steve.

How many people on your current staff are eligible for retirement in the next five years?

This is a question I recently posed to the Human Resources director of a 100-person agency. I had been asked to come to the agency to discuss future trends and things the agency should do now to plan for the future. The director didn’t immediately know the answer to my questions—but it didn’t take her long to find out. After running a report on the participants in their retirement plan, she discovered that 30% of the existing staff would become eligible for retirement in the next five years.

Why plan today?
“In talking with agency CSR staff where there has been a loss of individuals who have not been replaced—or who have been replaced with less experienced individuals—the existing CSRs take on more of the workload,” says TAAR writer Pat Alexander. “I see growing backlogs in these cases, and that leads to loss in productivity, burnout, and frustration.”

To avoid this scenario, it’s important to start planning now. It’s also important to remember that just because employees become eligible to retire doesn’t necessarily mean they will retire. Many employees will continue to work because they want to or because they have to. Many Baby Boomers underestimated what they would need financially to retire comfortably, so they work full-time for longer than expected.

Still, it would be dangerous to assume this is the case for your entire organization. An employee’s ability to work can change at any time. A spouse, child, parent, or grandchild who becomes sick or disabled can affect how long an employee might be able to work or how many hours that person can work. Because people are living longer, an increasing number of Baby Boomers are facing the prospect of caring for their parents.

Ask the right questions
Who is likely to retire and when? Who is going to replace these workers? How will the organization attract, hire, and retain people to replace those who leave? How will you train these new staff members? The solution is not as simple as finding new bodies to replace the old ones. How will you capture the knowledge and experience of these valuable staff members?

These are all questions that need to be asked now. Plans need to be put in place that will provide answers. There are some steps you can take to address these questions and begin thinking about how you will solve the problem:

• Find out who in your organization will be eligible for retirement in the next 5 to 10 years.

• Build a “recruit or die” mindset. Recruiting new talent needs to be woven into your organizational culture. It should not be a project when you need to fill a position, but a mindset that involves always looking for new talent.

• Create a career path for new employees. No one wants to be stuck in a “job.” Creating an insurance career will help you retain people longer.

• Create a training program. The industry, especially agencies, do not do a very good job of providing the tools and training necessary to help an employee become successful.

This issue is not going to go away. Find out now how much of an impact retirement will be on your organization and begin the planning process.

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