May 30, 2008 by Steve.

It is becoming increasingly important for everyone in the insurance industry to take a hard look at our ability to attract new talent. Of the approximately 78 million Baby Boomers, about 8,000 turn 60 every day. The industry has a long way to go in order to attract and retain enough people to replace retiring Boomers.

An edited excerpt from a recent e-mail I received highlights at least part of the problem:

Dear Sir,

I found your article in the April edition of Rough Notes (Agency Marketing Technology column) of interest. I agree that the insurance industry has not embraced technology like it should… I joined the insurance industry in September 2006 and departed this past January. One reason I left was due to the lack of technology.

Most [insurance company] Web sites did not give good quotes. Or, two weeks after the sale, the company would terminate the sale. Needless to say, my clients were frustrated with me and the fact that their insurance rates kept changing. I found myself phoning underwriters on a regular basis with my clients sitting in my office reviewing quotes. Underwriters would then change and (for the most part) increase the rate, or tell me they wanted to pass on the sale. One company even had to approve all sales afterwards, again changing rates or canceling.

The agency owner didn’t want to invest in technology and didn’t see the need for basic items—such as a laser printer. Instead, my clients sat in my office while a multi-function copier/scanner/printer slowly printed documents. One client commented that his home printer worked faster than mine.

It was hard to find clients in our low-wage market who could afford insurance and deal with insurance company obstacles… I worked for $7 an hour while the agency owner spent the profits on herself.

You likely do a much better job of trying to provide the technology tools your staff needs to effectively “make the sale.” But don’t get too smug. The level and type of technology that a recent college graduate uses (dare I say expects?) is far above what exists in most agencies I have visited.

How many people who enter this industry end up leaving due to frustration with the antiquated ways we get our work done? The frustration that results from the cumbersome and time-consuming process of trying to obtain a bindable quote from an insurance company is only one example. How many more don’t we hear about?

Many who have been around for a while see that progress is being made— but are things changing for the better fast enough for the kids we need to hire? Or are they just going to give up and leave? Worse, maybe they’ll never come to work with us in the first place.

If you want to attract and retain the talent you need to be successful in the future, you have to be willing to invest in appropriate technology. There is no time like the present to begin exploring and experimenting.

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May 27, 2008 by Steve.

Israeli company Aerophone Ltd. has developed a communication system that enables telephone calls to be made from airplanes—independent of GSM/CDMA ground stations. The system supports all wavebands and requires neither prior written registration of the passengers nor a particular billing system. Calls cost $1.60 per minute and are invoiced via the normal mobile telephone bill.

The development has been made possible by the installation of so-called picocells (miniature GSM stations) in airplanes, as well as by servers and transceivers that link to telecommunication satellites and receiving stations for the Ku band (Kurtz-under band: a portion of the electromagnetic spectrum in the microwave range of frequencies). The picocells in the immediate vicinity of passengers automatically reduce the energy output of logged-in mobile telephones to a minimum so they don’t have negative effects on the aircraft electronic systems.

Installation and operation of the Aerophone system is free of charge for the airlines. While I applaud the continued development of technology, as a frequent flyer, I am not thrilled with the idea of listening to phone conversations while trapped on a plane.

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May 16, 2008 by Steve.

An old-fashioned hard copy letter is still the most effective method for initiating a new relationship with a CEO, according to a new study completed by Gentle Rain Marketing. According to 82% of the executives surveyed, the one-page letter ranks number one among the top five methods for developing new relationships with senior-level decision makers. As an increasing number of businesses realize the importance of developing relationships with CEOs and other high-ranking decision makers, the question becomes, what’s the best way to get on their radar screen?

Senior level executives said that if the letter reflected an understanding of a specific key challenge they were facing, it would be read. But there’s a catch. Even if the letter got read, it’s unlikely the letter would motivate the executive to immediately agree to take a meeting. But, if the letter focused on an issue of real interest, and offered some additional information, the executives would be likely to take that next step and request a meeting. According to the report, the key to developing relationships with senior level decision makers is to orchestrate a series of small steps rather than trying to accomplish too much with a single communication.

Some other methods that work to build relationships with CEOs and other top decision makers include writing articles or books (62%). The more the books and articles provided practical ideas that the executives could use in solving real problems, the more this method was effective as a first step in building a relationship. Fifty-nine percent said that advertising was an effective method for building a relationship. Forty-four percent of the survey participants said that they initially developed a business relationship as a result of attending an event or seminar.

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March 3, 2008 by Steve.

The biggest expense in any agency is the staff. Of course, a quality staff is also the most valuable asset. Unfortunately, most agents I meet report that they are having a hard time identifying, recruiting, training, and retaining qualified staff.

This problem is not going to go away. In fact, it is going to get worse. Changing demographics are going to have a profound effect on the ability of your agency to remain successful. Here are some trends to consider:

• The Bureau of Labor Statistics projects a severe labor shortage by 2012—just four short years from now.

• There are currently about 78 million Boomers who are beginning to retire in increasing numbers.

• There are only about 48 million GenXers in the workforce to replace the retiring Boomers.

• There are about 80 million Millennials (Gen Y) who will be entering the workforce in the years ahead, but most agency owners don’t understand how to attract or manage them.

Other businesses are facing the same problem and are aggressively implementing recruiting and training programs to bridge this growing gap.

Eye opener
Try this. Calculate the average age of your existing internal staff. Do the same for your producers. If your agency is like many that I see, the resulting number will be over 50 (maybe well over 50). What are you going to do when your existing staff begins to retire? How are you going to create an agency culture where a 20- or 30-year-old will want to spend his or her time?

There are some things you can do as you plan to fill this gap. These include:

• Keep up to date: Are you providing the technology tools that younger employees expect? Keeping current can also create problems that need to be managed. Your existing staff has been doing their work the same way for a long time. Change always creates stress. Plan for the change so that you can at least minimize the stress.

• Technology can be an advantage: Continually experiment with new technology tools to see which are worth using and which are not.

• Outsourcing: Examine outsourcing as a strategic option. Outsourcing can take many forms, from carrier service centers to hiring an “employee” overseas.

• Don’t pay lip service to training: Few agencies use the full potential of the technology they already have. Ongoing training always seems to take a back seat to other agency priorities. This is a mistake.

• Try new things: Experiment with new recruiting tools. I met an agency last week that successfully used “help wanted” ads on CraigsList.com to find new sales talent. You need to go where the talent goes to find new employees. Don’t know what CraigsList is? Go find out.

• Recruit second career retirees: Unlike their parents, when Boomers retire they often start second careers to remain active and engaged. These are mature people with knowledge and experience. While they may not want to work full time, they can be a valuable source of talent.

These demographic trends need to be part of your agency strategic planning process. Being open to new ideas and creative will help you weather these changes.

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February 20, 2008 by Steve.

As a buzzword, nothing comes close to Web 2.0. Nobody really seems to know exactly what it means, but we hear and read about it everywhere. Is Web 2.0 something you should pay attention to? What will the Web 2.0 experience mean for your agency?

At the consumer level, Web 2.0 refers to blogs, Wikis, social networks, mashups, and similar Web applications that allow people to publish information and content on the Web and to connect and collaborate with others.

Several insurance companies are beginning to experiment with Web 2.0 technologies by updating Web sites to be friendlier for policyholders who want to “connect” with the company. Nationwide Insurance recently launched the “Have the Talk” campaign, a viral marketing effort centered on the difficult conversation friends and family must have regarding personal finances and insurance issues. HaveTheTalkAmerica.com is a site hosted by the company that offers advice and educational opportunities for consumers looking to discuss serious issues with their loved ones, such as teen driving and life insurance options.

Progressive’s new Web site features easier navigation, more personalization and customization, additional and easier-to-use video content, and more visuals throughout. New information on the site’s AutoTech channel includes exclusive content from Ziff Davis Enterprise, which covers vehicle technology such as portable GPS, in-car DVDs, hybrids, and more. Lonely Planet Publications provides weekly Driving Destinations articles that describe great places in the United States to visit, explore, and experience. In addition, Progressive experts provide weekly content to help readers better understand how car insurance works.

This new type of collaboration and information sharing will have an effect on organizations. The CEO of a large publishing firm in Nashville recently agreed to replace his existing corporate intranet with a wiki open source program that will allow each employee to add and edit information contained on the corporate site. If you have never used a wiki, go to www.wikipedia.org, one of the most popular wikis on the Web.

Another place where Web 2.0 technologies and organizations intersect is when companies tap into the “wisdom of crowds.” A well publicized example is Procter & Gamble, which is using collaborative Web sites such as InnoCentive to solicit new product ideas from consumers, rather than relying completely on internal production development teams.

Web 2.0 technologies are not just for kids. Organizations that start looking for ways to leverage Web 2.0 technologies will help advance business and stay ahead of the game. Start small. Use low-cost, lightweight applications. Give employees the opportunity to pick up the ball and run with it.

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December 4, 2007 by Steve.

By 2017, there will be approximately 91 million Gen Yers, compared to 88 million Gen Xers and 77 million Baby Boomers. Gen Y, also known as millennials, is an important demographic, as evidenced by several recent industry studies that highlight these important facts:

» Gen Y prefers choice in banking services. According to a survey by the American Bankers Association, 30% of those under 34 years of age prefer online banking. However, branch banking ranked a close second at 25%. It’s not a mutually exclusive relationship.

» Gen Y is largely being ignored by the fund management industry. A global survey by KPMG found that fund managers and advisors plan to stay focused on serving the Baby Boomer generation. Only 22% of surveyed firms currently focus on Gen Y, with an additional 28% planning to focus on this group in the next two years.

» Gen Y needs education. KPMG reports that Gen Yers need information and education about financial planning and that Gen Yers “want to look at their portfolio every day.”

Clearly, targeting Gen Y is an opportunity for insurance agents as well as wealth managers and investment advisors. Building long-term relationships with Gen Yers should include the provision of a variety of options for communicating important financial information. These options should include print, electronic, and interactive formats.

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October 31, 2007 by Steve.

“In the 21st century, it isn’t what you do that matters most. In fact, if you line up all the winners in business today, you will notice that few win by what they make or do. If you make something new (or just better, faster, and cheaper), the competition quickly comes up with a way to improve upon it and deliver it at the same or an even lower price. Customers instantly compare price, features, quality, and service, effectively rendering almost every what a commodity. Yet, the drive for differentiation – personal, professional, and organizational – lies at the heart of all our business endeavors. We all still want to stand out, to be bold, to be valuable, to distinguish ourselves from the competition, to do things others can’t copy and to be No. 1. We always will. But in a commoditized world, we are running out of areas in which to do so.

“However, there is one area where tremendous variation and variability still exist, one place that we have not yet analyzed, quantified, systemized or commoditized, one area which cannot be commoditized or copied: the realm of human behavior – how we do what we do.

“The people and companies that will rise to the top today and stay on top tomorrow – that will be rewarded, promoted, and celebrated – are those that get their hows right. The world has changed to make this idea more relevant than ever, and it now represents the most powerful way to chart a course of enduring personal and organizational business achievement.”

The above are excerpts from a new book by Dov Seidman called How: Why HOW We Do Anything Means Everything… in Business (and in Life). This book is an intriguing exploration of what businesses in the future will have to do to be successful. Seidman contends that continued success will have more to do with the character of an organization than with the products, price, and services they deliver.

He maintains that technological advances have created a hyper-connected world that demands transparency. “Soft” things like trust and reputation are essential for success in today’s transparent world.

Your clients already have a certain level of trust in your organization. Otherwise, why would he do business with you? Yet most agencies I talk to are focused on what products and services they can deliver to their clients that will differentiate them from their competitors. If Seidman is right, to be successful in the future, an agency should concentrate on building trust and reputation.

An example of this might be videotaping the contents of a client’s home or business to be used as documentation in the event of a claim (see previous post). Agents might read this suggestion and dismiss it because they don’t think they can afford to spend the time necessary to do this for their top clients –– much less for every client. However, if success truly is based on building trust with clients, what could be a better way to do this than to provide this service?

Technology is leveling the playing fields between competitors, making it much harder to distinguish yourself. The trend today involves delivering not so much a better product or service, but a better experience to customers. Working on the how instead of the what will put you in a leadership position for the future.

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August 28, 2007 by Steve.

Outsourcing. Just saying the word out loud raises questions and emotions. During several recent presentations, I have started talking about outsourcing as an option that agencies should consider. In fact, a few agencies have already started hiring staff from another country to work for them. That said, many agency owners and staff react negatively to the thought of outsourcing. They ask: “Why would we take a job and move it overseas? What would my clients think?” These are valid concerns.

While outsourcing is not a good option for every agency, I do believe it is something that agency owners should at least consider. Thinking about outsourcing strategically allows you to select functions or specific tasks that can be done less expensively — and often more accurately — by someone not located in your agency.

As an example, I recently received a phone call from a person at a small agency in South Carolina who asked if I knew of any resources they could utilize to hire remote staff. The agency owner explained that he was very frustrated with the problems he had encountered trying to hire staff locally. When he did hire someone, he spent a significant amount of time and resources training that individual. Inevitably, the person left the agency just when he or she was becoming productive. This particular agency had already outsourced all of its accounting functions to a US-based firm that specializes in insurance agency accounting. The agency owner was very happy with the arrangement and wanted to explore a similar arrangement for other positions in the agency.

Where to outsource

Specific transactions: Review transactions that are completed in the agency that don’t add value, such as issuing standard certificates of insurance, or as described above, accounting functions.

A staff person: There is a growing list of agencies that have hired people located in China or India to work full-time for the agency. These people access the agency systems using a remote connection. The cost advantage is significant.

A virtual assistant: A growing number of people are hiring assistants to complete time-consuming and labor-intensive tasks. A friend of mine, who is a CEO of a large publishing company in Nashville, requires his direct reports to hire a virtual assistant for personal or business tasks. He gives them a $500 budget. He told me that he requires this so his staff will gain practical experience in how outsourcing can work.

Simple data entry: I’m currently working with an agency that is changing to a new management system. They have determined they are not going to convert any data from the old system. To reduce the amount of keystrokes necessary to get data into the new system, we have come up with three strategies. First, we will do initial downloads from their carriers. Then we will use the import function on the new system to import large schedules. Finally, we will hire (i.e., outsource) data entry for any items that are left. This allows staff to concentrate on their strengths and not waste time on simple data entry.

Outsourcing raises many questions. How do you find someone? What about security? What tasks can be assigned? How do you monitor quality? Be sure to consider each of these questions before you even think about outsourcing.
 
In my experience, using outsourcing strategically in an agency can build your competitive advantage. What’s your opinion?

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