ACG - Agency Consulting Group

The PIPELINE

A national monthly newsletter for agency principals dedicated to agency management topic

Are you Giving your Customers What They Want?

The obvious first question is "Do you know what the customers want?"

If your answer is "They always want the lowest price and immediate service," you are probably right - but is that what they REALLY want? And is that really ALL they want? - or is that what they feel they must request in order to get fair pricing and reasonable service levels?

Very few agents have, in fact, asked their customers what was most important to them about their selection of an insurance agent or carrier. Those that have, found some very surprising answers. Of course price is always up there as a major concern of customers. We have spent many years convincing the customers that the premiums we charge are not necessarily the lowest available. If they seek out our competitors and achieve a lower premium, we can magically meet or beat that premium ourselves. How do you think our integrity fares in this type of competitive atmosphere?

However, aside from price, reliability, honesty, and efficiency ranked very high among consumers for their rating of insurance agencies and companies. Focus groups define reliability as the agent or representative (who can actually make a decision) being available when needed - always. Unfortunately always (in the eyes of the consumer sometimes means beyond normal 9 to 5 business hours. This reflection has caused a number of agencies to adopt live answering services after hours who refer emergency customer calls to dedicated agency employees, even after hours. Getting a live human being when calling the agency has its benefits. The answering service is instructed to inform the customer of normal service hours. They then ask if the call is an emergency and, if so, will forward the call (via message) to an emergency number given them by agency management.

Clients sometimes mistrust producers because of the pricing reasons noted above. You may be friends with your clients - but don't assume that they believe you when you tell them you have marketed their products and have achieved the "best" price available. This problem involves a complex and difficult situation. One of the desires of the insurance customer is that the independent agent markets his insurance annually to achieve the best insurance value for his money. Most agencies cannot afford to do exactly what the customer wants - marketing their insurance to every carrier every year to assure that they have the best product at the best price. However, few agents are honest enough to tell the clients that bitter fact. In this scenario, marketing is not equivalent to blocking markets. The amount and level of work required by a customer service department in a commercial lines agency today makes it prohibitively expensive to market to all carriers every year. The carriers don't like it (unless you price it in house) because it takes their time uselessly. Your service staff hates it because they know that, for the most part, they're spinning their wheels. All of the markets to whom they market but one will be useless efforts. Meanwhile, other critical service issues remain in their backlog. And your customers find themselves poorly serviced because that level of marketing consumes a great deal of time, taking it away from other service-related activities. So a decision must be made regarding the pricing and marketing of clients' products each year. The predominant successful agencies coordinate this activity through their renewal meetings at which a team comprised of service, sales, and management determine how to handle the client each year. We have seen a few unique agencies who have involved the clients themselves in this decision making process. This is the height of honesty since the client is invited to determine how best to handle the account at the approaching renewal period. These activities have only been used for the agency's most important clients and, to date, it has resulted in a much closer relationship between the client and the agency. The agent submits that the client, seeing the level of effort being exerted on his behalf, is satisfied that the agency is doing everything within its power to manage the account.

The final key issue, efficiency, is much more in the agency's control. Most employees tend to hide their mistakes. They do this for fear of retribution if the mistakes are identified. However, those mistakes are normally identified initially by the client themselves. While you, as the agency owner, are unaware that anything is amiss, your clients are calling your service team are asking why transactions haven't been completed or why they were completed incorrectly. The solution to this problem begins with careful management of the servicing process. A manager (or owner) should review mail daily to identify errors on transactions. Every customer complaint must be given highest priority. Like an iceberg, one customer complaint could represent a hundred dissatisfied customers. Customer satisfaction surveys, done on an annual basis can alert you to potential problems. Close supervision of customer service representatives will also identify if one seems to working much harder than another in order to accommodate the same commission volume or number of customers.

As independent insurance agents, we must balance what the customers need with what the customers want. If a customer is forced to buy what he needs, he does so begrudgingly, not thankfully. A part of our job is to convert those needs into wants by showing the customer the benefits of the product you designed. If, however, you did not fulfill the customers original wants, you will find yourself losing customers regardless of the quality of your agency. Do customers want low price? Of course! But no one has the lowest price consistently. Agencies who have set themselves up to offer nothing but low price products cannot afford the high grade of service that's expected from their VIP products.

We have seen some agencies develop a customer checklist, identifying five to ten issues ranging from frequent communication between agency and client to speed and accuracy of transactions. The checklist asks for clients to rank the issues from first to last (with "1" representing THE most important to them). We have also seen Customers' Bill of Rights outlining what, in the agency's opinion, the customer should rightfully expect of the agency in terms of service. Both of these methods are attempts at pin-pointing areas of service that will differentiate the agency from its competitors and transcend price alone as a consideration for the agency's customers. We feel that both of these methods are commendable and should be combined with a Customer Satisfaction Survey (CSS). The CSS actually asks the customers, themselves, for feedback about the agency's service levels and which are important to them. This tool requires a certain degree of confidence in the agency. Regardless of the results, the CSS will help the agency progress as a service organization in the eyes of the customers.