ACG - Agency Consulting Group

The PIPELINE

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

Focus on The Future / Focus on The Customer

The two terms shown above are synonymous. You will be successful in the insurance agency business to the degree that your agency can focus on the needs, priorities and perceptions of your clients and prospects, instead of operating according to the agency's perceptions of the clients needs.

I've never met an agent who does not claim to concentrate on the customers' needs. However, most agents have tried to define the customers' needs without input from the customer. This process no longer works. As evidenced by the decreasing customer retention rates in many agencies, customers no longer seem to agree with their agents on the importance of the agents services. Agents prefer to blame this trend on pricing considerations. But this reason simply does not bear scrutiny. If your customers were all price conscious, why do you keep some while losing others? If all prospects are price conscious why don't you get every account for which your price is low and lose every prospect in which your quote was not low?

The answer to the puzzle lies in the customers (not your) perception of good service. Those customers who are satisfied that you are providing maximum effort to meet their needs tend to stay with you. They know that you may not be the lowest price in the market, but you understand their business, and their needs. The effort and chance that someone else may be able to meet your service at a lower price is often not worth the effort of change for satisfied customers. However, your perception that you are providing good service may not be the same as your customers perceptions -- if you haven't asked them directly.

The two steps necessary to determine customer satisfaction are both risky. First you must properly define your customers because different customers require different activities from you to be satisfied with your service. Then you must ASK the customer a) How he grades your service levels, and b) What you can do to make him happier with your agency. The risk is to your ego. No one wants to be told that his service is not exemplary, especially an agency owner. But that is exactly what you need to know if you are to have the chance to improve both your service and your perception in the eyes of your customers. The simple act of telling the customer that you are interested in his opinion of your service and that you will act on his advice has a strong public relations effect on the customer. It relays the message that you care.

Asking for a critique of your service and committing to changing to better serve the customer is also risky. First, it may be expensive. Good customer service levels are not necessarily the cheapest way of running your business. But, if you commit to positive change within budgetary limitations, your customers will understand. No one expects their supplier to bankrupt himself in the effort to provide high service levels. The second risk to this commitment is that you may not feel comfortable in the process until your customers confirm (vocally or through increased retention) that the changes have worked. Here is a description of the two steps we at Agency Consulting Group use when assisting agents with positive change through customer orientation:

Define Your Customer:

We all have two types of customers, external and internal. External customers include insurance clients at one end of the spectrum and insurance companies at the other end of the spectrum. It is important to both identify and satisfy the needs of both types of external customers and that is one of the complications of the business. The agent as the supplier of service has to balance the needs of both types of external clients (while keeping them satisfied) in order to achieve maximum success.

Internal customers must also be identified and their needs must be met if you are to maintain the equilibrium of your agency. Depending on your role, internal customers could include producers, agency owners and managers, and even co-workers. Meeting their needs involves the Golden Rule of Participation. The Golden Rule of Participation states that the efficiency gains of cooperation between staff members is geometric, not simply mathematical. Twice as much work is done when two people cooperate efficiently. When three people work well together the efficiency factor multiplies by nine.

Define Each Customer Classification's Needs:

There are two steps to this process - 1) List your perceptions of the customer's needs and priorities, and 2) Conduct a Customer Satisfaction Survey to obtain the customer's actual needs and priorities. You can construct and disseminate the survey yourselves or use the services of a firm like Agency Consulting Group to create and administer the tool.

Once you have both your own perceptions and the customers perceptions of their needs, compare the two lists. Wherever the lists are different, use the customers' perception of needs, rather than your own. Perform this activity separately for each class of customers.

Finally, construct a set of Action Plans to change your systems, procedures, service standards and methods of operation to better attune your agency to the desires of your customers. Tell each class of customers about your findings through the surveys, commit to the changes that resulted from their input and follow up after an appropriate period to confirm the changes to the customers.

If this process is completed properly, not only will you experience an upsurge of customer loyalty, but you will find that conducting the Survey and changing your agency to the needs of your customers will become a regular part of your annual planning.