ACG - Agency Consulting Group

The PIPELINE

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

Growth-loaded Producer Compensation

It truly gets tiresome. At least once each month we encounter another agent with the UNIQUE problem of losing more customers than he is gaining, even though he swears that his team provides superb customer service.

The typical symptom is the high number of customers leaving for non-payment of premium. Often the agent does not even know that the customer is gone until he runs into him at a function somewhere to be told that they have left the agency. Or, worse yet, the agent does not find out until he sees the customer’s file in the “dead” group to be filed away. Typically, agency service employees do not call or question the reason for non-pay cancellations. The result is that clients are wooed by other agents who promise the kind of service of which the host agency already boasts (but does not actually accomplish).

Often the agent and his staff feel that the loyalty of customers that they had years ago is no longer prevalent. “The customers have changed,” they tell us. When In fact, it is the agency that has changed, slowly but surely, without the agent ever noticing. The personal touch that used to mark the norm of the agent’s operations when he was more in control of customer service is now an exception to be applauded – when noticed.

When the agent, himself, is personally interviewed, he always admits that he does not feel as much in control as he used to. “After all,” he rationalizes, “we have to give up control as we get larger. There’s no way I can pay personal attention to thousands of customers.”

That’s true. However, “paying attention” is not equivalent to answering every phone call and talking to every customer. The definition of “paying attention” as an agency grows larger has changed. “Paying Attention” now means how an agent keeps control of the quality of service as the agency grows beyond his ability to personally treat with every customer. “Paying Attention” has to do with the development of your employees in the same work ethic and service expectations that you have about yourself, and “paying attention” has to do with managing the personnel and the processes of quality service where previously you simply performed the service yourself.

Managing Quality Customer Service

It takes a unique individual to convert from a “doer” to a “manager”. It has less to do with insurance knowledge and the ability to fulfill a customer’s request than it has to do with making sure that your employees fulfill those requests at least as quickly, courteously, and accurately as you would. This process begins with Training, carries on with Managing and Monitoring, and concludes with Feedback from your clients and to your employees.

Training

Training is not only for new employees and inexperienced insurance people – it’s for everyone and should be on going. If you do the same thing often enough without re-training, you get stale and the quality of both work and service levels tend to drop. The training to which we refer is not insurance knowledge training. The training that assures quality customer service includes Active Listening Skills and Customer Relation Training. The best process of training is role-playing. Identify problems and objections that are brought to the agency by clients. Take turns playing the customer and the CSR while addressing the problems and objections. As the agency owner/manager, you will quickly notice the responses that make you cringe. “No wonder customers have problems if we treat them like that!” is not an unusual comment after the first round of role-playing. However, if the session is used as a clinic with ideas radiated of how to address the problems and issues, your staff will begin developing ways of handling customer issues that make you proud instead of making you cringe.

Managing the Process

Manage by the numbers – new business vs. retention. The percentage of business generated by referrals is one indicator of high or low quality service to your current clients. If most of your new business comes from marketing campaigns and advertising, you may have a quality problem that keeps clients from referring you when friends discuss insurance. Customer retention is a simple formula. How many customers do you have at the end of the year? Identify lost customers each week with reasons lost. The decreasing ratio as the year progresses identifies your customer retention. Perform the same calculations and analysis of lost policies (even if you retain other lines for the customer). The “reasons” for loss is the most important indicator that you can identify with respect to quality service measurements. Staff meetings should include a reiteration of “customer stories” that arise for every employee from time to time. Re-telling the stories reiterate the need for quality service and educates all employees regarding how to manage issues and problems.

Monitoring the Results

Share the victories and the losses with the employees. Some agents feel that if they lose a prospect or a customer it will lower morale. That, or the hurt to ego stops them from sharing what happened and why with the staff that worked hard toward getting or saving the accounts. Your employees are all adults, the buy homes and make investments, manage their households and families, live through personal victories and tragedies, and are perfectly capable of sharing either victories or defeats with an analysis of the reasons that caused the results. This process makes them truly feel a valued part of the team. It is that respect that makes employees more loyal to their employer. By the way, it is not a sin to make money and to make profit. Some agents actually feel that if the employees know that they have increased revenue or profit, they will want more money or feel upset about the owner’s situation. At least the employees already acknowledge that the owner will earn income from the efforts of the employees. From whom are we trying to hide this fact??

Asking for Feedback from Clients

You want to know if you are providing good service? Ask the customers at every opportunity (not just when good things happen). Make customer surveys a part of the agency operations so that every customer gets a short survey indicating service quality once every two years.

Providing Feedback to Employees

Good or bad, tell the employees what the customers have said and use all feedback as a learning experience. The first time you criticize an employee as the result of feedback, you have lost the battle for their loyalty to you and to quality service. From that moment on they are more concerned with saving their jobs and covering their backsides than with saving the customers and covering yours. Instead ask the employees what could have been done differently that would have changed the results of the contact. This turns criticism into a learning experience. The only things missing are blame and accusations.

I have never met an agent who said, “We give a moderate service to our customers.” Every agent prides himself on operating a high-quality servicing agency. There may be no basis for this beyond the comments of the employees, themselves, or the laudatory comments of a few customers each year. Those agents who “Walk the Talk” can PROVE their quality customer service through high customer retention rates (over 95%) and a high and growing rate of new business with other customers as the referral source.