Does running your agency ever keep you up at night? If you always sleep soundly, congratulations, because you’re part of a tiny group of business owners. Even those who don’t suffer chronic business-driven insomnia often find themselves wide awake in the wee hours, wondering whether they’ll be able to respond to threats they perceive.
That isn’t paranoia. While insurance agents have always faced situations that threatened their businesses, the pace of the industry and intensity of competition have both accelerated in recent years. Last year, in a PropertyCasualty360.com survey, agents and brokers had no difficulty identifying the threats that were keeping them up at night.
Many of those threats focus directly on how technology is changing the ways in which our industry does business. For example, nearly three of five agents worry that sophisticated data analysis and similar technology will make it easier for carriers to identify and sell directly to prime prospects. Nearly half worry about the tendency of younger customers to “bypass the middleman” and deal directly with national businesses like insurance carriers. Nearly 54 percent are troubled by websites that allow prospective clients to compare dozens of carriers in just seconds. And half of the agents worry about whether their own investments in technology will allow them to keep up.
Among smaller agencies, one of the biggest worries is the emergence of nontraditional competitors such as retail chains and car dealerships that attempt to bypass the familiar carrier-agent business model. A majority worries that coverage is becoming a commodity driven by price alone.
Much as I’d like to reassure you and say that none of those issues is valid, we both know better. So is it time to give up hope? Not at all! Instead, take a moment to think about how you sell insurance products to your clients. You’ve probably explained that it’s impossible to eliminate risk, so it’s wise to take steps that allow you to manage that risk. Bring the same approach to your business. Instead of allowing threats to paralyze you into inaction, stop and focus on the risks each represents to your agency, and on specific steps you can take to reduce those risks.
You can’t stop the forces that are reshaping the industry. New competitors and amazing new technologies are inevitable. So the key becomes knowing what you offer that makes you different, and capitalizing upon those differences. Is it easy? Not at all, but it’s critical if you want to stay in business for the foreseeable future.
Have a clear vision
No two agencies are exactly alike, and no two agency owners share the same exact goals. The more clearly you can define what makes your agency different and the goals you have, the less you’ll be affected by threats. You’ll be far more focused than most agency owners, so you’ll be less likely to be distracted or frightened by external events or developments. A clear image and well-defined goals give you a framework within which you can consider every decision. If something is consistent with your image and goals, it’s probably a good idea. If not, it may be something to avoid or ignore.
Protect your book of business
Your agency’s single-biggest asset is the list of clients you’ve developed. As long as they remain your customers, they’ll provide a predictable stream of revenue that will let you keep the doors open and the lights on. Knowing they’ll be around for the long term can give you the confidence to take other risks, such as exploring new lines of business.
That doesn’t mean you can assume your customers will always stick around. Yes, they may have chosen your agency after considering others, but they’re constantly being enticed by other carriers and agents. Whether it’s a funny commercial on Sunday’s televised game, a direct mailer, or a friendly conversation after church, there’s a never-ending effort to chip away at the foundation of your agency.
The best defense is an aggressive offense. Start by never taking your current customers for granted. Remember that they could leave at any time, so be just as friendly, welcoming, and helpful as you were when they first selected you. Check in with them periodically, and not just at renewal time. If they have a question or concern, resolve it quickly and efficiently. In addition, look for opportunities to increase the value of their relationship with you and become a trusted resource. Review their coverage and look for ways to adjust it so they are better protected.
Don’t create openings
If there’s a threat outside your home, the first thing you’re going to do is lock the doors and windows. In the same way, you want to make sure you don’t give competitors easy ways to steal your customers. The key here is to think of what strategies your competitors might use and address those issues before they have the chance.
For instance, one of the most sensitive issues for customers is pricing. Over time, with your carrier’s typical increases, a customer’s premiums may have grown to the point at which they’re much higher than what the competition may charge. Or your customers may be paying for coverage that no longer makes sense. Reviewing policies and bringing cost-saving suggestions to clients may lead to a slight reduction in your commissions, but they’ll create far more value in good will and loyalty.
If a competitor suddenly becomes aggressive and lowers rates to lure customers, be sure that you’re able to explain the extra value you deliver. If you have a reasonable argument, the customer may choose to avoid the perceived hassle of switching carriers.
Finally, solve problems quickly. Even issues that seem small can loom large in customers’ eyes when they go unresolved. When you address the issues immediately and with a smile, you’re telling the customer that you value his or her business. But when you make only a halfhearted attempt to resolve an issue, you’re creating a welcome mat for your competitors.