by Jeff Yates, ACT Executive Director
Independent agents and brokers should take time periodically to think about the trends that are most likely to affect the future of their businesses. How do I identify the trends that have the highest degree of certainty? Do the trends create opportunities for my agency to begin to take advantage of today, or do they represent threats that I had better start to prepare myself for now? Finally, what are the two or three things the leaders of my agency all agree we “must do” today to meet these trends and continue to improve our business?
Under the leadership of our Strategic Future Issues Work Group, ACT has been encouraging this type of discussion on an industry level by the agents, brokers, carriers, vendors, user groups and industry associations participating in ACT. The discussions themselves have been very healthy to get the industry focused on the future and moving toward a common vision. ACT’s work is ongoing, but I’d like to give the reader a flavor of the discussions we have been having, and why I believe these trends represent primarily a positive for independent agents and brokers, provided they have a culture that is willing to embrace change and seek continuous improvement.
At our most recent ACT meeting, noted technology futurist Daniel Burrus, author of “Technotrends,” gave us a good methodology for distinguishing between “hard” and “soft” trends. “Hard” trends are usually driven by technological, demographic, or legislative/regulatory changes that are permanent and often transform the reality with which we must deal. The emergence of the Internet, cell phones, and globalization are all good examples. These trends have changed our reality forever. We have the highest degree of certainty about “Hard” trends, and they are the most important trends for organizations to consider when they are making investments for the future.
There are two categories of “Soft” trends. “Soft trends (1)” are apparent trends today, and we think they will continue to occur. But they are not a certainty. “Soft trends (2)” are those that are apparent today, but we do not think they will continue to occur in the future. The prediction of a continuing federal government budget surplus was a good example of a Soft trend (2), upon which decisions should not have been based.
Burrus spends a lot of time thinking about trends, and he believes that technology will continue to transform our reality at an accelerating pace. He points to the fact that computing power continues to double every eighteen months (Moore’s Law), while broadband connectivity, wireless, and low cost storage all continue to become more widespread. We are also on the cusp of the integration of voice with the Internet, coupled with voice recognition by our computers.
The impact of these trends will continue to grow broader. Agencies will be able to interact with their systems from anywhere and will use several different types of devices (computers, PDAs, cell phones, etc.) to access the Internet and their systems. Computers will send and receive data to and from other computers in real-time virtually automatically, and will query for additional information when needed to complete a transaction.
As a result, agencies will save an incredible amount of the time they currently spend on securing rates and issuing policies, as well as on handling customer servicing needs (such as, inquiries about billing, claims, or policy details). Agents will be able to give consumers the immediate responses they expect and handle issues on a “once and done” basis. Agency staffs will be freed up to focus more attention on sales, cross marketing and providing customers with value added services.
These technology trends will also create some challenges for independent agents. Consumers increasingly will turn to the Internet as their first source to get information and be attracted to businesses that give them value added services online. Competitors—both the direct companies and innovative agencies—will move to the next generation of website that marries voice and video with the graphics, enabling customers to access a customer service representative live over the Internet, as well as to see and talk to him/her through the computer.
Many independent agencies run the risk of ceding the Internet to their competitors by not focusing on this area, at the very time the Web is becoming the “go to” resource for a large percentage of the public. It is important for agents to develop a website strategy and to offer a meaningful website presence. They also need to learn more about how they can use website “search” and other Internet marketing techniques to attract business to their site and to their agencies.
There are also many demographics related hard trends occurring. A big percentage of baby boomers will reach the traditional “retirement” age over the next ten years. We know this is going to happen. We also anticipate that the baby boomers will differ from prior generations by continuing with active lifestyles into retirement, often “re-engaging” with new work, including part-time positions, in-home businesses, or volunteer work. This latter prediction is a Soft trend (1), and its implications are that baby boomers will continue to be important insurance consumers for many more years.
During this same time frame, Generation X and Y will be in their prime child rearing years, owning homes, and running businesses. They will have needs similar to those that their parents had at this stage of their lives, but they are likely to have some different expectations from their parents, which service providers will have to ascertain and deliver. We anticipate that these consumers—having grown up with computers—will look for agencies which are full participants in the networked world and are readily accessible to them 24/7 to accommodate their busy lifestyles.
We will also see the United States continue to become more ethnically diverse. There will be significant numbers of single parent and other non-traditional households. In traditional households, it will continue to be the norm for both spouses to be working, and women will increasingly hold managerial positions. In this environment, time will continue to be in short supply for most consumers and businesses, and they will favor business relationships that can save them time, rather than cost them time. Agents, of course, are in an excellent position to save their customers time.
One point Burrus made struck me as a particular opportunity for independent agents and brokers. In spite of the growing pervasiveness of technology, ours remains essentially a human economy that is based upon relationships. Trust continues to lie at the heart of all effective relationships, and agents are well positioned to build trust relationships with their customers. Today, more than ever, however, trust must be earned, because of the high degree of public skepticism, based upon their perception that many businesses have not lived up to the promises they have made, whether to customers, employees, stockholders, or insureds.
Burrus was very excited about the direction in which many agencies are headed to transition their staffs into the role of trusted advisors who actively work on nurturing their relationships with their customers. These agencies are in the process of using new technology to automate their processing functions wherever possible, so that they free up their service personnel to perform this new role. These agencies are also beginning to track the preferences of these customers including how they want to be communicated with and what customized services they want to receive.
We urge agents to seize this opportunity to strengthen their customer relationships by specifically focusing on building the levels of trust they have with them. To what extent do current communications and procedures, as well as contemplated actions, build client trust or detract from it? Agents should consider addressing the trust issue directly with their customers, asking them what it would take to move trust to the next level.
We hope this article will serve as a starting point for the reader to identify the Hard trends that promise to be the most significant for his or her particular agency, so that the agency can then devise the appropriate “must do” strategies to capitalize on the opportunities created by these trends, while fully preparing to counter any accompanying threats.
Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. Jeff Yates can be reached here. ACT’s many reports and business improvement tools can be found at www.independentagent.com/act. This article reflects the views of the author and should not be construed as an official statement by ACT.