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Commodity vs. Relationship

Author: Al Diamond
One of the reasons that the direct writers and internet-based companies do so much business is that the buying public feel that insurance is a commodity—we’re all the same and the price is the only differentiation. In an impersonal internet-based world in which texting replaces actual conversations this concept makes sense—until a sour experience with a claim or service issue illustrates the need for personal service and relationship.
The statistics show that while a large number of people “shop” for insurance on line, most people choose to actually BUY from a human being. They want to touch, feel, and speak to their financial counselor. But I’m pretty certain that they don’t quite know why—it just comforts them. The actual reason is that they are assuring themselves that they are spending their insurance money wisely and the hope that someone stands behind them in case they need to use the protection.
But attitudes about insurance agents tend to change in the year after they purchase the product depending on the attitude of the agent or of the agency.
While most agencies have great slogans and logos about personal service, the reality is that the pressure of time and volume of work causes us to treat most of our clients just like the “commodity” that they feared they would become if they just signed up on line or over the phone. We treat them like numbers. We don’t get to know them. At best they may know the agent who sold them the insurance but are not likely to establish relationships with the agency or with other staff members.
Yet few intelligent agents deny that their best clients are ones with whom they have a long and lasting relationship, personally and professionally. Some may have been friends before becoming clients, but most agents create a relationship with clients who are important to them and friendship often follows and stems from a strong business relationship.
So where’s the DISCONNECT? Why do we only see many of our clients once a year (if that often) to confirm renewals? Are these the same clients that you wooed and enticed when you initially sold them on using your service because they lost contact and trust with their prior insurance provider?
Too Much To Do, Too Little Time to Do It, Too Many Clients to Visit
When it boils down, the reasons we hear in response to the questions above is
a)   We have so much to do that we’re lucky if we see any clients at all.
b)   Our agency operations take up so much time that we are hardly in the insurance business at all any more— we’re managers, administrators and “firefighters.”
c)   We promise on-going communications and relationships but, in reality, we have hundreds of commercial clients and thousands of personal clients—we simply can’t see them all.
Before we can even address the issues raised above, we must actually gauge our commitment to the concept of Personal Relationships as the primary point of differentiation between our agency and our competitors.
Commitment is the way you operate your life. That to which you are committed (marriage, children, church, sport, hobby, your business) gets attention and gets accomplished. That to which you aspire but are not committed are the things that you TRY TO DO. And, in the words of the immortal Yoda, “Do or do not. There is no try.”
I know folks who are COMMITTED to golf. They are agents and some are successful, but they play golf three to four times each week—they certainly maximize their success at that which they are committed. Similarly, I know agents who have hundreds of commercial clients and thousands of personal clients and are so committed to the concept of personal relationships that every client thinks that the agent (or agency) considers them a VIP and treats them accordingly.
If you commit to personal relationships, you understand that there are others in the industry who can outspend you—there are always better prices than yours if the client looks hard enough—but as long as your clients know that you give them a grade of service that they cannot achieve elsewhere, they will not only remain your clients, but they will tout you to their friends as their ‘go to’ insurance expert.
If you’ve reconciled your feelings and find that the Personal Relationship point of differentiation is the one that will best serve your and your clients’ needs, you are ready to attack the “symptoms” of the ailment that keeps you from maintaining strong relationships with your clients after the sale.
1.   We All Have Too Much To Do – Lack of Prioritization – We have a small staff and a very busy consultancy. We have to remind each other of lunchtimes and at the end of the day or we will work through them. But there are a few things that we remember because they are our priorities. Our health and alertness is a priority so we remind ourselves and each other of break and lunch times in order to be most effective in our business and personal lives. Our families are priorities so no matter how much work we have, we force ourselves to become husbands, wives, parents and grandparents evenings, weekends, during time off (we criticize each other for calling in while on vacation) and whenever a family event needs to supersede our daily lives.
For agents and their staffs who have become converts to Personal Relationships, seeing and talking to clients must become the primary function of your working lives. Many of us have been shocked by long-term clients who we visit at renewal who tell us that they have found less expensive insurance elsewhere. We are hurt and feel that we think of the clients first, but we fail to keep the clients in the loop. The worst case scenario is when our agency DOES spend a great deal of time working on behalf of customers but we never bother to include the customer in the communications loop. They never assume that you are working on their behalf unless you actually tell them of your efforts.
2.   We are pushed and pulled into management of people, process, underwriting, marketing, administration and anything else instead of being able to work with our clients – Lack of Delegation and/or Lack of the right managers. As our agencies grow we tend to take on more and more work instead of identifying lead workers who could become supervisors and eventually managers who should take on these needed roles IN OUR SUPPORT as the key producer/insurance professional. Once you have more than three or four employees you must breed your own managers. If you have ten or more employees and are still the only manager, you are automatically doing your clients a disservice by spending your time on administration instead of with them.
3.   We have TOO MANY CLIENTS to communicate with regularly – Lack of Process. Classify every client (we spreadsheet ours) by the appropriate number of times that client should be seen or communicated with in a year. Then by virtue of the revenue size and/or personal relationships, define who should be seeing or speaking to the customer and start tracking and managing that communications line every week and every month. When we establish a relationship, it doesn’t always have to be with the agency owner or producer. Most clients find themselves dealing with service staff much more than with a salesman anyway. If a client is large enough, the owner/producer should be the lead (but not necessarily the only) point of contact. But size DOES matter. You must differentiate in treatment between a $10,000 commission account and a $100 commission account. Both should feel they have a special and personal relationship with someone in the agency, but not every personal relationship has to be with the owner.
PRIORITIZATION – DELEGATION – PROCESS MANAGEMENT are the tools that allow the agents truly committed to PERSONAL RELATIONSHIPS AS THE POINTS OF DIFFERENTIATION between them and their competitors to accomplish their goals and to have the vast majority of their clients feeling “special” all of the time. Call us and we’d be happy to advise you how to teach Personal Relationships to your agency and to establish all of the tools needed to make you successful as an independent agent competing against the Commodity Agencies and against the direct writers who thrive on making insurance a commodity business.
Copyright 2014 by Agency Consulting Group, Inc.
Reprinted from The PIPELINE, the national newsletter for agency principals. The PIPELINE is published by Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for over 30 years.  Call 800-779-2430, E-mail, or visit for information about the content of this article or PIPELINE subscription information.
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