ACG - Agency Consulting Group

The PIPELINE

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

Benchmarking Via Internt

I recently tried a little experiment. Two agencies that I encountered expressed a great deal of pride in the degree of service provided by their staff to clients and prospects. Both of the agency owners assumed that they provided great service because, 1) they did not hear many complaints, 2) their employees told them that their service was excellent, and 3) they wanted and needed to believe that they provided excellent service to support their own egos. Neither owner had surveyed or tested the agency to determine the real level of service.

Each agency asked Agency Consulting Group, Inc. to assist them in marketing efforts to generate higher volumes of prospects to their agencies in personal lines because their growth was lagging. So I called each agency as an impending homeowner and new prospect to request a quote for a homeowner’s policy needed for an impending closing, but I did not make it easy. I sought a quote on a 200 year old house designated a historic home (there are lots on the East Coast) and was looking for replacement cost coverage and other special forms.

The first agency had a New Business Representative managing all quotes and new business sales. She was very knowledgeable and asked dozens of questions, some of which esoteric enough that a new homeowner (as I was represented) would have no idea of the answer. As an insurance professional I understood that she was asking all of the questions that the underwriters would need to qualify the home for coverage, but as a consumer, I was bothered that this agency could not provide me a quote without asking all of the questions that I had been asked. I was TOLD that I needed to answer the questions before a quote could be prepared. I called back the next day with “answers” to the questions asked. Then this New Business Representative buried herself. At the end of the conversation she said, “ I think I have everything that I need. Let me see if I can find a company who will take you. I will call you back when I have something.”

She was going to seek a company that “WOULD TAKE ME”?! My consumer side took offense. This was my dream home, a 200 year-old beautiful house already designated a historic home! She was alluding to the fact that my dream home may be “rejected” by many companies. As a former underwriter, I knew exactly why she made the remark. However, she should never have said that to a potential customer.

My next call was to the second agency, a branch purchased last year of a multi-location local regional agency (covering one part of the state). Agency Consulting Group, Inc. has been instrumental in the acquisitions and mergers of many of these “mini-regional” agencies over the last few years. I called the branch presuming that it was closest to the location of the home I was purchasing. When the agency purchased the local office, it moved most of the service and administrative activities to its main office. The branch office staff could not help me when I called, and TOLD me to call back in the afternoon, when the appropriate employee would be in the office. I called back in the afternoon and was told that homeowners insurance was not handled at that office. I would HAVE TO call the main office. I called the main office and was told that another branch that was closer to me would handle this type of insurance and then was TOLD to call that office. I terminated the merry-go-round at that point, as would most prospects seeking a quote.

Finally, as a control, I called Liberty Mutual. I was transferred to an “agent” who asked me the questions necessary to establish the replacement value of the home. Before I hung up I was told an estimate of the cost and that I would get the Replacement Cost worksheet and the quote delivered to me by fax. Within two hours, the fax was at my office.

Three days later I still had not received a callback from agency number one. No call was expected from agency number two since I disappeared from their “scope” as a prospect before they even knew who I was. During those three days, I received two calls from the Liberty Mutual agent asking if I had any questions and when I needed the policy for closing (not asking me if I wanted to “buy” the policy). She simply assumed that I would take the coverage.

I wrote a report synopsizing the process that I took and the results I encountered to the President of each agency and recommended that the consultation be converted from “Marketing Program Development” to “How to Become Customer Friendly”. One owner rejected my offer stating that they were already “customer friendly”. The other accepted the consultation. Three months later, without a marketing program, their new business was up 25%.

Many agencies claim good customer service because retention rates are high. We remind them that inertia is the greatest force for retention. You do not necessarily have great customer service just because your retention rate is high, you just do not upset the existing customer enough to make them go away. A better gauge of customer service is the number of referrals you get each year. Divide the number of referrals by the number of customers that you have and you get a base rate for customer satisfaction (they do not refer their friends if they do not like you, or are lukewarm to your agency service). A rate of less than 5% (meaning that one in twenty customers refer people to you) means that your service is not outstanding. A rate over 10% (meaning that more than one in ten customers refer people to you) means that you are in the “excellent service” business.

If you find that you are not as “Customer Friendly” as you would like your agency to become, here are a few hints for improvements:

1. Answer customer and prospect questions on the first call. (Provide really good service)

2. Treat every prospect as if she/he were the agency owner’s Mother. (Respect them to a high degree)

3. Treat every prospect as if she/he was going to put $10,000 cash (tax free) in your pocket if they buy a policy from you. (Go “above and beyond” to make a prospect happy)

4. If they are looking for a quote, GIVE THEM A QUOTE NOW!! There’s always time to get additional information after you have their attention. If they do not like your quote anyway, you’ve wasted your and their time gathering all of that detail information that you ask. (Do not get trapped in “insurancese”, the prospect is a non-insurance person and neither appreciates nor will tolerate too much technical talk.)

5. NEVER – NEVER – NEVER – NEVER let a prospect off the phone without satisfying their reason for contacting you in the first place! Never let the prospect hang up without asking him/her if there are any other questions, or without attempting a “close” at least once (twice is better). (This is called Selling)

6. Only transfer a prospect call once. The recipient of the transfer must deal with the prospect to his/her satisfaction or will “turn off” the sale by trying to transfer again or taking messages.

7. Tell your clients that you welcome their referrals and will treat their friends and relatives as well as they, themselves, are treated by your agency (Here is where you really test your service satisfaction levels, telephone transferring is one of a customer’s least favorite hobbies).

8. Make doing business with your agency easier than it is for anywhere else you know. Never tell a customer or prospect what she/he is REQUIRED to do in order to get serviced. (Would not you deal with a business that made dealing with them easy, rather than hard)

Being Customer Friendly is the single most important ingredient that differentiates successful (def. = growing) from unsuccessful (def. = stagnant) agencies. It’s all really quite simple, treat customers and prospects as you would like to be treated yourself (politely, with respect, quickly, and efficiently with an attitude that the employee WANTS to provide the product or service that you require).