Every year we see agencies struggling with the problem of how to differentiate themselves from their competition. This is an especially difficult problem for agencies involved in personal lines or small commercial lines because of the commodity nature of the insurance products, but it affects medium and large commercial focused agencies, as well. Strategic, Tactical and Marketing Plans are designed stressing “high-quality”, “personal”, “value-added”, and professional” service. But what do these terms mean to the customer? NOTHING!! Why?
1. All agencies tout service as their strength or difference, whether true or not.
Have you ever heard of an agency marketing itself as “average” or “good enough”? Just as every car manufacturer finds sources to name them “best in its class”, all insurance agents who advertise or market tell the prospects that they are the “best” in service, markets and price. The customers are not stupid. They no longer believe that there is a difference between agencies with which they have no experience. And since they are looking, you can assume that they have had problems with their prior agencies. Since no one likes to believe that they have made a mistake, any poor experiences with prior insurance agents color the expectations and feelings of the customer for all future agents. We have to prove ourselves to customers who have had sour experiences with our predecessors.
2. Customers assume quality, professionalism, and competence in their agents. Otherwise, they wouldn’t do business with them.
Most customers understand that a part of their premium dollar goes to pay agents. They are being educated further by the direct writers who advertise to “cut out the middle-man” as a way for customers to reduce costs. Most customers, personal or commercial, who deal with insurance agents do so in expectation that the agent (and his staff) will be higher quality, more professional, and more competent than the predecessor agency. The customers have certain expectations and different customers have different expectations. One of the major problems we have as a group is that we try to TELL the customers what we will do for them, rather than asking the customers what they expect and filling those expectations. In most cases, the customers’ expectations are below the level of service that agents are willing to provide. Certainly, giving the customer more than they expect is wonderful, but be sure that they understand that you are fulfilling their expectations first.
3. We don’t believe that most customers know the difference between an average, a good and an excellent servicing agency.
Customers buy a perception of comfort with an individual or a company. That level of comfort remains active as long as the agency doesn’t prove that feeling wrong by performing poorly on more than one occasion (most customers will overlook a single mistake). Don’t fool yourself into thinking that the customers are dealing with you because everyone in your agency is licensed, CIC or CPCU. They are not. If you have the chance to show the prospect a glowing and friendly personality, your credentials will never be mentioned. And, by the way, what percentage of your customers understand what the acronyms mean?
So if touting your excellent service doesn’t matter – if the clients assume competence (whether true or not) – if the customers don’t know the difference between mediocre, good and excellent agencies – HOW CAN WE DIFFERENTIATE OURSELVES FROM THE REST??
The answer lies in the word DIFFERENTIATE. Of course you want to be “better” and provide “excellent” service. But how are you DIFFERENT from your competitors? That’s what is most likely to be seen by the client. Since they can’t tell the difference between a mediocre, good and excellent agency (specially before they have any experience with it), they look for differences as an indicator of whether they should move their business.
The differences that are meaningful for customers are not necessarily those that seem meaningful for agencies. For instance, customers EXPECT their transactions to be handled quickly and accurately. This is an example of simply meeting expectations. Advertising prompt and accurate processing fulfills a need, but doesn’t point to a differentiation. Getting policies issued in a timely basis is another example of a basic expectation that is not really important to most customers. If they trust you enough to feel that they have been taken care of, they don’t care if they get a policy or not. The important points of difference are the small things that touch the customers and are noticed by them.
1. Does the person who speaks to them know them or are they constantly being “looked up”? It is very comforting for a client to feel that (s)he is known personally.
2. Is the agency staff courteous? How long should I do business with a company who treats me as if I am “interrupting” their busy day with my call?
3. Agency staffers are busy enough that, occasionally, messages or voice mail must be left.
a) Are messages occasional, or predominant? It is very frustrating to have to leave messages every time you call an agency. You can not guess that messages and voice mail is only occasional. In order to determine this, you must actually call into the agency a variety of times during the day and week, recording whether you got through or had to leave a message.
b) How fast are messages returned? The customer expects that if a CSR is on the phone when the customer calls, the CSR will return the call as soon as (s)he gets off the call. The customer has no idea of how many calls come in or how many voice mails are waiting (nor should they care). They didn’t call for social reasons. They have a question/problem that needs addressed. Calling the next day may be acceptable to you, as the agency owner. I assure you that even if it is acceptable to your customers, it is not desirable.
c) Can you commit to message recalls within one hour of the original call? Within four business hours of the original call? Within one day of the business call? Whatever the commitment, it must be in writing and measured. A commitment to one hour service is only validated when it is measured and reported (i.e. 95% of our returned calls last month were within one hour).
4. Are you willing to follow up on a customer problem/issue without being asked? If you would like to thrill your customers, call them when they are not expecting it to tell them the status of a transaction, problem or claim. It makes them understand that you are thinking about them, even when they don’t call you.
5. Do you shop your customers’ insurance products every year? This is a service issue that many agents are not prepared to address, but most customers are lead to believe is a part of the service provided to them. Independent agents tout their ability to market to many markets as a point of differentiation between them and the captives of the direct writers. But what happens to most of the personal and commercial accounts after the first year? Most policies are “renewed as is” with the expectation that the carrier in which they reside continues to be best from a pricing and coverage standpoint. While that may be so, things may also have changed and the customer expects you to be acting on his behalf each year to assure that he has the best value for his insurance dollar.
Unfortunately, unless an agency is procedurally established to do quote comparisons every year, this activity is very expensive in both time and money. When programmers established automated life insurance rating systems that rated hundreds of companies through a simple entry program, it changed the fact of life insurance marketing forever. We suggest that a similar program will be developed for personal lines and simple commercial lines (BOP’s) that will permit either independent agents or the carriers themselves to take advantage of direct access by the general public to multiple quotes every year. If an agency is procedurally established to take advantage of this opportunity, it will be in a position to fulfill every client’s dreams and wishes regarding annual rating comparisons by carrier. Of course, nothing is as simple as it sounds. Most companies still have subtle coverage differences that explain rating differences. P&C comparisons must include both rating and coverage comparisons for the customer. These complications are the best reasons for the survival of the agency system in the U.S. P&C insurance is complicated enough that there will continue to be a need for a trained specialist to analyze and recommend one policy over another.
Customers have three different levels of satisfaction that must be considered. Level 1 satisfaction is meeting the BASIC NEEDS of the customer. Those needs include getting them the best value for their insurance dollar, addressing their insurance needs quickly and efficiently (policies, endorsements), and handling claims quickly. Without satisfying these basic needs, you will certainly lose customers. Level 2 satisfaction addresses what the customers WANT (handle all issues on the first contact, know the customer personally, call him back when he has to leave a message). Level 3 satisfaction is performing sufficiently beyond the customers’ expectations that they are SURPRISED by your actions.
Most of the points of differentiation that we have discussed are complex in management, but simple in cost and implementation. Most clients are more thrilled by the little things that an agent can do to meet or exceed their expectations than by the expertise and basics that they already take for granted. Concentrate on implementing one point of differentiation at a time and don’t start a second until you are convinced 1) that the first point of differentiation is in place, and 2) that you have done a good job in telling your customers about the difference between your agency and the rest.