I went to a new take-out Poke restaurant for lunch the other day. There was a very simple procedure to order your food (think Soup Nazi from Seinfeld), where at the end, a sign read: "Cash Not Accepted".
These were my observations: 1. An older couple saw the "Cash Not Accepted" sign on the front door and left, grumbling how the restaurant is losing money by turning them away. I heard the word "ridiculous". 2. Several people in front of me bottle-necked the line by using their debit cards because they didn't have wallets set up on their phone. It actually took longer to process the debit cards than it did to make the Poke bowls (there were a couple of screens, they had to read each screen and follow the instructions). 3. The customers with phone wallets were handed their food, tapped their phone on a tiny screen in front of the "register" --which was just an iPad mounted on a swivel-- and were gone within 3-5 seconds.
Here's what I recognized: 1. Cash added an amount of time that would have lost more business by taking longer to complete than simply not accepting cash at all (it would have resulted in a line that would have extended out the door, and passers-by would leave thinking the wait was too long). 2. Debit cards also added a back-log, but it was acceptable (i.e. they didn't lose business by those customers that would have walked away seeing a long line) 3. A completely automated solution (pay by phone tap) resulted in the smoothest customer experience and the restaurant actually ran more efficiently.
Let's take this same scenario and apply it to the every-day insurance agency. If a customer pays by check and the agent doesn't use their phone to deposit the check, the agency must now get that check to the bank. Record, endorse, deposit. What is that...? 30 minutes? What if we waited for the check to clear?!? The more "advanced" agencies offer "Pay Online", where you can use direct deposit to transfer money from the customer's checking account to the agency's account. With that, you need a check to enter the routing and account numbers and sometimes even a check number to complete the transaction. Where most of us now use Google Pay, Apple Wallet, Venmo, heck, even Facebook Messenger allows you to transfer money, pay by check, whether paper or electronic, is still the industry standard for most agencies. The more time the agency devotes to supporting checks, the less time there is to spend in capturing new business.
OK, so, what's the point?
The point is this: There are a thousand little tasks that are done each day for each agency; answering the phone, answering emails, updating proposals, accepting applications, accepting payments, and many others. What if one of those tasks was completely automated? What if automating that one simple task saved your agency 5% of it's total operating time. That could either be a 5% reduction in overhead (cost savings) or a 5% increase in customer sales (increased revenue). This is just a simple example of payment, and there are a lot of reasons why an agency MUST accept checks, but it serves well to illustrate the point. What if there was a more complicated task that saved even MORE time?
In another article, I conducted a micro-study where I surveyed the top 10 Google results for the search term "Commercial Insurance Agency". I was surprised that only 1 in those 10 offered the ability to complete an application on-line (although I didn't count the 1 because it didn't actually complete the insurance application and instead required an agent to call me for more information). Agencies still rely on the traditional methods of capturing customer information using downloadable templates, such as PDF, Word or even Excel. Where expedience and quality are to the success of the take-out Poke restaurant, information and service is to the success of the insurance agency. Yet, the most common customer experience is: "Download this large PDF application, fill it in, and email it back to me".
Why is the most important element of the insurance agency, customer information, treated with such a non-customer-friendly approach?!?
In my conversations with other agencies, the common theme is cost and understanding. They don't have the understanding or the experience to develop something customer friendly themselves, so they rely on development companies to do it for them. Generally speaking, the greater the reliance, the greater the cost.
There is a "rule of thumb" that for each million dollars of premium an agency earns, there is 1 customer service representative (CSR). A decent sized agency might have several to dozens of CSRs to service customers. A quick trip over to salary.com indicates that each CSR earns around $35K per year, every year (not to mention health care and other employee expenses). Because these agencies don't have the understanding to develop more automated solutions, they must employ more resources to manually tackle these redundant tasks. After a few necessary CSRs and that 5-figure quote from the development company doesn't seem so bad.
This fact is exploited by big agency management software companies that build solutions for agency automation. On their side, they develop solutions with features that can be used by any sized agency, offering any product line. By keeping it generic, they provide the tools that appeal to the widest breadth of customer. However, on the agency side, they require only a small percentage of all of those generic features in order to operate their business. The problem is, the agency is paying for all of the features regardless of whether they actually use it. But, I think that is a topic for a different article. Instead, I want to look at a very simple task, in my opinion, the most important ... capturing sales.
Let's look at one common agency requirement: the application. A new customer is interested in a particular policy and have stumbled across the agency's website. They download a 9-16 page PDF, complete the entire application, and email it back to the agency. The agent reviews the application and will usually follow-up with the customer for missing or unclear information, which can take one to several days, but ultimately completes the application. Once completed, an independent broker will use that application to complete the proprietary applications of several insurers. Keep in mind, this is the exact same information, but in separate formats, one for each of their carriers. After a few days and more follow-up questions from the underwriter, the agent will receive quotes from the carriers, which are then forwarded to the customer for purchase. Usually, the agent will use an agency proposal template to consolidate the quotes into something the customer can easily review. From my experience, this can take several hours spread over several days to complete a basic commercial insurance policy.
Let's break the example down: 1. The customer downloads and roughly completes proprietary agency PDF. 2. The agent reviews and further completes the same agency PDF. 3. The (independent) agent then completes an insurer proprietary PDF, and repeats this step for each carrier 4. The agent and the underwriter (and the applicant) fill in more information based on the applicant's original answers 4. The agent receives quotes from each carrier and enters them into a proprietary agency proposal and sends to the customer 5. The customer reviews the proposal and selects the policy they wish to purchase
Programmers will read this and cringe. This simple scenario is the de facto standard for most independent agencies in the U.S. But, why?!?
Agencies exist for the purpose of selling and servicing insurance, and insurance agents are salespeople. Think of high school cliques...there were the very social, the not so very social, and the gradients in-between. The very social grow up and into social careers; i.e. sales. The not so very social (the introverts) grow into musicians, artists and programmers. Of course, there are thousands of exceptions, but I think this is a fairly accurate generalization. Salespeople lack the experience and knowledge to bring programming into everyday tasks, and programmers lack the experience to understand the needs of the everyday salesperson. This tug-of-war has existed since the beginning of computers and will continue well into the future. Big business recognizes this and devotes entire IT departments to this marriage, but the smaller the business, the wider the gap between these two groups becomes. Unfortunately, we are quickly reaching a point where the two must meet, or the small agent will fail.
My business goal has been to create an "agent-less" agency. By making the application process as simple as possible, my customers will not cringe when they see a 9-page PDF to download and complete. In fact, the most recent application has converted to two forms; one for general information and one for exposures. The number of questions you were required to answer depended on your particular exposures, but it was relatively simple. Click-click-submit is my mantra, and I think it works. It is completely automated and works for about 80%+ clients. There are exceptions that require manual review, but for the remainder, it is automatic. With a couple of forms, I can capture the majority of the application directly from the customer. Now that I have captured the data, I can manipulate the data into any form I require. Namely; a proprietary application format for each of my downstream insurers. So, with one form that my customer completes, my system transposes this into a different application for each of my insurers automatically.
Yes, it seems obvious, especially for the technical reader. But, if it is so obvious, why are so few agencies providing the customer-friendly, agency-efficient automation? This is where we will start to see a dividing line between yesterday's agency and tomorrow's. Younger customers require mobile friendly applications and will not complete 16-page PDFs or call for quotes. Agencies that operate using that model are appealing to the older customer base, but these are already starting to fade out. If these agencies don't start adopting the tools and technology to attract the younger customer base, they too will begin to fade out.
For those agencies that are struggling with sales, perhaps it isn't the sales or the product, but the approach. There is a common saying: "Go where your customers are.", but these agencies are relying on phone book and other ad mediums to generate new business, which is NOT where tomorrow's customers are located. the point of this article isn't to solve these problems, but to help agencies begin to think of insurance and insurance customers in a new way.
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