Who says we need to be saved?
The consumer. That’s who.
GEICO’s growth didn’t happen in a vacuum. Those consumers used to be ours.
And let’s not pretend that small commercial lines is some impenetrable safe harbor. Not if 84% of them are willing to toss us off the boat for a few bucks.
Just a few years ago, the infamous “McKinsey report,” created a widespread kerfuffle when they said, "There are signs now, however, that the economics of the traditional agent model are beginning to unravel." The industry reacted strongly against it, defending itself to itself, poking minor holes in their arguments. But arguments don’t win the war. Innovation does. And, ultimately, delighting the customer. (And, let’s face it. McKinsey’s report was based on pure empirical numbers. Argue all you want with math. It doesn’t listen. We win this argument by winning customers.)
I had the occasion the other day to present to a group of Canada’s largest independent brokers a few days ago. Rick Bauman’s excellent Brokers Performance Group. Over dinner, there was a lot of discussion about the need for associations to keep competitors out of the marketplace. And more conversation about “unfaithful” carriers creating direct channels to the consumer.
Challenges in the marketplace can be dispiriting to an industry that’s been losing an average of a point of market share per year for 20 years.
But isn’t the real anxiety that when consumers have more choices, they won’t choose us?
Several months ago, I was asked by my good friend, Ron Berg, Executive Director of The Agents Council for Technology to deliver a keynote to the industry’s technology leaders. He introduced me as a “technology strategist.” He wanted me to analyze the trends that are impacting the independent channel and forecast their affect on the industry. After my presentation, my friend, social media strategist, Mike Wise, told me my presentation was “gutsy.”
I’m old enough that I don’t have to sugar coat the message. I’ve been around long enough I don’t have to prove I’m a member of the team by telling people what they want to hear. I outlined seven ways the industry is vulnerable.
But at the core, I said, “You’ve broken the fundamental promise. You said this was a relationship business, and it’s not. Not anymore. There’s not a single piece of evidence, no research report, no statistical analysis that says that the consumer is feeling the cover and protection of relationship anymore.”
Sure, your top 10% - the ones you talk to or visit four times a year - they feel relationship. And, perhaps because you’re “relating” all day long, it feels like you’re in a relationship business. But the rest of your clients? How many would you recognize at the grocery store? How many would recognize you? How many of them are you rock-solid confident won’t leave you for price or convenience?
Are you their Apple? Their Starbucks? Their Uber? Until they’re raving about you, the loyalty between the retail agency and the customer base is thin enough to tear.
Years ago, I earned the moniker, The Bad Boy of The Insurance Industry. I was young. Saw a mature industry that I felt needed a kick in the rear. Saw an industry that relied on old, expensive ways to get customers. Saw an industry that had few established processes for optimizing and retaining customers. (Other than empty platitudes, like, “We take really good care of our people,” or, “I have a great staff.” When everyone is saying that, it’s not a strategy. When everyone is saying that, and we’re still losing market share, it’s not a viable strategy.)
I was startled when my long time client, CEO of one of the fastest growing niche agencies in North America, Brian Barrick, wrote that, “Michael Jans isn’t just the best marketer in the industry. He’s our best philosopher. Pay attention to what he’s saying.”
Philosopher? I, too, thought I was “the marketing guy.” But, over time, you discover that great marketing requires deep understanding. Marketing is not just technique. It’s not just tricks. The best marketing penetrates the fundamental questions. Like, where is the greatest value? What is the long term win? How can we earn unbreakable bonds with the customer?
Technique is good. It just needs to be built on the firmest possible foundation. And that foundation - as I intend to show in this series - is in the relationship.
What Brian said about me high praise. He’s probably wrong. You can safely bet good money there are better “philosophers” in this industry. But I have had my eyeballs on the industry for a good 25 years. And - maybe just as important - I love this industry. 25 years ago, people told me I would. It seemed a good place to work. It seemed a good place to run a business. And, as the song says, “I fooled around and fell in love.”
It’s that love that, I think, has earned me a special right. The right to criticize. I am critical because:
- What you do as agents and brokers really matters. If you promise to protect someone, the stakes are high. If they suffer a tragedy, and you’ve got them properly protected, you’re a hero. You did a service to a family or business or organization or individual. It’s a “taken-for-granted” miracle. Boom: we’ll build you a new house. Boom: we’ll pay for your daughter’s surgery. Boom: we’ll cover that frivolous lawsuit. You could wear a cape and justify it. But, conversely, when you promise to protect someone and they suffer a tragedy (bad thing #1) and then they discover they have a gap in their insurance (bad thing #2), well, someone got hurt. And, the industry messed up.
- We can do better. We have a unique value prop that other channels don’t have. We have “real people in real places.” The direct channel doesn’t pretend to have that. They have - smart, carefully crafted, branded - cartoons and characters. Real people permits real relationships. And consumers - members of our wonderful tribal species - care about real relationships. But - again, as I will demonstrate in this series - for two critical reasons, they’re not “feelin’ it.”
Before I wind up, let me be clear. I’m bullish on the independent channel. There will be a “whole lotta shakin’ goin’ on.” Some will make it. Some will not. Forrester may be right. 25% of agencies might be swallowed up.
But there is a very clear path to success for the independent channel. And that path - the lonesome valley - must be walked alone. Each agency or brokerage has to achieve the understanding that the old model worked yesterday. A new model is needed today.
The consumer has changed. We must change at least that fast.
If you’re serious about growth, here’s a sneak peak of what I’m going to cover in this series, Mending The Broken Promise: Making Insurance A Relationship Business Again:
- Why tactic and technique without strategy is an expensive waste of money, time and talent. (Strategy gives you focus on the one or two critical elements that produces a cavalcade of benefits. Without it, you have no clear direction.)
- Where the surprising disruption is coming from - and how that will change the way you do business. (And what we need to do to prepare.)
- Michael Porter’s Five Forces: The State of The Industry and analyzing the forces that can drive you to the top.
- SWOT Analysis: What to avoid. What to exploit. Where the money is in the insurance industry.
- The Leaky Bucket Syndrome: How agencies and brokerages waste money get new clients (it’s the single most expensive part of the marketing sequence) - and waste tons of money by not managing the customer’s journey. (Ideally, they go from “I want a quote” to Raving Fan - fully protected, loyal, referring friends and colleagues, buying more insurance and staying with you forever.)
- Why never to sell on price. (Why you don’t have to. Why it’s bad for business. And the single best way to overcome this all-too-common trap.)
- Discovering the what your customers really want. (They rarely tell you.) And, the beautiful economics of aligning your business with their secret needs.)
- Why copying strategy (like, “GEICO sells on price, so we need to sell on price”) is dangerous, demoralizing and damaging to your bottom line.
- Tapping into the tribal need for relationship: why doing the “right thing” is also the most profitable business strategy.
- How to get an 80% closing ratio. (And why this prospect group is the best one you could ever get.)
- How to communicate with your clients (make relationship real!) in the modern era. (Hint: they want relationship…just not like they did in the ’90s!)
- 5 steps to building trust with your marketplace.
- 6 qualities of the insurance pro that consumers want a relationship with.
- How to answer the nagging questions about how often to communicate with your clients. (Short answer: if it doesn’t add value: never.)
- The Heart-Wallet Client Index: understanding the direct line relationship between giving value to your customers (heart) and earning value from your customers (wallet).
If organic growth gets your juices going, I’d love to have you participate in this discussion with me. Agree or disagree with my premise, I’m going to lay my heart and soul on the table to give this industry some of the love back that it’s been giving me.
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If you have read this far, you're a serious student. (I know this is not tweet.) You can download my State of the Industry report here.