Want more revenue? More market share? Shrink the available pie

First draft, part 1 of about 12

**Written for my counterparts who consider themselves Independent Agents and Insurance Brokers***

So I regularly read a publication called Rough Notes.  Kind of interesting, some value each month.  They do a pretty neat thing each month, they publish a brief article from a much older issue.  The one that caught my attention was titled “Producing New Business to Balance Cancellations” It’s a topic that I have been working on for over three years.  Fascinating one to me and actually I have my own soluton.  More on that later.

So this piece from 1965 is 100%  relevant today.  At least as a topic.  The article is heavy on quotas and sales meetings but the reality is the underlying theme is correct.  What if this was not a problem?  I tend to read a lot.  Much of my reading is geared towards business, marketing, self development, etc.  Now where it gets interesting to me is this, when I read on insurance I tend to continually run across articles on how to use social media.  How it will help them grow business, etc.  Much of it is very timely, very solid advice.  Keep up on Facebook, Twitter, Blogs, etc.  Produce content, get likes, etc.  I’ve seen some really good stuff on Facebook Contests, etc.  All, to some extent, relevant.

BUT why is all the focus on how to “compete” with the direct writers?  WHO CARES?  The only person to compete with is your agency.  I’ve written this before and heard some amazing podcasts on it, direct writers and call centers CANNOT compete with a well run agency.

WELL RUN; That means keeping your expeneses in tact.  That means taking care of your agency employees so people actually want to work with you long term.  That means getting into H2H business not B2C not B2B. *  Yes, saw it on twitter and really, really like it;

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So what’s that mean?  Well you can look it up and see that there are about 121 million households in the U.S.A.  To keep things round, lets assume that 100  million have at least one auto or residency insurance policy.  Now, in insurance many agencies have some focus on retention rates.  What they actually are versus what you are told could be misleading.  This article was pretty good.  So in the article it said 84% seems to be average.  So lets use that number in our example.  If agencies are keeping 84% of customers that means there are 16 million households in play every year.  WHY?  I have no idea.  But a big part of the problem is in focusing on getting new business.  Ask yourself this question; how much money are you spending on keeping your current customers and how much are you spending on getting new customers?  Seriously, dive into it.  How much does it cost to acquire a customer?  How long does it take you to turn a profit on a customer?  How many referrals are you gettting each month versus your response rate on your last marketing campaign?

So how about instead of  eating more of someone else’s pie, instead let’s focus on keeping more of your slices.  Besides, maybe that flavor is not good for you.  A couple of guesses, **I have no idea how to substantiate these** Of those 16 million that seem to be in play, my guess is half do not need to be.  Imagine that, the independent agent channel could hold onto 8 million households.  Now in my world that is at an average of about $2500 per household.  That means $20,000,000,000  in premium dollars doesn’t move.  At a conservative commission rate of 12% that means $2,400,000,000  stays in the hands of independent agents.  Oh and did I mention you’ll spend less than $20 a household to keep them?  Kind of scary.

Yes, it is possible.

Do YOU trust your agent?

Do you trust your agent enough to get a second opinion?

How about asking your agent what coverage they have and taking a look at their declarations pages?

Sounds like fun to me, let’s see if your agent has full no-fault coverage.  Let’s see if they have matching liability and supplemental coverage.  Let me know how it turns out.

UPDATE 5/14/2015

It has been over four years since this first post.  Sadly, the majority of times I review a policy I end up saying;

I’m not saying it’s bad. I’m just saying I wouldn’t sign my name to it.”

The selfish truth is, on the surface at least, this is good for business.  Makes the sales part of my day much easier;

Yes, I would like to give you more coverage and charge you less.  Is this ok with you? “

If you happen to be an agent, think of it this way, if the car you are about to insure where to hit your car with your family in it, would they have enough cocerage?  Since you’ll never actually know, isn’t it a good idea to not simply defer to what the previosu agent did?

If instead you are a consumer, I do not expect you to know the “ins and outs” of an insurance plan.  It is really like any other purchase, if it doesn’t feel right it probably isn’t.


Appreciate your agent…if

Yes I believe the agent, me, works for you, the customer.  This is no different than any time you are spending money on a product or service.  This relationship tends to go better if you appreciate the person providing the product or service.  How do you do this?

UPDATE 5/19/2015

How do you “appreciate”‘ the person you are paying for a service?

  1. Give them a chance to work for you.
  2. Rather than carrying over the poor previous experience you may have had give your potential new agent the chance to shine without thinking he or she is as bad as the last one.
  3. Ask questions without questioning.  You should ask lots of questions and the agent should have lots of answers.  BUT, at some point you need to trust the person you hire.
  4. You pay them.  As they saying goes, ” A deal is a deal…”
  5. Life happens and buying  insurance is no acception.  Remember, we are all, first and foremost, human.

Sure we could get into buying gifts, sending referrals, etc.  But these five are a great start.


Just some thoughts.