Don’t compete … differentiate

December 14, 2023

It is an understatement to say that the world is changing. The way we communicate with others, purchase goods and services, engage in entertainment, have all changed at an unprecedented rate leaving many businesses trying to comprehend what they will need to maintain and grow their client base.

One of my favorite quotes is from Author Larry Wilson who states that, “We are faced, today, with the option of either learning the rules, roles and distribution of rewards in this new game, or continuing to practice our present skills and become the best at a game that is no longer being played.” The bottom line: The consumer culture of how and with whom they want to do business is changing at a speed that most businesses are not prepared to handle and are in danger of becoming the “best at a game no longer being played.” Then, how can you compete with multibillion-dollar organizations that spend millions of dollars advertising their products across print, television, radio and social-media platforms? The answer: Differentiate.

One of my first consulting contracts was with a company that asked me to work with its countrywide underwriting offices. Before going to each of the offices, I asked the company not to tell its employees that I had any experience in the insurance industry and simply let them assume I was a generic consultant who wasn’t familiar with insurance. After pointing out that they were a part of an independent agency environment in which agents get to choose with whom they do business, I asked them why an agent should choose to work with them. As I expected, each office responded with the same answers (e.g., good commissions, service centers and variety of products). I wrote these answers on a flip chart. Before flipping over to the next page, I asked, “Do you have the highest commissions?” No. “Are you the only company with service centers?” No. “Does any other company offer those same products?” Yes. After each answer, I crossed off the individual elements, tore the sheet off the pad, crumped it in a ball and tossed it into the middle of the room and asked, “Why you?” again.

In an industry that nearly has convinced itself that insurance is little more than a commoditized product that, in order to compete, you need to have the cheapest annual premium, there still are ways to differentiate your business.

Value vs. price

The annual premium a client pays reflects the risk and who assumes what. This equation is driven by the coverage limit and the amount of the loss the client is willing to assume (i.e., the deductible). Increase deductibles and lower limits and you have a lower premium. You know this, but do your clients? I used to ask prospective clients what they expected from the policy if they had to file a claim. Most people said they’d like full coverage, so you need to educate your clients on the way their policies actually will pay out during claims. Your clients should realize that saving 15 percent now could end up costing tens of thousands of dollars if their limits and deductibles have been adjusted to save them money.

High tech, high touch

As an early adopter of technology, I understand the value of technology in the service of clients—as an addition to service, not a replacement. During a conversation with a client who started his agency almost 40 years ago, he shared how he missed the annual event of hand delivering the clients’ renewals. When I asked what he missed, he said that it was the chance to look them in the eye and thank them for their business. I picked up my smartphone, turned on the HD video function, and asked him to articulate what he wanted to share with me if I was a renewing client. He looked directly at me and shared how much he appreciated my trust in his family business all these years, knowing that I had other choices when it came to my insurance renewal, and just wanted to say thank you for renewing with him. I ended the video and then shared with him how that could be uploaded to his agency’s YouTube channel and a hyperlink could be placed in a “thank you for renewing” email template in his agency management system and sent to clients who renewed their policies. His clients would open the email, click on the link from the owner and see his face, looking them in the eye and thanking them for their business. High tech, high touch.

This same principle can be applied to Happy Birthday messages (your AMS has a date-of-birth field) as well as sending handwritten thank-you notes to new clients to your agency. Fewer people are sending out these types of messages. Be careful not to fall into the generation gap—believing that Gen X, Y or Z would rather get a text. As a panelist at a recent tech conference, I was asked, “What should businesses do to improve their client’s experience?” One panelist looked at me incredulously when I recommended sending clients handwritten notes based on the interaction (e.g., congratulations, get well soon, happy birthday or thank you for your new business). Then I asked the mostly Gen X through Z audience to raise their hands if they had ever received a personalized note acknowledging them for their business. When only a few hands were raised, the other panelist felt justified in never sending such a note. Then, I asked the audience to raise their hand if they had received a personalized note of appreciation and if that would influence their decision to do future business with them and/or refer their friends. Nearly every hand was raised.

You are the difference

When the University of Connecticut Women’s basketball team started gaining national prominence in the early 2000s, the head coach, Geno Auriemma, was asked what made them different. He responded, “We have Diana [Taurasi] and they don’t.” When it comes to our businesses, it cannot be overstated that we are the difference to your clients and that people do business with the people who work there. Remember, “Why you?” needs to be answered on both an individual as well as corporate level.

What is your agency’s culture when it comes to a differentiated customer experience? It can be as simple as how phone calls are answered in your office and whether there is a live person on the line or if it becomes an exercise of entering policy numbers or searching for extensions on a company directory. In an agency that I managed, our receptionist worked in the agency as a teenager and then was a young professional concierge at a high-end hotel. The hotel staff trained her to come out from behind the desk to greet the guest rather than talk over an inanimate object. This customer service, muscle memory carried over into her role in the agency and, over time, you could tangibly discern the difference of interaction from clients who came into the agency for service.

Don’t compete … differentiate

While many view our product as a commodity, our process should differentiate us from our competition. In an environment filled with hyperactive activity for interaction with clients, we shouldn’t just focus on being faster or doing more than others in our marketplace, but we should strive to offer an authentic alternative in an increasingly artificial environment.

This article originally appeared in the July/August 2019 issue of PIA Magazine.

John Fear, CPIA, CISR
Premier Business Solutions

John Fear, CPIA, CISR, has worked in the insurance industry for over 30 years and has conducted hundreds of workshops and sales training sessions. Those experiences have given him the knowledge and insight into real-life solutions that improve sales and maximize operational efficiencies for agencies.

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