Stoke Sales by Restructuring Your Traditional Departments

Growing your agency means thinking outside of the walls. There is no compelling reason to divide a modern insurance office into personal, commercial and life departments anymore. These ancient walls were built years ago to organize your staff by the type of policies serviced. But as our industry and communication methodologies have changed, so has the need for these once vital demarcations. In today’s insurance office, they can cause negative side effects like prioritizing service over sales, and restricting interagency contact. There are better organizational options for you. This month’s column explores just one of them.

It’s not uncommon for personal, commercial, and life (PCL) staffers to dislike each other. This malevolence can create a dangerous “us versus them” mentality that makes cooperation between PCL units almost impossible even in the smallest of organizations. The price is more than a few hurt feelings; its impact can be seen throughout your P&L statement. In most offices, this interdepartmental “prejudice” extends far beyond the individuals involved. Its core is the organizational chart. So, simply changing the worst offenders isn’t enough. You also have to adjust the way that your agency is structured.

As with most prejudices, the root of such interoffice friction lies with too many perceived differences and not enough recognizable similarities. In some ways this is understandable, as the PCL walls have seemingly stood forever. However, in the ’50s and ’60s (and earlier) additional sub-walls existed. For example, it took agents years to combine auto-only CSRs and homeowners-only CSRs into one harmonious personal lines department. Today, with the competition and pressure you face, you have to take a radical step to eliminate the final walls of the old era. Abolish your existing personal, commercial and life departments and replace them with two units that are separated by small painted lines instead of massive ramparts. The resulting new divisions should be based on similarities of function, not the old PCL distinctions. A great example is how you handle claims.

Chances are if you have a dedicated claims department it functions much like a unisex hair salon; it’s open to everybody. That’s because in most offices where CSRs don’t handle claims, personal and commercial clients can call the exact same number and speak to the exact same agency personnel whenever they suffer a loss (companies permitting). The reason behind this is simple: a claim is a claim regardless if the occurrence involved an individual or a business. And this logic isn’t limited to claims. It’s also been applied to other areas of your office. Accounting and IT personnel also reach broadly across policy lines. These were easy decisions for you to make because it’s unreasonably expensive to provide separate administrative staffs for your personal, commercial and life departments. Now it’s time extend this thinking beyond the back office to the front desks. Sales, marketing and service still follow policy lines. And when you are set up this way, you’re unnecessarily restricting your income.

Your agency’s reason for being is not to provide quality client service. That’s a welcome by-product. Your No. 1 function is to sell protection. And the failure of some agencies to recognize their role in the insurance social mechanism is one reason why some carriers have modified their distribution network. Direct sellers, banks, sponsored groups and others now compete with you head-to-head. And the barriers between direct writer, direct marketer and the agency system are collapsing fast. Consider that Allstate sells personal insurance through independent agents (as Encompass) while The Hartford signed an agreement to sell auto and home policies direct to Sears customers in 2000. Then, there’s that little thing called the Internet to take into account. For you to survive in this upside down world, it’s essential to reorganize your office around marketing and nothing else.

“Guru” Peter Drucker once defined marketing as “the whole firm, taken from the customer’s point of view.” Thus for our purposes, marketing is marketing, regardless if it involves P, C or L. And this simple truth can free your agency. Use it to harness your divided resources for a single purpose: to make new sales. Instead of maintaining competitive PCL divisions, establish cooperative direct response (DR) and face-to-face marketing (F2F) units that sell and service small and large accounts respectively. DR uses the Internet, the mails and the phone to generate leads, make new sales, serve client needs, and to cross-sell across policy lines. F2F targets and serves larger accounts that demand personal attention. These include high-value HOs, medium-to-large sized businesses, and families requiring detailed estate planning. DR and F2F teams, although working on different-sized accounts, won’t suffer from the PCL prejudice. That’s because there are no walls here, only faint lines that can easily and openly be crossed.

Populate the DR team with CSRs and producers from your old personal, small commercial and term life units. Charge them with the responsibility of building revenues for every small account in the office. Give them the time, education and resources to hone their overall marketing skills to better communicate, prospect and sell. Encourage them to use personalized direct mail as well as the Internet. Mail is still the No. 1 marketing method and has a robust future. E-mail, faxing and telemarketing are all or soon will be limited in scope by current and future regulatory restrictions. Furthermore, when a unified team handles all of an insured’s needs across policy lines, it can build a comprehensive history of that account. That data can then be used in future one to one marketing [see Pepper and Rogers’ groundbreaking 1993 book, The One to One Future]. Used effectively, personalized communications result in a dramatic increase in sales and a much fatter bottom line. Meanwhile, the F2F squad manages every insured and prospect that’s too big, or potentially too big, for the DR unit. It does its work face-to-face because these accounts can’t be sold or properly serviced without someone physically being there. For example, F2F might sell and service the policies of a large manufacturer, the personal lines of its executives (including financial planning), and handle the group insurance for its employees. And while there are no PCL walls here, producers and CSRs within both teams will naturally have their own areas of expertise.

Reorganize your office based on how best to market. Topple the walls. The changes to your office that we suggest require more than a few modified job titles. They include a new office floor plan that might involve the literal tearing down of partitions and the relocation of personnel. Move your former personal and commercial liners together, since DR and F2F team building is virtually impossible without true physical proximity and camaraderie.

The hot concept of the ’90s was total quality management (TQM). Now it’s customer relationship management. CRM is generally defined as a means of managing all aspects of a firm’s interaction with its clients. This fits easily within Drucker’s definition of marketing and well within the reorganization ideas presented here. So, it’s not brand new but it has gained serious attention. Today’s high-end agency management systems allow insureds password access to their accounts online. Soon it’ll be standard on all systems. This variation is sometimes termed eCRM and it is gaining momentum. A growing number of insurers maintain online customer service centers, where insureds can view their billing and policy status, file a claim, etc. Agencies can also add similar functionality to their own Web site with the help of a vendor. But before you can take advantage of any of this, you have to tear down and restructure.

The changes briefly outlined in this column suggest serious alteration to the status quo. Actions such as these are always a gamble. However, they should be weighed against the cost of doing nothing, even when you are growing. An agency’s true sales success can be easily distorted by hard market excesses, registering contingencies as ordinary income, buying or brokering movable business, and much more. Pure marketing and sales is every agency’s prime mission. Removing current departmental walls is one possible path towards that goal. When the “surgery” is successful, your rewards can include greater office harmony, economies of scale, better retention, and most importantly, improved odds for your agency’s survival.

Alan Shulman is publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the 1001 Agency Ideas book series and other popular P/C sales resources. He may be reached at (800) 724-1435 or by e-mail at: shulman@agencyideas.com. His Web site is www.agencyideas.com.