Agency Success Lessons Learned from Computer Manufacturers

The biggest builders of personal computers (PC) and typical property/casualty (P/C) agencies are alike in many ways. These similarities extend far beyond the simple truth that both sell something of value to the general public. Virtually every hardware manufacturer must overcome many of the same day-to-day survival issues that impact insurance agencies and carriers alike.

Primary among them is the fact that in the eyes of most people, both industries offer functionally equivalent products. An auto policy is an auto policy and a PC from Dell does fundamentally the same thing as one from Gateway, HP or IBM. Other similarities include advertising, marketing, targets, customer service, and guiding prospects towards an intelligent buying decision.

Computer makers, just like P/C professionals, deal with distinct personal, small business, commercial, municipal and other market segments. They use slightly different names for them, such as consumer, home office, corporate and governmental, but both cover the same basic territory. Different services and computer configurations are packaged and marketed to each sector in a fashion that’s eerily similar to our industry.

Also like agencies and insurers, certain manufacturers focus in on specific segments and sub-segments of the PC-buying universe. Some swim profitably in the low-end, such as eMachines (recently acquired by Gateway). Others float on the high-end, like Apple. Yet, as in the insurance business, most are generalists like Dell, Gateway and HP, selling to numerous sectors simultaneously, using multiple channels of distribution.

For PC manufacturers, these sales channels include electronic and print direct marketing, plus in-house and outside sales reps. Dell’s Web site serves as an excellent example. It generates a massive percentage of the firm’s overall sales, while simultaneously providing knowledge-based customer support.

The technology exists for P/C sellers to do much of the same. Real-time premium estimates are commonly available as is 24/7 online customer service. This type of e-support includes payment and policy information inquiries, change requests, certificate and ID card issuance and more. At the very least, agencies need to incorporate some elements of this interactivity within their Web site. Everything doesn’t have to be done all at once, but it’s definitely the direction in which your online presence must head.

Furthermore, every insurance policy ever printed promises indemnification in the event of a covered loss, subject to a variety of stated conditions. It’s the pricing, configuration (forms, endorsements, etc.), image, and level of service that distinguishes one seller’s policy from another. Ditto with the PC makers. That’s why it’s enlightening to consider how these manufacturers use marketing, and other means, to differentiate themselves from other box builders.

This article addresses seven success lessons that agents and others can learn from computer manufacturers. The industry-to-industry commonalities are interesting, guiding and relevant.

Dell Computer

Lesson 1: Advertising
Dell’s print advertising has a consistent look and feel in every publication, year after year. Prospects can easily recognize Dell ads by their trademark blue background and variety of products and configurations. Insurance agency advertising should similarly have a consistent look in terms of color, font and basic format. When your agency has one or more trademark colors and typefaces, use them in your ads, on your Web site and elsewhere. Help prospects to spot your commercial messages and other communications before they actually read them.

Lesson 2: Marketing reach

Dell grew to its massive size by selling made-to-order PCs direct, first out of a dorm room at the University of Texas, and later by Web and phone to buyers across the globe. Agencies can also enjoy dramatic growth by expanding their sales reach beyond the comfort and confines of their local marketing territory. Take full advantage of the statewide reach of agents’ and brokers’ licenses. Obtain a toll-free number and advertise in the Yellow Pages of other cities and via inserts in their newspapers, particularly the smaller weeklies.

As for face-to-face sales to out-of-town prospects, there are myriad ways to accomplish this without the overhead of maintaining a distant office. Instead, establish a short-term physical presence by setting up temporary personal insurance kiosks at distant malls and exhibiting at targeted commercial trade shows around the state. Everyone at the show and in the mall is a prospect, even your fellow sellers.

Lesson 3: New products
Dell regularly widens its product line but has a low tolerance for red ink. Management expects most new products to be profitable within a year or two. Your agency should similarly experiment by addressing new markets, selling additional lines, expanding life sales and group benefits, and hiring new producers. Follow the resulting numbers carefully and set realistic bailout levels if you determine that acceptable profitability cannot be realized.

eMachines

Lesson 4: Quality control
This once small firm did the impossible: making high-quality low-cost consumer PCs at a profit. The company accomplished this by giving customer support (the unit that handles complaints) a voice in product design and control over quality assurance. The results were happier customers, the need to replace only 1 percent of PCs, and a fatter bottom line. The six-year old firm was so successful that it was bought by Gateway in 2004 for $242 million, yet still remains a stand-alone brand.

The lesson for agencies is to give CSRs greater training, motivation, and influence in the decisions and actions that effect routine operations, workflow and quality control. Inaccurate quotes, overlooked coverages, and overworked reps can seriously impact an agency’s retention. Emulate eMachine’s above average reliability and make the correction of these and other service issues a continuous priority. If they can do it with PCs that sell for as little as $400, you can do it in personal and small commercial lines, considering that you don’t actually have to manufacture anything.

Apple Computer

Lesson 5: Creativity
Apple is a relatively small but influential firm that’s known for innovative engineering. It continuously develops elegant and powerful computers that are well suited for its high-end markets: designers and publishers. In recent years, this excellence has set the standard in cool. Apple’s profitable iPod and companion iTunes software rule the digital music world.

Small doesn’t have to mean insignificant. Any agency can become a true player in any niche market where underwriting, policy and industry knowledge overshadows the import of agency size. There’s serious reward potential in becoming an innovator, especially in commodity-like industries such as consumer electronics and insurance.

IBM

Lesson 6: Focus
IBM has repositioned itself to make the business client its single-minded focus. Therefore, Big Blue has agreed to sell its Personal Computing Division to Lenovo Group, a Chinese computer maker. The result is the freedom for IBM to concentrate all of its many resources on the enterprise. Another motivation was that IBM reported that the division lost nearly a billion dollars over the three and half year period ending June 30, 2004.

The lesson is that if your agency is no longer interested in selling to a long-entrenched niche market, or is bleeding money on a particular line of business, consider selling those accounts–just those accounts–to an interested competitor. Many agencies shy away from selling any account, considering it an admission of failure. It’s not. It’s smart business to sell off operations that no longer fit into your long-term plans, regardless of how long they’ve existed. Instead, focus your resources on insureds and prospects that align with your strategy and have the potential to result in the healthiest of long-term profits.

All PC Manufacturers

Lesson 7: Preconfigured choices
The base computer and option packages advertised by most PC makers serve as helpful starting points for potential buyers. Without them, prospects can get lost in an endless maze of parts and configurations.

You too can follow this path of decision assistance. For instance, instead of requiring auto prospects to make specific decisions on each available limit, for each potential coverage, begin the decision-making process by offering them prepackaged options [examples, below], subject to any applicable regulatory and E&O restrictions. Focusing a prospect’s attention on just three basic packages, allows you to develop a trio of sales brochures and quote sheets. CSRs can then use these tools as starting points to help people select what’s right for them.

Caution: Don’t be too restrictive; always allow for custom flexibility within each of the options.

Prepackaged options for auto insurance might include the:

-Essential.The lowest reasonable auto liability limits (and other mandatory coverages) that an agency feels comfortable providing.

-Typical. The average liability and physical damage protection carried by a typical agency insured. This is the package that most prospects will select.

-Superior.Higher physical damage deductibles and enough underlying auto liability to qualify for an umbrella policy–plus a $1 million dollar (or higher) umbrella policy.

There is much that the industry, and individual agencies, can learn from the public practices of computer companies. So the next time you sit in front of your PC, consider what influenced you to buy from that manufacturer and whether you are willing to buy from them again when it’s time to renew (upgrade to a newer model). When the answer is yes, it’s clear that they’re doing something right, and just maybe your operation can learn from their success.

Alan Shulman, CPCU, is the 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: shul-
man@agencyideas.com. His Web site is www.agencyideas.com.