Keeping Up With the Joneses

“So baby, let’s sell your diamond ring
Buy some boots and faded
jeans and go away
This coat and tie is choking me
In your high society you cry all day
We’ve been so busy keepin’
up with the Jones
Four car garage and we’re
still building on
Maybe it’s time we got back
to the basics of love”

These immortal lyrics from “Luckenbach, Texas,” arguably Waylon Jennings’ most famous song (written by Bobby Gene Emmons and Chips Moman), may be more applicable to insurance agency management than they are to improving a marriage! As these insightful lyrics conclude, material possessions can get in the way of a successful marriage. I’d argue strongly that agency owners collect their own unique material possessions that are supposed to make their agencies more successful but tend to just get in the way of getting the job done. I’d also argue that quite often, their collection is driven by competition with other agency owners.

What do I mean by collecting things to improve agencies? Many agency owners will buy anything a seller says will improve their agencies. They buy advertising and marketing without rhyme or reason. My favorite example currently is Internet advertising. Agencies are spending tens-of-thousands of dollars on Internet marketing, social networking and websites without a clue about what they are doing. They don’t stop and think about the huge errors and omissions (E&O) exposure they are creating by promising services they rarely deliver.

When I asked one agency owner why the agency was advertising that it customizes each customer’s coverages when the agency doesn’t talk to more than half its clients, but for once every five or 10 years, the response was: “It sounds great and we have good intentions.”

Tools well-used do build a great agency, but tools poorly used only do damage.

Sales programs are another example of things that are being collected and costing agencies fortunes. There are a number of sales methodologies that are supposed to turn even the most lackadaisical producer into a star. Many of these wonderfully advertised and marketed systems rarely work, or if they work, it’s due to other forces that have nothing to do with the system.

Others are quite wonderfully designed and work well when used properly. What do I mean by properly? Every sales system I have seen that truly contributes to material success was based on discipline. Of course, no one advertises, “Use this sales system that is completely dependent on your self-discipline,” because no one would buy it. However, I have never seen a system that truly worked that did not rely on a high level of self-discipline.

Another example is information technology (IT). An agency owner recently insisted his agency needed to invest in cloud computing. While cloud computing has much going for it, I can’t imagine it is more important than having producers proactively selling day in and day out.

Other examples include loss control, too many carriers, too many brokers, joining clusters “just to belong to something bigger,” and consulting on ancillary issues. The total annual expense can easily exceed a $100,000 for a relatively small-to-medium size agency. Yet, the return on investment is easily predictable, 0 percent, at best.

Showing Up the Joneses

Why is the poor ROI so easily predictable? Because it is clear from the beginning the agency has neither the intention nor the ability to keep the tools sharp, to learn how to use them well, or to have the producers learn to use them. Countless times I’ve sat with producers who work in agencies that have purchased these expensive tools, but have no clue how to use them. Some don’t even pretend to ever have learned them, and instead are bluntly honest that, in their opinion, a given tool is just the latest toy for the agency owner.

Why do so many agency owners collect these tools with really limited expectations of ever using them? Are these tools just an analogy to “the four car garage and we’re still building on?” Is it analogous to the guy who buys all the tools for a great workshop only to see them sit idle? If there is a history of buying but never using value-added tools, what would compel a person to keep buying them unless it is that they are always trying to always show up the Joneses?

Are you really going to manage your agency by always trying to show up the Joneses? Some will, and that is another agency’s opportunity. I’ll bet many readers can think of just such a competitor.

At first, they seem formidable.Subconsciously they may be collecting all these tools as a kind of fortress, trying to make competitors think these tools protect their accounts so those competitors will instead attack other agencies’ accounts. I know people who look up to the agencies that have collected all the latest toys and believe these agencies have their act together, and that competing against them is a waste of time. In reality most of these agencies have only the ability to buy the tools, not to use them.

Among your competitors again can you think of one that is more likely than the others to have tools they don’t know how to use? These agencies are quite often the most vulnerable, because they have put everything they have into purchasing the tools. It’s their only line of defense, and they have no offense whatsoever.

Best Targets

Whether they have bought these tools to keep up with their peers or as a subconscious defense, these agencies are your best targets. I have known some great mechanics who always had relatively few, but quality, tools. They could take apart and build most anything because so often, the most important tool, the one many vendors want buyers to ignore, is the brain.

Similarly, I have known many phenomenal producers, and few use multiple tools. Most had one high quality tool that they knew how to use well. Often that tool has been a basic coverage checklist they could use to discover pain, to educate, to protect, to sell and even to obtain testimonials. The real masters use tools to enhance their product rather than to look good or as a defense. The real masters have chosen the basics and the love of doing a job well. They’re generally happier and more successful. Everyone has a choice. What road will you follow?

Topics Agencies