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January 6, 2017

Insurance is Not a Commodity? Hmmm

Summary:

We service professionals all too often tend to define our business model in terms of products and services offered rather than clients served.

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I was scanning the Insurance Thought Leadership site, and saw the Most Popular Article today is Insurance is not a commodity, by Chet Gladkowski. Number 10 on this same list was Lemonade – Insurance is changed forever, by Rick Huckstep. Both articles were well written and thought provoking (for us folks in the insurance industry). For the average consumer, I suspect both articles would probably not be read or certainly not rise to the top 10 list of non-industry professionals / consumers. 

I believe the biggest threat to our future as agents and the insurance industry is not technology, generational change, a global economy, AI, innovation, etc. I believe it is, to quote Pogo – “we have found the enemy and he is us!” The Insurance, Financial Services and Risk Industries exist for customers / clients, yet we as the “vendors” or “service professionals” for this industry – all too often think it’s about us. We tend to define our business model in terms of products and services offered versus clients served.

We are self- defined as P&C agents, Life and Financial Service professionals, Risk Managers, Bankers, Consultants, etc. We tend to be “product defined and product driven” versus “client defined and client driven.” What if we became experts first in our clients and their wants and needs and facilitated their buying versus being “sales reps” for the manufacturers – the insurance companies, banks, brokerage firms, etc.

See also: Has Auto Insurance Become a Commodity?  

Here’s reality – as I perceive it – sometimes buyers just need / want a commodity (term life), a product (BOP or group policy) or a service (a self-funder plan or retirement planning). My experience indicates that most consumers “want what they want and they want it now” on their terms and with their definitions. 

Our industry will protect our future when we look more to the marketplace and spend less time looking in the mirror! Below is an article written months ago yet appropriate food for thought in light of the above – are you like Southwest Airlines or a bad gelato store?

What did you do for me today? 

I was flying back from Milwaukee. The bad news is that I had to spend time in airports and airplanes. The good news is that I got out before it got crowded and the best news is that I flew Southwest Airline (SWA). In my opinion, flying can be worse than a root canal. What makes SWA different is they use enthusiasm and fun to “sedate” you from the pain of the flying process (cramped space, bad weather, security checkpoints, etc.).

If you haven’t flown with SWA before – try it you’ll like it. If you have you’ll understand what follows. It’s the simple things – a smiling face, a pilot and attendants who inject humor and song into the mundane process of telling us what we need to know but don’t want to hear. They even give you two small bags of peanuts (instead of one). I know this sounds insignificant until you’ve flown on airlines that don’t sedate you.

When we deplaned in Atlanta I stopped at a Gelato stand in the Concourse. I was reminded of what a root canal without the sedation is like. The “lady” behind the counter came across as a Don Rickles’ type character without his charm. She served me a scoop of Chocolate Chip Gelato (about the size of a golf ball) in a cup the size of a single shot jigger. The Gelato was very good – the service and presentation weren’t. At $5.99 a scoop – I don’t think it’s wrong to expect a smile, kind word, or a thank you.

In the name of full disclosure – I think I presented myself well to the “lady” – I think I was my cute, charming and polite Southern Gentleman self. She may have been having a bad day – which we all do. Nonetheless my experience is determined by what happened to me not what may have been happening in her world that day. I was the customer!

Here’s the parallel to the agency business. I realize, whether you are an airline, Gelato stand, or Agency, customer service is not always easy. You have hundreds (thousands?) of customers that have to buy insurance or use the product they’ve already bought. Some have just had a claim, others an audit, others a loss control inspection and still others merely need to make a change to the policy. Some are nice people, some are nice people having a bad day, and some are not so nice whether their day is good or bad. Like an airport, dealing with the insurance industry is not the most exciting part of anyone’s day. 

See also: Agents: What’s That Spot on Your Face?  

Agents measure themselves against Best Practice Guides. These guides “count” what you did or will do. It measures “things” you do every day. Retention and additional sales of policies and clients – in my opinion – is the more important measure of success or failure. Are your customer’s “coming back for seconds” or will they be like me and “avoid your Gelato stand next time they need something sweet to eat.”

About 35 years ago I wrote a column in national publication about “whether agents sell a product, commodity, or service?” Today I realize that I missed the point – it is not what agent’s sell, it is about what clients “perceive” (feel) they receive from what they buy. It is about the experience created for them in dealing with you and the carrier. Will their memories include a kind or comforting word you offered, the help needed, a smile, song, or a “second bag of peanuts? Will their experience keep them coming back for more, whether that is for a commodity, product, service or a similar experience?

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About the Author

Mike Manes owns Square One Consulting and is on the board for the LSU Healthcare Network. His experience includes insurance agency production, military service, speaking engagements, serving as an instructor of risk and insurance at LSU and his board positions.

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