The Oregon Agent, Winter 2015 by Blue Water Publishers, LLC

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The Oregon Agent â&#x20AC;˘ Winter 2015

Acquisition Strategy

#17

MARKETING SUPPORT

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WINTER 2015 IIABO Office 5550 SW Macadam Suite 305 Portland, OR 97239 Phone: 503-274-4000 Fax: 503-274-0062 Toll Free: 866-774-4226

IIABO Staff Directory Executive Vice President Jim Perucca jimp@insureoregon.org

Sr. Vice President Marketing & Communications Barb Demings barbd@insureoregon.org Vice President Education & Finance Tyra Dressel tyra@insureoregon.org Asst. Vice President Agency Products & Services Abby Kahl abbyk@insureoregon.org IIABO Lobbyist Roger Beyer roger@rwbeyer.com

INSIDE THIS ISSUE: 6

Letter from the President, Ed Davis

IIABO 2014 - 2015 Leadership

10 Great Agency Websites 14 Different Values for the Same Agency 16 IIABO 2015 MidWinter Education Symposium 18 Nineteen Free Kick-Butt Tools for ELearning 20 Recommending Your Competition 22 What’s In a Name?

For more information on advertising, contact Jim Aitkins Blue Water Publishers 22727 - 161st Avenue SE Monroe, WA 98272 360-805-6474 fax: 360-805-6475 jima@bluewaterpublishers.com The Oregon Agent is the official magazine of the Independent Insurance Agents and Brokers of Oregon and is published four times yearly. IIABO does not necessarily endorse any of the companies advertising in this publication or the views of its writers.

24 The Adversity of a Desperate Market 26 Connecting Agents with Download 28 What Lane Are You In? 30 Resolve Customer Complaints Quickly

THANK YOU ADVERTISERS: Anderson and Murison

Liberty Mutual

BCE Consulting

Mutual of Enumclaw

Burns & Wilcox

Preferred Property Program

Continental Western Group

Quirk & Co.

EMC Insurance

RT Specialty

Grange Inc.

Risk Placement Services

Griffin Underwriting

Ron Rothert Insurance Services

Imperial PFS

The Oregon Agent • Winter 2015

Western National Ins Group

FROM THE PRESIDENT

Ed Davis

s mentioned in the fall edition of the Oregon Agent, strategic planning is moving forward on two fronts. The IIABO wants to determine what the association should look like in the next ten years, and how we can help agents with perpetuation. Working with the Washington Big I, a joint meeting was held in October with executives from Mutual of Enumclaw, Oregon Mutual, Travelers, Safeco and Encompass to discuss the prospects of carriers and association working together to come up with a plan to help agents recruit, screen, hire, train and develop new producers. All parties agreed this was the biggest issue facing the independent agency distribution system! A working group was formed to flesh out ideas, ascertain resources and evaluate a course of action. There is full agreement that a collaborative effort is the best way to make real progress. If you would like to be a part of this endeavor, contact me or Jim The second front of the strategic planning process is to determine what the association needs to change in the future. To ascertain; • What services or products could the association offer that you don’t see now? • What we doing exceptionally well, and what do we need to improve? • How can we improve the content of our communications and what is the best method of delivery?

• •

What legislative or regulatory issues should we address? What else can the IIABO do to serve you more effectively?

This is a big undertaking, but an important step in determining our future. Closer to home, we are looking forward to the MidWinter Education Symposium, March 5-6, 2015 at the Inn at Spanish Head, Lincoln City, Oregon. This is a great way to earn up to 12 hours OR/WA CE, while enjoying an Oregon Coast get-away. Registration includes CE filing, breakfasts, lunches and a hosted reception. A gourmet lunch/cooking demonstration is an option for registered spouses and will be held at the Pacific Coast Culinary Institute. Our instructor this year is David Thompson, CPCU. David began his career in the family insurance agency in Vero Beach, Florida. For the last 17 years he has worked for the Florida Big ”I”, conducting continuing education across the country. The MidWinter is a great way to earn half of your required CE, have some fun with sponsors and exhibitors while enjoying the view from the most spectacular classroom in the state. Contact me if you would like more information or would like to get involved with the IIABO Ed Davis Maps Insurance, Salem (503) 779-1851

Your association staff: Executive VP Sr. Vice President Vice President Asst. Vice President Toll Free Numbers: 6

The Oregon Agent • Winter 2015

Jim Perucca Barb Demings Tyra Dressel Abby Kahl

1-866-77-IIABO or 1-866-774-4226

503-274-0583 503-274-4000 ext. 26 503-274-4000 ext. 31 503-274-4000 ext. 23

jimp@insureoregon.org barbd@insureoregon.org tyra@insureoregon.org abbyk@insureoregon.org

WN-2013FallAd-(IIABWA-(WA)).pdf 1 10/25/2013 8:17:24 AM

CMY

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Winter 2015 â&#x20AC;˘ The Oregon Agent

2014 - 2015 IIABO LEADERSHIP The IIABO Board of Directors is a diverse group of insurance professionals representing the varied interests of agents throughout the State of Oregon.Â We would like you to learn more about these volunteer leaders and the years of experience they bring to the association.

Ed Davis President, IIABO Maps Insurance Services Salem, Oregon - 49 years

Trish Fulwiler President Elect, IIABO President, J.D. Fulwiler & Co. Portland, Oregon - 24 years

TJ Sullivan Legislative Chair, IIABO Huggins Insurance Services Salem, Oregon - 18 years

Keith Blackerby Finance Chair, IIABO Chief Operating Officer, Bisnett Insurance Offices throughout Oregon - 28 years

Mark Atkinson Board Member President, Atkinson Insurance Group Portland, Oregon - 25 years

Steve Fitzwalter Board Member President, Rogers, Fitzwalter & Powell Portland, Oregon - 40 years

The Oregon Agent â&#x20AC;˘ Winter 2015

Kay Hunkapillar First Vice President, IIABO President, Wheatland Ins. Ctr., Inc. Pendleton, Oregon - 46 years

Brian Wilbur National Director, IIABO Owner, Pacific Insurance Partners Forest Grove, Oregon - 21 years

Jim Ginger Board Member President, KPD Insurance, Inc. Springfield, Oregon - 35 years

Gary Githens Board Member Data Breach Specialist Brown & Brown NW Bend/Portland, Oregon - 35 years

Adam Harris Board Member Vice President, LaPorte & Associates, Inc. Portland, Oregon - 18 years

Greg Horner Board Member Commercial Lines Producer, Insurance Partners, LLC Portland, Oregon - 20 years

Joe Hubbard Board Member Managing Partner, The Protectors Insurance Medford, Oregon - 31 years

Marty Kantola Board Member Owner, Chet Hill Insurance Portland, Oregon - 30 years

Debbie Krambeal Board Member President, CAL/OR Insurance Specialists, Inc. Brookings, Oregon - 32 years

Matthew Pidcock Board Member Co-Owner, Valley Insurance LaGrande, Oregon - 17 years

Brett Slater Board Member Chief Operating Officer, Slater & Assoc. Insurance, Inc. Tualatin, Oregon - 26 years

Steve Smelley Board Member Chief Operations Officer, PayneWest Insurance Beaverton, Oregon - 25 years

John Timm Board Member President, Timmco Insurance, Inc. Portland, Oregon - 39 years

Insurance carriers and service providers do not serve on the IIABO board of directors, but support the association as Associate Members, Sponsors and Exhibitors. If you want to learn more about the IIABO, or if you would like to get involved, please contact any of these individuals. If you are not a member, please email Jim Perucca, jimp@ insureoregon.org for information on membership.

Winter 2015 • The Oregon Agent

Great Agency WEBSITES Marty Agather, CPCU, ARM

ne of the most common questions independent insurance agencies ask is “What makes a great agency website?” This question comes in various flavors. Sometimes, it focuses on a single facet of the site itself such as design. At other times, it is more general in nature such as “making my website perform better.” A 2014 report, Beyond Referrals, provides sobering data about the importance of websites. The average buyer reviewed more than three different sources to ‘”check out” a new provider of professional services. Reviewing the provider’s website was the primary method that buyers researched, with 81 percent of respondents using a website review as a way to determine the quality of the service provider. Although a discussion of insurance agency websites may be very broad, a great agency website does a few things very well. A great agency website has these characteristics: • Is professional in design • Generates visitors to the site • Gets clients and prospects to act If your website isn’t doing all three of these well, then you should have a to-do item of “review and improve our website” in your 2014 marketing plan. Great Websites Exhibit Professionalism Eighty plus percent of your prospects are reviewing your agency web site as part of their due diligence. Does your web site show your agency in the best possible light? If you were going to have your neighbors and professional acquaintances over for a holiday gathering, wouldn’t you want your home to 10

The Oregon Agent • Winter 2015

be clean, well decorated and welcoming? A professional website has a number of attributes: • Appealing visual design • Relevant content for the target audience • Lack of errors • Evidence of honesty and integrity • Prominently displays agency contact information • Reflects your agency’s brand and the differentiators that make your agency unique Reasonable people can disagree on what denotes style and taste. That is why some prefer Victorian, and others like Midcentury Modern. Thus, not all great websites need to look alike, but they should share some common traits. The site should appear up-to-date. Declutter your pages. Use images, preferably unique; not the stock photos that are on every other site. Your content should be original and focused on your target audience. If you have one or more specialties, consider developing a unique page on your website for each. A professional site is error-free. Edit your content; check the links. Make sure that visitors can contact you. If you don’t have contact information on every page, make sure the “Contact” link is obvious on each page. To demonstrate your integrity and trustworthiness, show your association memberships and accreditations on your home page. One of the most effective ways to gain consumers’ trust is to showcase testimonials from your clients. Online shoppers are looking for validation of their choice. Testimonials of how your agency helped other clients provide that validation.

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Finally, your agency’s brand and brand promise should be reflected in your website. If you promise excellent service, do you have a self-service capability available and is it easily found? Do you have “click to chat” available for clients to use for quick questions? Great Websites Attract Visitors The only way your website has any value to your clients and prospects is if they see it. The number one challenge for too many independent insurance agencies is that potential visitors cannot find their website. Therefore the number of visitors per month is only a few dozen. Analysis of many insurance agency websites reveals that the only search term that the website does well for is the name of the agency, which means that the only way buyers will find them is by using the agency name. Think about this in the context of that old-school favorite, the Yellow Pages print directory. It is the same as the Smith Agency placing its name in the alphabetical listing but not in the “Insurance Agency” section of the book. Recent comScore data indicates that 70 percent of insurance shoppers start their research on the Web. The primary way people research is by using a search engine like Google, Bing or Yahoo. In order for a customer to find your agency’s website, it is imperative that your agency display on Page 1 of a search result. An agency can get first-page web search ranking through various means. The easiest and most costly way is to purchase advertising. Another way is to carefully engineer your website using techniques such as Search Engine Optimization. Effective use of social media can both get your agency on the first page of search results and provide links for a customer or prospect to jump directly to your web page. Participation in local directories offers another way to have prospects and customer find your site. Rich media such as video is another avenue for getting on the first page of search results. While advertising on the Web is a quick way to get prospects to your website, it is also an easy way to spend big money without an appropriate return on investment. Internet advertising takes the form of many names and techniques, but the two most common are Pay Per Click (PPC) and Cost Per Thousand (CPM). With PPC, every time a customer clicks on your advertisement, you pay. With CPM, you pay every time a customer sees your ad. Common to all Internet advertising is the need to get the prospect to respond to your ad. For this reason, you should leave these advanced techniques to agencies that have optimized their websites and are using website analytics tools. Search engine optimization (SEO) is a complex science. Search engines are constantly changing how they determine which 10 of the thousands or millions of webpages will be the most relevant to the searcher and, therefore, deserve a coveted 12

The Oregon Agent • Winter 2015

spot on Page 1 of search results. If you want your agency to perform well in searches, you have to get a myriad of details right and be able to change as the search algorithms change. There are no easy fixes. Take claims of performance with a healthy dose of skepticism, and ask for proof. The Agents Council for Technology (ACT) has been on the forefront of helping agencies with their social media for the past four to five years. And while social media is a great way to connect with insurance buyers, it is also a strategy to get your agency to Page 1 of search results. It isn’t easy, but if your post gets ”liked” or ”Plus One” enough, it can bring attention and Page 1 rankings. Rich media is another way to help consumers find your agency. A picture is worth 10,000 words and possibly thousands of shares or likes. Ryan Hanley, an agent with The Murray Group in Albany, New York, says that the agency post on Facebook that got the most engagement was the one with members of the agency clustered around the filing cabinet with the “office dog” standing on top of the cabinet and getting ready to jump. Finally, don’t forget Mobile! In a recent IIABA Young Agent’s webinar titled “A Strategic Approach to Enhancing Your Agency’s Online Presence,” Matt Marko, Marketing Process Manager for Progressive Insurance, states, “Having a mobile optimized website isn’t a nice to have, it is something you have to have.” Matt points out that 50 percent of insurance shoppers now start their shopping on a mobile device and 64 percent of shoppers will leave your site if you have not optimized it for mobile use. Great Websites Encourage Action A common misconception regarding insurance websites is that as soon as a visitor arrives, that visitor is going to buy a policy. While this might happen once in a blue moon, most visitors arrive at a website and immediately do one thing: Hit the back button. Think about your own recent web browsing experience. Many of the links you clicked took you to a page that had little if anything to do with your interest, and you immediately hit the back button. But if you find a page or site that matches your interest, you scan, read a bit and perhaps click to another page on the site. The first action that you want visitors to take upon landing on one of your web pages is to NOT back away. Then, you’d like them to stick around a bit and find out if your agency can help them. A key way to encourage action is to talk specifics rather than generalities. Which of these two statements is more powerful?

1. “The Doe Agency specializes in managing our clients’ risks. Ask us to help.” 2. “The Doe Agency’s long association with the Injection Molding Society of Illinois has taught us that many molders don’t have enough coverage for clients’ molds. Call today for an explanation of how the destruction of customers’ molds could cost you thousands of dollars.” The specificity in the second statement tells plastic injection molding accounts how they might have an exposure that isn’t adequately covered and shows the agency’s expertise. For this reason, we suggest having several pages on your site devoted to the niches of your agency’s specialties. Analytics is the process of measuring the performance of your site. Google provides a no-cost analytics package that can answer questions such as these: • Which of your pages attracts visitors, and where do prospects and customers spend their time? Do more visitors download the white paper when it is on the home page or when it is on the personal auto policy page? Start slowly with your analytics. Initially, the sheer capabilities can be overwhelming. The final way to encourage your visitors to take action is to remove the number of options they have. If you are going to provide online quoting, put the “Get a Quote” button on a page with a bit of supporting text but no other options. Don’t offer the prospect the option to “Join the Newsletter,” “Read Our Blog” or “Visit Our Facebook Page.” All of those are things you might want them to do, but when they are ready to get a quote, don’t let them get distracted and do something else. Place those options on different pages or in the footer where they won’t distract from the main call to action. •

your website up in the rankings, but don’t forget other methods of getting your agency to Page 1 of a search result. A great website gets your prospects to act. Building your site correctly, measuring the actions of your visitors and modifying as needed will get customers and prospects to take the actions that lead to account rounding and new business. Any agency can attain a great website at a cost competitive rate. To do an adequate job, the agency should budget a reasonable figure based upon agency goals and the competitive climate in which the agency operates. A rural agency can spend far less to attract visitors easily than a metro agency with lots of competition from other independent agencies and the captives. The investment of time, effort and capital to develop a great website will generate returns for your agency. If your existing website isn’t generating sales opportunities for your agency, you should begin the process of identifying the goals for a new site today. Marty Agather, CPCU, ARM, works for Consumer Agent Portal, LLC (CAP) as the Senior Vice President for Client Development. CAP builds and maintains TrustedChoice.com. Trusted Choice is the brand of the Independent Insurance Agents and Brokers of America (The Big “I”) and demonstrates how independent agents can bring choice of companies, customized products and local advocacy to the insurance buyer.

Conclusion This brief overview addresses some of the more common areas where great websites stand apart from the far more common run-of-the-mill varieties. A great website is a marketing and sales resource for the agency that publishes it. It represents the agency 24 x 7 and can be a strong differentiator, explaining to customers and prospects alike why the agency is the right organization to manage the client’s risk. It presents your agency in detail, but allows customers and prospects the option to explore at their leisure, with no pressure. A great website is designed to be found by interested prospects. Attracting the kind of business that you want requires making choices about whom your agency specializes in and building your site to speak in detail to those customers and prospects. Search engine optimization techniques will move Winter 2015 • The Oregon Agent

Different Value$

for the

Same Agency By Al Diamond

lthough we are best known as a consulting firm specializing in growth and profit strategy development and implementation, most agents know that Agency Consulting Group, Inc. also has a very active valuation practice. While every agency should know its value, a relatively small number actually identify this important measurement until it is time for a change in ownership. So we are never surprised when good, strong, professional agency owners call us inquiring about valuation methods. Most still cite “multiples” of some derivative as an understood value even though they are certainly intelligent enough to realize that no two agencies likely bear the same value even if their income sizes are similar. They simply have no other frame of reference to judge their own value. I’m afraid that the situation becomes even more confusing when we suggest that the value of the agency depends on who is valuing the agency or the purpose of the valuation. Agents would like to have a clean and simple way of judging their estimated or exact value. When they ask me to simplify the method for valuing their agencies, I cite the Antiques Roadshow as an example of why this is impossible. Last week we saw a table appraised on the Antiques Roadshow that was purchased at a yard sale for $25 valued at several hundred times that value on the show. As far as the seller was concerned it was an old table that was worth $25. The buyer saw a potential in the table that he would have paid as much as $50 for it. The appraiser identified it as a Haywood Wakefield table worth several thousand dollars “to the right buyer.” Similarly, an insurance agency will have different values based on who is valuing the agency and the purpose of the valuation. To begin, we must understand that the value of an agency depends on the earnings potential (profit potential after taxes) from the agency to the person or entity valuing the business entity.

The Oregon Agent • Winter 2015

If you can earn $1,000,000 over a reasonable period of time (as defined by the valuer), the business is worth no more than $1,000,000 to that person. After all, would you buy any investment opportunity for more than you could reasonably expect to achieve in returns on that property? O.K, with that being said, let’s get on to the “Who” and “Why” of valuations. WHO IS VALUING THE AGENCY: If the valuation is done by the current owner for estate planning, the owner intends to continue to operate the agency and would like to validate an amount of insurance on himself/ herself that would provide a fund for the owner’s family in the event of the owner’s unexpected demise. The earnings potential the agency owner is estimating is that which the owner would be likely to enjoy over a period of time that he wishes to protect his family. If he can “earn” (as defined above) $100,000 a year and wishes to give his family 10 years of protection (after which he would likely retire and sell the agency), the proper value and insurance amount is $1,000,000. If the same valuation is done by an internal successor for succession planning by the agency’s next generation of owners, (family or staff) the “earnings” potential could be the same as that of the current owner or may change based on the plans of the new owner(s). If they intend to continue the operations similarly to that of the former owner, then the trended history of growth and expenses would likely be continued into the future and the earnings capacity can be judged based on continuing

those trends. Of course the time line would change to the time Each of the above purposes carries conditions that change the new owner would need to pay for the agency (to the current assumptions of earnings according to the specific reasons. In owner or to a financial institution). So if the agency is to be addition, some valuations are calculated as Fair Market Valuapaid for over five years, its value would likely be the equivations while others are necessarily “Going Concern” valuations, lent of five years of earnings. However, if the new owner had each of which has different components, as do Asset Valuations definitive plans for growth or expense change that differed from and Stock Valuations. the historical trends, the calculation of earnings potential may This article was not meant to teach you valuation methodologies. It change to include the new growth and/or expense expectations. is meant to show readers and all agents to whom these documents After all, with notable exceptions, any business will only pay are distributed that agency values in terms of “multiples” are overfor itself with monies that can be earned from the business, simplistic. Any agency value may be viewed in terms of multiples itself. of revenues, commissions, earnings, or EBITDA – once the dollar If the same valuation is being done by an outsider for an value is known. However, it is NEVER appropriate to use the multiple acquisition, a new feature must be considered, the economies generated for one agency for another anymore than it is appropriate of scale that has made the acquisition market so strong for the to assume that every building in town is worth $1,000,000 because last several decades. A strong agency with space and personnel one building in town was sold for that amount. Every agency is unique may not need the acquired agency’s location, all of its staff, or in terms of its owners, staff, clients, and business mix. Valuation CAN some of the other redundant expenses that all agencies routinely certainly be done and should be done for every agency. However, it experience (automation, professional fees, bookkeeping/acshould surprise no one when multiple values are presented by differcounting departments, etc.). The savings to an acquiring agency ent valuers and/or for different reasons, each being different from the could make the target agency much more valuable to acquire other. than it is to internally perpetuate or as an on-going business to Reprinted from The PIPELINE, the national newsletter for agency its current owner. principals. The PIPELINE is published by Agency Consulting Group, These are only three of many potential types of valuers that Inc., a leading consulting firm for independent agents in the U.S. for could be valuing the same agency and reaching different values over 30 years. Call 800-779-2430, E-mail info@agencyconsulting. for the business entity. com, or visit www.agencyconsulting.com for information about the content of this article or PIPELINE subscription information. What’s the purpose of the Valuation: The “Standards And Guidelines For Appraising Insurance Agencies And Brokerages,” a publication of AAIMCO (The American Association of Insurance Management Consultants) and available at no cost from AAIMCO (www.aaimco. com) or from us (info@agencyconsulting.com or call 856-779- 2430), lists the following common reasons for valuaImperial PFS, the leader in premium financing, tions/appraisal: continues to focus on the success of our agency partners. • Sale The relationships we have developed with our agency partners are a critical • Merger element in the way we do business. These relationships have enabled • Acquisition Imperial PFS to continually develop and improve programs and services. • Divorce Customer focus is why we operate a nationwide network of local offices, each shaped by the region it serves. We look forward to your continued • ESOP partnership with Imperial PFS and providing you the most comprehensive • Loan benefits in the industry. • Estate Planning • Involuntary Conversion • Agency Perpetuation Connect anywhere, • Other purpose

teamwork

AAIMCO had to include the generic “other” purpose because the team putting this document together found no fewer than forty other purposes for which agents have requested valuations.

anytime with any mobile device.

www.ipfs.com marketing@ipfs.com Bothell: 800.888.2750 Spokane: 800.234.7373 Winter 2015 • The Oregon Agent

The Oregon Agent â&#x20AC;˘ Winter 2015

Winter 2015 â&#x20AC;˘ The Oregon Agent

Free

Kick-Butt Tools By Justin Ferriman

for ELearning

veryone likes nifty tips, tricks, and tools – so how about 19 of them! Take a look at these incredibly useful tools that you may find of use when you’re working on your next elearning project. Many of them are free! Some of them you may have heard of before, but sometimes a reminder never hurts: 1. GreenShot: a perfect alternative to Snagit. Allows you to annotate your screenshots as well. 2. YouSendIt: Elearning files are huge, so that’s why having a program like YouSendIt will save you the headache of sending limits. 3. Screenleap: A LearnDash favorite – perfect for sharing your screen instantly without having to download anything. 4. Trello: Working on development projects is tricky, and sometimes requires a lot of coordination. Trello helps you with this, for free! 5. Fences: Computer desktops get messy and sometimes need some organization. Fences can do just that. 6. Creative Commons: The never ending search for stock photography – may as well start at the source! 7. Google Image Search: Great for getting ideas for your elearning images. 8. Stock Exchange: See a theme yet? Images are in high demand, especially free ones. You can find free ones here. 9. Morguefile: Okay, last one, I promise. Morguefile is another place to find some pretty sleek free stock images. 10. Free Sounds: Elearning needs sound, may as well get some free stock sounds.

The Oregon Agent • Winter 2015

11. Free music Archive: Another resource for finding the music you need. 12. Icon Finder: Nifty little icons you can use for free! 13. QuietTube: Using YouTube for your elearning or presentation? Quiet Tube removes the advertisements and “suggest videos” so that only the video is shown. 14. Envato Marketplaces: Themes, templates, coding, etc. – you can likely find what you need from Envato. 15. Font Squirrel: Great little site to find the font you need for your templates, be it PowerPoint or another form. 16. WordMark: An alternative to Font Squirrel, just another resource to get that exact font. 17. Adobe Kuler: Finding that ideal color palate has never been easier. Find proven pre-made schemes or create your own. 18. Teleprompt for iPad: Do you need a teleprompter when creating your videos? Look no further. 19. Adobe Edge Inspect: For the developers out there, see how your code is going to play out on multiple devices. Justin Ferriman is the Founder of LearnDash, a WordPress based LMS and Learning Strategy provider. He also works as a Learning & Collaboration Consultant where he implements large-scale training programs for Fortune 500 companies.

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Winter 2015 • The Oregon Agent

Recommending Your

COMPETITION NOITITEPMOC

By Shep Hyken

he other day a potential client inquired about having me speak about customer service at his company’s annual meeting. Typically, one of the first questions a client will ask when they call about me speaking at their meeting is, “Are you available on this date?” That’s an easy one to answer. I was. However, once we started discussing his goals for the meeting, I realized that I was not the right fit for that particular meeting. I was happy to recommend one of my colleagues. The client was quite surprised that I would be so willing to turn business over to a competitor. While I will admit that I refer to my competition as “friendly competition,” even “colleagues,” it is still turning business away and referring someone else. WHY WOULD I DO THIS? THREE REASONS: The first reason is that it is the right thing to do. I wasn’t a good fit and it would be a mistake for me to accept the offer to speak. The success of the client’s event was at stake, and I wasn’t about to be the reason he didn’t meet his goals, especially when I was not the guy for the job. The second reason is that I have confidence. I’m confident that if I care more about the client’s success than that one booking, the client will eventually care enough to bring me in when it is a good fit. I’m confident he will remember who helped him with this meeting when he starts to plan for the next one. The third reason is simple. It’s just good customer service. I put the customer’s needs ahead of mine. That’s what the best customer-focused companies are most interested in; taking care of their customer’s needs is more important than making the sale. They realize that, long-term, the customer will come back. One of the best examples of this was shared by Jay Baer, the author of Youtility. In a recent presentation he mentioned that Hilton, the hotel chain, monitors the social media channels for opportunities to engage with their customers and guests. This particular interaction came over Twitter when a person tweeted out that he was looking for a good restaurant in his area.

The Oregon Agent • Winter 2015

@LTHughston: Good places to eat near the Magnolia Hotel in Dallas for Saturday? @Hilton Suggests: Wild Salsa on Main or Campisi’s on Elm are awesome. Both within walking distance from your hotel in #Dallas. Enjoy! What makes this a great example is that the customer isn’t a guest of a Hilton, yet Hilton is still willing to take the time to respond and engage. The restaurants they suggested aren’t their own hotel restaurants, and who knows if that person will ever be a guest of a Hilton hotel? It doesn’t matter. It’s about creating good will and having the confidence to recommend the competition. Are you confident enough to recommend your competition? In the right situation, it is simply good customer service. Shep Hyken is a customer service expert, professional speaker and New York Times bestselling business author. For information contact (314)692-2200 or www.hyken. com. For information on The Customer Focus™ customer service training programs go to http://www. thecustomerfocus.com. Follow on Twitter: @Hyken Copyright 2014 by Shep Hyken. Reprinted with permission.

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What’s in a Name? “What’s in a name? That which we call a rose by any other name would smell as sweet.” ~William Shakespeare By Chris Burand

heech and Chong had a funny comedy routine built around the concept, “If it looks like s%!#, if it smells like s%!#, it’s got to be s%!#.” A similar sentiment is conveyed by the modern version of an 18th century expression: “You can put lipstick on a pig, but it’s still a pig.” And like putting lipstick on a pig, many agency owners try to make producers out of employees simply by giving them the title “producer”. Even if these employees are not producing, they are given the title “producer” –– and voila! they are magically producers! Once that title has been bestowed, agency owners will often go to great lengths to rationalize their producers’ lack of success. In some agencies, the rationalization is so obvious it reminds me of Garrison Keillor’s Lake Wobegon sign-off where all the children are above average (which is an obvious impossibility). It’s as if once the title is given, the owners have to convince themselves their producers are successful. Agency owners will rely on conversations they’ve had with people who know nothing about the situation and they will use the wrong benchmarks to prove their producers are above average. If the situation is really bad, they start giving their producers call-in and walk-in business. Then they give their producers business their customer service representatives (CSRs) can handle on their own. Then they give them house business. Then they give them personal lines books. When agency owners start giving their producers the CSRs’ business, they’ll often rationalize it as, “It’ll free up time for the CSRs.” For what? To service more new business the producers are not producing? When agency owners start giving them their own business, they’ll rationalize it as, “It’ll free up more of my time.” To do what? Rarely have I seen 55-65 year old agency owners give away chunks of their book and then replace it with all new sales. It happens, but rarely. Or another 22

The Oregon Agent • Winter 2015

rationalization is, “They just need more experience working with clients.” What have they been doing the last 10 years? I’ve also found it interesting how many of these same agency owners want their agencies valued high, like a high performance agency. But high performance agencies have producers who can sell. Rather than hiding behind a false title, doesn’t it make more sense to manage people better? Doesn’t it make more sense to give people appropriate titles? This means giving the title “producer” ONLY to people who do produce. A problem with a generic title is it carries expectations and cost. No agency is going to achieve true success until the owners recognize and accept reality. If their producers cannot produce, they should not be producers. Even if the agency cannot find anyone who can produce, very often the better solution is to leave the position open. A huge number of agency owners though will never accept reality, so the opportunities for those who do get this point are great. For those willing to try, a good place to begin is by recognizing and accepting that not all producers are created equal, and the differences are great, not small. Next, recognize and accept that people with very different talents and skill sets should have different titles and pay scales. Let’s get past political correctness and deal with reality. Just because that’s the way it has always been is not a legitimate reason for not changing things going forward. The fact that producers may be paid commission rather than salary is no excuse either because it ignores the following realities: 1. Many producers, especially poor producers, are paid a salary whether the agency calls it that or not. 2. Many producers, especially poor producers, are given business upon which they earn commissions. 3. Agencies have de facto fixed costs to cover and

producers have to generate enough of their own sales to cover those costs. A first string quarterback makes more than a second string quarterback. This fact does not mean the backup quarterback is not important, just not as important. So why pay producers as if they all have the same importance to the agency? Why give a $100,000 producer the same title as a $1,000,000 producer? Why give them the same perks? Are you afraid of hurting their egos? How much is this worth to you? The agencies that get this are doing much better in this economy than those that do not. The agency owners that understand this reality have historically saved enough money (by not wasting it on producers who cannot produce) so they can afford to continue to hire people who can produce. Their morale is higher because everyone in the agency is contributing and their higher morale contributes further to their success. Even when a producer who cannot produce tries hard to produce, morale is still injured because everyone sees the person is in the wrong position. This employee can only come into work with a great attitude for so long. This does not mean a producer who can’t produce is not valuable as a servicing producer or account manager. (Do not let any biases cause you to make the wrong decision just because the “producer” is male.) An agency can be successful with just servicing producers, but the model and cost structure must change. Agency owners that get this have defined clearly what a producer is in their agencies. They do not give the same title to employees based on what they should do, but based on what they actually achieve. To me, a producer produces at least $300,000 of his or her own commissions. It is inappropriate to call an experienced person who produces less than this a producer. Such a distinction pays huge dividends, including the ability to attract better people to the agency. Who wants to go to work at an agency where the future is limited because the producers can’t produce? It is so much more fun to work on a winning team. Title your people with appropriate titles. Don’t let wishful thinking get in the way. Manage reality and success will follow.

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Chris Burand is president of Burand & Associates, LLC, an insurance agency consulting firm. Readers may contact Chris at (719) 485-3868 or by e-mail at chris@burand-associates.com. NOTE: None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

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Winter 2015 • The Oregon Agent

t e k r a M e t a r e p Des

The Adversity of a

By Chris Burand

n almost 25 years in this industry, I have never seen such desperation. One of the unfortunate results is that many good agencies that have worked hard, done things well, and are not grasping at straws, are still at a competitive disadvantage. It is much like the situation faced by the most responsible citizens bailing out the most irresponsible or incompetent (take your pick) individuals and companies. The categories in which this is occurring are widespread. Here are some important examples. 1. Certificates of Insurance. The changes to certificates have caused widespread carnage, frustration, anger, and virtually every other negative emotion imaginable. One item that is not being discussed much publicly is the difference between agencies following the rules versus agencies that are not following the rules. In particular, the question is whether to issue certificates that violate contracts, copyrights, and regulations. There is no question some agencies are doing so knowingly or, if ignorant, they are living in a deep, dark hole. Neither companies nor associations nor many regulators (the Wisconsin Department of Insurance is a notable exception and there may be others of which I am not aware) have done much to correct the abusers. The result is that sometimes the agency willing to violate the rules, contracts, and copyrights make sales they would not otherwise make. By being silent on this issue, companies, associations, and some regulators are assisting the irresponsible—and the responsible are paying the price. 2. Premiums payable. An even more verboten subject is whether all companies and brokers are truly requiring all agencies to pay premiums on time. My theory, based on my experience, is they are not. I understand that many companies are so desperate to hang onto whatever premium they can that they would prefer to work this out

The Oregon Agent • Winter 2015

rather than lose their premiums. But the best agencies lose as a result because this amounts to a handout. 3. Giving away free services. The debate that is occurring between agencies and brokers and even among regulators on whether it is ethical for agencies to give away free services such as loss control in order to get accounts is eye-opening. The average agency makes zero dollars of profit on a commission basis per the last Growth and Performance Standards (GPS) study by the National Alliance Research Academy. So how do these firms plan on increasing their costs without going broke? Free services require significantly

good management and good cost accounting methodology, which are severely lacking in most agencies and even large and supposedly sophisticated brokerages. I suspect many of these accounts will cost the agency much more than it makes; either that or the free services being offered are not that real. More than one agency/brokerage advertises services they don’t deliver. Sometimes they don’t deliver because they don’t actually offer the service. Sometimes they have the service but the producers won’t deliver it because the producers have to for it through 3281pay Summit Ad a lesser commission. On the other hand, the desperation of this market has 7.25X4.625 clearly changed buyers’ perspectives of what they are buyPropMan ing. They understand better now that the insurance policy is only one aspect of their purchase. So moving forward, it is no longer an issue of whether these services need to be offered to adequately complex commercial accounts. Burying your head in the sand while thinking important clients will never demand these services is pure denial of reality. The real issue is what price an agency will charge for these services. 4. Companies buying into agencies. Companies cannot figure out how to grow themselves, but they are convinced they can grow agencies so their strategy is to buy into agencies. Insurance companies may not be able to grow, but they have a lot of excess cash and are desperate to invest that cash, just like they

are desperate to grow. It is too early to know, but the question worth asking is whether an agency owned wholly or even partially by a carrier will treat all carriers equally? Will they treat other agencies equally? 5. Rising rates in a poor economy. Most people in this industry have never experienced a hard market in a poor economy. Customers will shop harder than ever when rates rise. They will be susceptible to promises that they don’t need limits and coverages. They’ll be susceptible to buying insurance from poorly rated carriers and ignorant agents. The question is, what are you doing to protect yourself and your agency when the market turns hard in a poor economy? Chris Burand is president of Burand & Associates, LLC, an insurance agency consulting firm. Readers may contact Chris at (719) 485-3868 or by e-mail at chris@burand-associates.com. NOTE: None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

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Connecting Agents with Download

Identifying New Download Opportunities for Agencies

ince the introduction of ACORD-based interface, the industry has struggled to identify the overall penetration of download into the independent agency channel, as well as help agents identify the available, but unrealized carrier interfaces. In early 2013 IVANS began a project to measure the industry utilization of download, and to provide insight into areas of opportunity. The first results confirmed that ACORD and IVANS have been VERY successful in their efforts over the past 30 years. Today, over 250 carriers send over 120 million ACORD download messages to 25,000 IA agencies every year. That is amazing success for the entire industry. Based on that insight, IVANS then turned the question around, and used data analytics to identify download opportunities available from carriers that were NOT being used by their independent agencies. The results were staggering! For all of the success in interface that IVANS initially found, IVANS also discovered over 40% of all potential downloads from carriers to their agencies were not setup for delivery. That is a lot of efficiency to be gained by agencies, and thus the IVANS Connections project was born.

The Oregon Agent • Winter 2015

Examining Agency Connections In late 2013, IVANS began a test project with Westfield Insurance Company to roll out Activity Notes download transactions and, at the same time, provide Westfield’s independent agencies with a Connection Report (example attached). The Connections Report for Westfield was a personalized company report used with agencies to identify any download connections from any of the agencies’ carriers that were inactive or not “turned on” with the carrier. IVANS also began to work with agency solution providers such as NASA, Applied Systems, Vertafore and SIS, as well as the major software user groups, to provide additional agencies personalized connections reports. Dispelling Misconceptions The IVANS Connections Report has determined that more than 40% of the total available download connections from carriers are inactive, largely because many agencies have a misconception about the availability of download connections from their carriers. “When we received our connections grid, it was an eye opener,” said Casey Hearring, system administrator, Schultheis

Agency. “I thought we were downloading EVERYTHING we possibly could. The IVANS Connections Report showed lines of business that we weren’t downloading and alerted us to new downloads offered by carriers.” IVANS Connections Report is an agency’s first step toward fully automating information exchange with carriers. By activating all lines of business available from carriers, an agency strengthens its carrier relationships and maximizes agency efficiency by reducing time spent on administrative tasks. “This is such a great tool,” said Christine Horne, system support manager, Bankers Insurance. “Seeing a real, tangible analysis of the download connections available to our agency has given us greater insight into our interface setups: where we are, where we want to go and what we need to do, strategically, to get there. This is a key part of leveraging interface to create greater value and efficiencies for our agency.” Maximizing Agency Efficiency According to the ACT/AUGIE 2013 Real-Time/Download Survey, personal lines download saves almost an hour and a half per employee per day; commercial lines download saves nearly one hour per employee per day. However, there are more benefits to fully automated download than just time savings. “Our report told me there were lines of business available from carriers that we weren’t leveraging,” said Debbie Miner, technical services manager and bond specialist, Henriott Group.

“I was surprised to find out that we were missing commission download from a carrier whose statement has traditionally been difficult for us to manually enter into our system. One of the first things we did after learning this was to sign up for their commission download.” Agencies can begin to see the immediate benefits of turning on all available download connections by requesting a personalized IVANS Connections Report and activating on all available downloads. To request your personalized connections report, contact IVANS via email at connections@ivansinsurance.com, or register on the web at http://insight.appliedsystems.com/ IVANS-Connections_Register.html. Paul Warga is the Vice President of Product Management for IVANS Insurance Solutions, a division of Applied Systems. Paul has a wide variety of leadership experience on implementing solutions for business and technical issues across software and web-based products, using effective development methodologies. This article reflects the views of the author and should not be construed as an official statement by ACT.

Winter 2015 • The Oregon Agent

What Lane Are You In? By Shep Hyken

he best companies know what they are good at, and they “stay in that lane.” For example, Ace Hardware is known for its helpful customer service. Nordstrom is known for their brand of legendary service. Zappos is known for their amazing service. What none of these companies are known for is being the low price leader. It’s not that they are high priced either. They are competitively priced and have chosen to compete by delivering value with their customer service. That’s their lane: customer service. Sure, at certain times all of these companies have sales and discounted items. I love the semi-annual sales at Nordstrom. Some great buys can be found. But those are just twice a year, and even with the sale, you still get the great Nordstom experience. On the flip side, you have the Dollar Stores. They advertise an incredibly low priced product. The bargains are sometimes amazing. But, unlike Nordstrom or Ace Hardware, you don’t find sales experts standing in the aisles ready to serve and help the customer. What you usually will find are friendly people at the cash register who smile and say thank you as they take your money and hand you your bag of merchandise. It’s important to note that there is nothing wrong with that. It works well for them. It’s their plan; their focus. It’s the lane they’ve chosen to be in. What really got me thinking about this was the recent news of Radio Shack closing about 20% of their stores. All reports indicate that they are struggling. Or, just like any savvy retail chain, they may just be ridding themselves of low volume stores. How could this happen to a retail industry icon? I may not have the entire answer; however I have a theory of what could have contributed to Radio Shack’s current situation. First of all, I love Radio Shack, and I admit to being a little bit of a geek. As a kid, I loved going to the Radio Shack store and getting what I needed for cool projects. I continue to go to their stores on occasion to buy some electronic accessories. However, the store I visit in the mall today is very different than the store I remember as a kid. I remember going to Radio Shack for things I couldn’t get elsewhere; batteries, wire and cables. They also had cool merchandise that other stores didn’t sell. Today, their merchandising doesn’t give me that

The Oregon Agent • Winter 2015

impression. Are they in the “hard-to-find-in other-stores” electronics business, the phone business, or the TV business? Are they competing with Best Buy and other consumer electronic stores? At some point they switched lanes, but I’m still not sure which lane they switched. Now even though I’ve opened the door a bit on Radio Shack’s strategy, that’s not the discussion I want to get into. This is just an observation that made me think of companies that struggle because they can’t choose a lane and stay in it. Back to the companies mentioned earlier; Ace Hardware, Nordstrom and Zappos.com. We know what lane these companies play in. We know what they stand for. There is no confusion. They have chosen to compete with customer service, and they have done quite well. That lane is obvious. Walmart and Dollar Stores choose to compete on price, another obvious lane. Less obvious lanes might be companies known for industry specific merchandise or very high end merchandise. So, the question is this: Do your customers know what lane you are in? Making a lane change in business isn’t illegal. You won’t get a ticket. But, if not done properly, you will confuse the customer, which reminds me of what someone once said: “A confused customer won’t buy.” (By the way, if you know who said, “A confused mind won’t buy,” let me know. Our search for the source of this quote didn’t give us a definitive answer.) Shep Hyken is a customer service expert, professional speaker and New York Times bestselling business author. For information contact (314)692-2200 or www.hyken.com. For information on The Customer Focus™ customer service training programs go to http://www.thecustomerfocus.com. Follow on Twitter: @Hyken Copyright 2014 by Shep Hyken. All rights reserved. Reprinted with permission.

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Winter 2015 • The Oregon Agent

Resolve Customer Complaints

Quickly

Quickly How much time do you spend on the phone dealing with bad customer service?

By Shep Hyken ccording to a recent article by Brian O’Connell, writing in The Street, adults in the United States spend, on average, 364 minutes every year on the phone, waiting – and hoping – to fix a complaint. That’s about six and a half hours. Let’s put this in perspective. If you are one of these “average people,” in just a little over six years, you lose an entire work week of productivity; right about 40 hours! Worse than that, if you start thinking long term, as in about 25 years, you will have lost an entire month. Connell’s information was based on data from Populus Research and Kana Software, who refer to the “complaint wait” as the “hidden price of doing business.” Some interesting stats and facts came from their study: • 71% of US consumers have lodged a customer service complaint in the last three years and the time wasted on each complaint was one hour and four minutes. • Getting the problem resolved took three attempts and 69% of the customers had to repeat their complaint multiple times. • 39% of people use the phone to lodge a complaint. 33% use email. • Only 7% turn to social media sites such as Facebook, Twitter and Yelp to vocalize their complaints. That last statistic surprises me a bit. Based on other surveys, I thought more people had been turning to social media for customer service issues. 7% seems low. These are the “squeaky wheels that get the oil.” Even if the number is just 7%, these are the customers who broadcast negative publicity about your

The Oregon Agent • Winter 2015

company to their friends, followers, and in some cases like Yelp, to the general public. That number is on the rise as consumers become better educated on how to effectively use social media to be heard and get their problems resolved. For all types of businesses, especial B-2-C, the statistics in this article should be a wake-up call. I never thought about how much time the average customer spends on the phone dealing with complaints and other customer service issues. Time is a precious commodity, and if you “steal” it from a customer, you are showing a tremendous amount of disrespect. When customers realize that a company they do business with is wasting their time by giving poor service, or forcing them to wait on the phone for customer support, they will consider finding another company to do business with who will give better service, quickly fix problems, and as a result, respect the customers’ time. Smart companies know this. They also know that is a value proposition that customers are willing to pay more for. So, here is your simple, common-sense, you-already-know-it-but-are-you-doing-it customer support strategy: Fix problems quickly! And, with the right attitude! Shep Hyken is a customer service expert, professional speaker and New York Times bestselling business author. For information contact (314) 692-2200 or http://www.hyken.com. For information on The Customer Focus™ customer service training programs go to http://www.thecustomerfocus.com/. Follow on Twitter: @Hyken Copyright 2013 by Shep Hyken. Reprinted with permission.

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