This post is part of a series sponsored by ITC (Insurance Technologies Corporation).
Independent agents specializing in personal lines have taken a beating recently. But what else is new? Back in the late 80s when I started in the business, people were counting the days to our demise.
I remember in the late 90s when Gramm-Leach-Bliley passed. Banks were buying agencies at multiples never seen before at 8-10x earnings.
It was doomsday for insurance brokers. (Yes, we actually called ourselves insurance brokers, and it was ok!) Banks were going to disrupt the small agent, and we’d be gone before long.
I was an agent when this happened. But I don’t recall new business coming to a halt. The sun continued rising in the east, and we kept going.
A lot has happened between then and now. There are less of us today than there were 25-30 years ago. There’s been a slow consolidation with the big agencies buying up the smaller ones.
Today, the average agency owner is in their mid- to upper-50s. So, there will be more consolidation in the independent agency channel coming. And quite frankly there should be. But that’s another topic for another day.
An agency that generates less than $500,000 in annual revenue is going to have a hard time growing without more investment. Plus, at that revenue level, the agency owner isn’t earning enough to continue. At some point a top 100 agency or large competitor will acquire these agents. Or they’ll merge with other agents the same size, which isn’t necessarily a negative.
So, how do you not only survive, but thrive in this environment?
Here are five ways to compete and grow in 2021.
- Don’t Settle for the Traditional Methods. Embrace Digital
I’ve consulted many insurance agencies throughout the years. The startups and top 100 agencies know that to take their business to the next level, they need to fish where the fish are. They have embraced the internet as a tool to help grow their business.
The challenge is that it’s tough for a small agent to generate enough referrals to actually grow. Every little bit helps, but you need a windfall of quotes, calls, new sales and cross-sells.
You need to find the consumer who used to stop in for a quote or call from the yellow pages. Guess what? They’re online now.
The modern consumer shops differently now. In the age of the micro-moment, consumers make buying decisions faster and want help making tougher purchases. That’s a good thing for independent insurance agents.
But, most local agents have missed the boat on establishing a quality online presence. There’s no doubt that referrals are the most valuable prospects. Second to existing clients of course.
Do you have a strategy to ? The single biggest challenge we hear from agents is the phone stopped ringing. Seventy-one percent of consumers start their insurance research online. Are you investing 71% of your time, effort and budget into attracting and capturing that online consumer?
The world outside of your office has changed over the years because consumers have completely different shopping habits. In fact, I bet that for most of the policies you write, those clients went online at some point during their decision-making process.
A good digital local presence – a well-design optimized for local search – will help you grow your business.
There are so many digital tools to help you grow your agency. Here are some resources to get started.
- 4 Reasons Why a Google My Business Listing Can Help Your Agency
- Having an Optimized Website Can Earn You Business
- 5 Ways to Enhance Your Insurance Agency Product Pages with Keywords
- It’s a Context Battle, Not a Content Battle
- 5 Basic Components of Effective Landing Pages
- Don’t Assume Customers Stay the Same. Establish a Modern B2C Sales Strategy.
Ever feel frustrated visiting a website on your phone that takes more than three seconds to load? Guess what? You’re a part of the vast, and I mean vast, majority. Consumers want and expect speed and ease in everything.
Imagine a consumer shopping for something as complex as insurance. Fill out forms online, make calls, get placed on hold only to find out that your rate is more expensive that you expect. Too many agents are trying to sell insurance the way they want to sell it, not the way consumers want to buy it.
Consumers are process oriented today, and your business needs to be the same. You need a structured process for following up on leads from the moment you get it. No matter what channel it came through… email, phone call, social media post, or any other channel.
You can’t take someone’s information and call them back in a few hours with a quote because they’ll get five quotes while waiting for you. And chances are they’ll never take your call to hear your quote or why they should choose you.
- Don’t Try to Compete Everywhere. Build Locally.
Trying to out-market the regional carriers, directs and others is a recipe for disaster for most local agents. However, being known as the insurance pro in your local and social media communities is a win.
Your best differentiation is that you’re local. So, own your local community. Connect with professional referral sources to establish your footprint in the community.
When people search for insurance in your city, do you appear on the first page of search results? When someone enters your agency name, do you take up the first 3-4 pages on the major search engines?
If you don’t, get proactive. Work on your insurance website so your prospects will find you when they’re doing online research.
- Don’t Forget Your Team. Grow It.
This is always a sensitive topic, but you must ask yourself the hard questions.
Is your current staff capable of excelling in the insurance business in 2021? They may have been great 10-20 years ago, but can they work with the connected client? Are they effective at converting and retaining the online consumer?
Looking at your team to see if it’s the right one is one of the biggest challenges for most agencies. So, if it feels awkward or uncomfortable digging into this exercise, you are not alone. Be honest with yourself and your staff as you discover the strengths and weaknesses of your team.
And, don’t shy away from the toughest question of them all: “Knowing what I know about this employee, would I hire them today”? If the answer is no, you need to decide whether or not you can afford to maintain the status quo. (You can’t!)
- Don’t Stop at the Sale. Cross Sell.
The biggest advantage IAs have is the variety of products we offer. The best way to keep your clients from leaving you is to sell them as many of those products as possible.
Develop a culture that believes you’re doing a gross injustice when a client doesn’t have all policies with you. I’ve never seen an agent with an average of two or more policies per household complain about being slow or not growing.
There’s more money living in your book of business than you know, so devise a strategy and execute on it.
As more attention is paid to our industry, local agents have several choices.
- Move on and sell your agency: Always an option. There’s a lot of demand, and it’s a seller’s market.
- Just survive and stay the same: Declining a couple of percentage of points per year until you’re ready to sell isn’t the end of the world. Make money by cost-cutting and survive.
- Adapt and thrive: , and find a way to evolve with it.
If you want to not just survive, but thrive and grow your agency, your only option is the third one. Embrace the online world. Allocate most of your marketing budget to finding the online consumer. Retrain or replace your people. Develop processes that cater to the connected consumer. And, start working ON your business.
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