I was trolling a lively blog post conversation about whether or not a high priced, glitzy, all-in-one marketing service was legitimate or not.  I’m not going to comment on that directly, nor am I going to name the blog or the company that was, more or less, pummeled mercilessly by post comments.  What I would like to comment on, are a few simple principles to keep in mind before taking on a big financial commitment at your insurance agency.  Oh yeah, and I want to work beer into this…

Back in the 80′s, I blossomed into a full fledged beverage snob:  coffee, scotch, but especially, beer.  In the part of the country I lived in at the time, craft beer was hard to come by and brew pubs were a bit of novelty.  Fortunately, I traveled quite a bit, and was able to sample some excellent micro-brews from a then burgeoning micro-brew movement.  I even got into home brewing, just to prove my street cred.

When I visited a brew pub, I was most keen on sampling interesting beers and ales.  Don’t get me wrong, I like my food and ambiance as much as the next guy, but I figured there were lots of places to get those things.  When I walked into a brew pub, I was there for the beer.  Some brew pubs were small and obviously bootstrapped by the owner/brewer.  The large brew pubs had nice graphics for all their beverages, fancy menus, and fresh decors.  Who almost always had the better line up of beer?  The small breweries.

The large brew pubs, I’m sure, we’re capable of brewing whatever beer they wanted, but they had to cover their overhead.  Read that as, they had to sell as much beer to as many people as possible. Because of that, they tended to keep their range of beers pretty tame, and used their slick ambience to lure you into the establishment. They weren’t for me.  Which brings me back to insurance agency service providers.  Those that invest a lot of money in advertising and keep a healthy staff of well paid people around may well be in a position to provide expertise and assistance to your agency.  But they also have overhead to cover so they are more likely to need to convince you, with a really hard sell, that you need their service, when in fact you really don’t.

So now the principles from the blog post…When confronted with a decision about whether or not to make a really big business investment in an insurance agency marketing service:

1. Make sure you understand all the costs, not just what service provider is going to charge you, but other expenses you may incur as you implement their system.
2. Run some rough calculations about how much new commission you would have to generate to make the investment pay off.
3. Take your time, never make a decision on the spot, and check with a number of the service provider’s client agencies to get an accurate picture of whether you are likely to generate the level of new commission you need to make the investment make sense.

Common  sense, really.  And it sort of applies to beer.

For years now, I have had insurance agent after insurance agent admit – sheepishly – that they were not ‘fully utilizing’ their agency management system.  Don’t feel bad – you have company.  Back in November of 2009 Wired.com noted in their Gadget Lab blog that the iPhone App Store Apps hit six digits.  More recently, the NY Times suggested that the average iPhone owner actually uses only 5 – 10 apps with any regularity.  Out of over 100,000.  Yet no one accuses iPhone users of ‘under utilizing’ their devices because the assumption is that each individual iPhone user gravitates to the apps that are most useful for that individual.

Independent insurance agencies have a wide range of feature options, not only with their agency management systems, but with other technology tools like email, websites, and mobile devices.  So, if there is a shortcoming that insurance agents are guilty of, it probably isn’t under utilizing the technology available to them, but rather, the shortcoming may be not choosing the right five or ten tech features that help achieve agency growth and profit objectives.

What is it that makes Apple’s iPhone, iMac, iTunes, and other products so wildly successful and easy to use.  One suggestion, quoted in a recent NY Times article, is that they are ‘disease’ free; that is, none of these devices is afflicted with ‘featuritis’.

“A defining quality of Apple has been design restraint,” says Paul Saffo, a technology forecaster and consultant in Silicon Valley…They are edited products that cut through complexity, by consciously leaving things out — not cramming every feature that came into an engineer’s head, an affliction known as “featuritis” that burdens so many technology products.

We see insurance agents struggling under the weight of management system features; independent agents have the freedom to represent any insurance company that will sign a contract; to launch a facebook page or twitter feed; agents can build and manage their own websites without worrying about restrictions imposed by one mother-ship product supplier.  But does all this freedom of choice lead to featuritis?  What is the minimum feature set delivering maximum benefit for independent insurance agents?  What do they need from the companies they represent, the marketing programs they choose, website solution and social media options…what is that minimum set of features that is super simple to use and provides the most important set of benefits in such a way that it would make Apple wish they had come up with the answer?

There is ample evidence that suggest too many options delay decisions and increase dissatisfaction with the choices we make (See Barry Schwartz’s excellent book on the topic: The Paradox of Choice: Why More is Less). Enter a new definition of quality, posited in a Wired Magazine article: The Good Enough Revolution: When Cheap and Simple Is Just Fine. The article leads with discussion of the cheap, and easy to use Flip Ultra camcorder. Despite the lack of features, the camera has sold like hot cakes, grabbing a 17% share of the camcorder market in just two years.

Other ‘good enough to get on with it’ products and services cited in the article include gmail and Zoho Writer, a Microsoft Word substitute with fewer bells and whistles (but most of the features you are actually likely to use). Oh yeah, and what about the advantages of a (relatively) unsophisticated, unmanned Predator aircraft vs. a $45 million F-16 (options, including pilot, may cost extra)?

Wired isn’t alone in noticing that cheap and simple solutions are often the best ones. In the upcoming sequel to Freakonomics – called Super Freakonomics – Steven Leavitt and Stephen Dubner have included a chapter chapter entitled The Fix Is In – And It’s Cheap and Simple.

I think this movement toward ‘good enough is more than effective’ is good news for agency manager perfectionists. Instead of wrestling with decisions about which expensive and complex software or web service to work with, just go with what works, and can be had for little or no money. Here’s a few favorites that insurance agency managers should be thinking about:

For video calls, and free long distance, try Skype. Depending on features you may wish to add (a traditional phone number, the ability to call out to land line or cell phones, e.g.), you may pay a few dollars a month.

And speaking of YouTube, there is no simpler way to get your video converted for streaming and to add it to your website.  We have been using YouTube for a variety of purposes at Confluency Solutions, and set up our own channel a little over a year ago.  Use YouTube videos to explain insurance coverage, the claim process, or to highlight safety issues.  Oh, and the cost – free.

Video email can be free, or you could pay as much as (gasp!) $99 a year.  Eyejot is our service of choice.  At Confluency, we use it for proposal deliveries, conference/trade show follow ups, and to set up renewal reviews.

Email management, CAN SPAM compliance, and newsletter sign ups can be facilitated by several services.  MailChimp is free, as long as your ‘subscription’ list is $500 or less.  After 500, the monthly fees are low.  (Your insurance agency might have 2,000 customers, but how many email addresses do you have?)

For web conferencing, including document and screen sharing, try DimDim.  The service is reliable, easy to use, and free for up to 20 attendees in a session.

The list could go on and on, but in my experience, these are good places for most insurance agencies to start.

I can’t quite leave the theme raised in the last post:  is it technology or is it communication?  I also can’t quite move on from using the lazy approach to posting:  video.  Watch as I opine:  I don’t see the reticence many insurance agents have toward using email as being a new phenomenon; and watch as I wax nostalgic on managers from my distant past not setting a good example using tools they encourage others to use.  Insurance agents are under utilizing email, a tool that is certainly in decline as social networking gets bigger.  It’s time to maximize email benefits before it’s too late.

I was doing some light research while drafting copy for target market website landing pages, and once again, allowed the internet to pull me into a digressive side alley. So of course I have to drag you in with me.

The cover article in a periodical widely read by agents and companies, Rough Notes, caught my eye. The September, 2008 issue features an agency that is able to provide high levels of service thanks to technology: Technology Backs High-Service Approach at 7-Person Agency.

What is instructive about the article is that all the ‘technology’ referenced in the piece is internally focused: insurance company-to-agency via download and real time rating, internal efficiencies gained going paperless (that can mean several different things, but that is a post for another day). There are a handful of platitudes about ‘service’ in article: ‘customer-focused’, ‘service “through the internet’; ‘Technology has allowed us to communicate with the younger generation…through email’; ‘We’re able to meet with clients more frequently, assist with claims, and provide them with quotes from other companies if that’s what they want’. These are the same kind of general, ‘service’ claims agents have been making since eight seconds before the advent of dust.

My point is not to cast doubt on the featured agency’s ability to deliver these service generalities better than other agencies. The point is that too often we assume internally focused technology and efficiencies result in better service. There is an old and well validated axiom: work expands to fill the time available. If we create time through efficiencies, but do not explicitly fill that time with measurable, customer focused activities, the void is often back filled with more internally oriented work.

What caught my eye about the article’s title was the juxtaposition of the words ‘technology’ and ‘high-service’. My mind leapt to the assumption that some kind of customer facing technology was at work in the featured agency. That I made the assumption is my problem, but it does raise another point. Technology for pushing data around the agency, or to and from the company, is not technology that consumers care about. Too often I still see agency websites touting a ‘state of the art computer system’ when all there is to brag about is an agency management system and some kind of comparative rater. That will engender a great big, consumer yawn every time. If a consumer is to care about technology, direct benefits need to be described – that is, here is how you will save time, or here is why your protection will be better. Indirect benefits – we’re more efficient so we might be able to spend more time with you – just don’t resonate.

There is nothing to suggest that the featured agency is using technology to systematically develop their customers and differentiate their agency. It’s all about saving time, and putting that time savings to work in an ad-hoc way will result in’higher-service’ that is inconsistent at best.

I don’t mean to suggest that efficiency is not important; it is a key to profitability and sanity. But having more time is not the same as providing value-added service (which the Rough Notes cover suggests the article is about). That is a point we felt was being missed too often when we conceived Confluency Solutions four years ago, and the point is still being missed, I’m afraid.

“As the estimated 80 million people nationwide born between 1981 and 20001 enter the work force and become active consumers, technology will play a critical role for insurance firms recruiting those in the so-called “millennial generation” as potential employees and customers…

…techonology appears to be a recruitment driver for the insurance industry, which faces a shortage of new workers; 60 percent of its current employees are older than age 45. In fact, 91 percent of millennials stated that being able to work with “newer, innovative technologies” in the workplace would make them more likely to consider a potential job opportunity.

While the insurance industry faces a challange recruiting millennials to replace retirees, a bigger issue might be recruiting them as customers.”

Survey Results reported by Insurity and Microsoft Corp. at the ACORD LOMA Insurance Systems Forum 2008, May 13, 2008.