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Following my earlier blog entry on retention, I’d like to look more closely at issues that independent agents are facing to achieve personal growth objectives while meeting insurance carrier requirements.

We all know that insurance agents are a very valuable resource for insurance carriers. In many cases, they support 40% to 60% (if not more) of existing sales and servicing activities. However, there are a lot of variables in play: the current market shift, reduced top lines, increased operating costs (e.g.: 2009 represented the highest commission costs for the top 10 US insurers; estimated at 38% of operating costs, this was an increase from 29% 20 years ago), and changes in customer interaction dynamics and buying patterns. Fresh innovation needs to be considered to drive new top-line growth and enhance an agent’s ability to communicate with end-consumers. The result will be targeted revenue increases and cost efficiencies, while at the same time a delivery of the best combination of channel, product, price and servicing for each customer.

Many agents feel that they are supported in a sub-optimal way by insurance carriers.  They feel challenged to drive consistent revenue increases by tapping into consumer needs, optimizing offers and recommendation selection, while at the same time developing trustful customer relationships. It is why many of them focus on the short term — and unsustainable — strategy of moving consumers from insurer to insurer to drive one-off commission incentives.

Insurers need to find ways to support their agent networks: help them multi-equip, advise and service each and every customer in an optimal way. They need to do this while minimizing agency costs, and driving customer satisfaction, loyalty and advocacy.

I believe there are seven criteria that can drive successful results for both insurers and their independent agents:

• Identify those customers that are delivering, or are likely to deliver, long-term mutual value from the outset.
  - As most agents do not have the ability to acquire the analytics to identify these individuals, insurers will have to attain the analytical technology and push the outcome to the agents
• Incentivize agents for their cooperation in using each individual customer’s channel preferences.
  - It’s very hard to convince agents, particularly the most experienced ones, that the new alternative channels must be used to tap into the “Net Generation.” The younger generation of agents understands that even Twitter and Facebook can be an amazing source of lead generation. So new incentive models, which reward agents for their contribution in driving new business models, must be considered.
• Address customer ownership issues as information.   These issues have become the most powerful vehicle of bargaining between insurers and agents.
  - Agents see themselves as the sole source for customer satisfaction, and the sole owner of the customer intelligence, so sharing this information with insurers is not a top priority. Insurance carriers have to show agents that sharing this information will drive higher growth for both parties. The best option is bi-lateral transparency.
• Help raise agent awareness around alternative channels, and facilitate agents’ ability to home in on the strengths of their propositions to develop more accurate customer communication strategies.
  - Helping agents understand the value of alternative channels (from web to chat to social media) will require some investment in training and knowledge transfer from insurers. Finding tools that can facilitate that knowledge transfer the “smart” way will become invaluable.
• Deliver quality promotions and offers that attract the most difficult customers.
  - Next-generation customer experience tools can help both insurers and network agents become credible, competent and customer centric service enabled players. For instance, if an agent wants to focus on providing high quality advice and expertise to each one of his customers, providing this agent with the right advisor-led technology will help him focus on his customers’ priorities, thus driving growth.
• Boost customer intelligence and drive multi-specialization to enhance agent and customer support.
  - Insurers must build brand legitimacy, especially now as trust and confidence in the market has diminished. This must be done across channels to validate insurer credibility at each customer touch-point. Despite the current focus on alternative channels, more than half of policyholders want to interact directly with an agent. The ability for an insurer to attract new agents will depend on his ability to drive “shelf-mind-space” and provide quality personalized offers in real-time.
• Seamlessly integrate disparate systems with advisory-led and conversational tools to deliver high quality servicing activities in real-time. This will enhance agents’ understanding of products and facilitate the up-sell of new product features.
  - Agents want more proximity and integration with their insurers and a greater sense of partnership. They want the ability to spend more time with customers to provide great sales support and really understand their customers’ needs. Seamless access to the right data and systems through portal-based applications is key. However, we should not over-estimate good, old-fashioned professional advice. Insurers need to enable agents to become the advisors they want to be!

Chordiant can assist with all of this. Stay tuned for my next few blog posts where I’ll dive deeper into each of these seven criteria.

— Sabine VanderLinden, Director, Worldwide Insurance

Being a former defensive football player, I had an interesting thought after the Super Bowl.  Tracy Porter, the Saint’s cornerback who picked off Peyton Manning, said that they had studied Manning on film and knew he was going to throw that exact same pass.  That’s “analytics”, the ability to predict likely behavior.  However, the cornerback didn’t take that information and call a time-out to hold a series of meetings on his findings.  He “acted” (and intercepted the ball) resulting in a Saints victory.  Just like the retail banks that rely on Chordiant Cx Solutions, he was able to “operationalize” the data.

In a recently updated report by Forrester entitled “The Marketing And Customer Analytics Software Landscape”, Suresh Vittal discusses how simple analytics doesn’t work for customer intelligence any longer.  I found the two paragraphs below (emphasis added) very intriguing:

Today, predictive analytics go beyond response prediction to serve all kinds of marketing goals like Cross-sell/Up-sell, retention, and loyalty management. But firms are only scratching the surface when it comes to applying analytics to drive customer decisions.  As the head of Customer Intelligence for a large retail bank described, “We want prediction to inform more than just marketing.  We want to influence our go-to-market strategies, collections management, risk mitigation, and fraud detection.”

Insights are rarely available at the point of interaction.  For most organizations, analytics remains the domain of the power users and data analysts.  As the head of CRM for a European telecom explained, “Our intelligence team generates great insights. But we are constantly struggling to integrate these insights into our customer and marketing strategy.” This is a common refrain – marketing teams often lack the skills or the technologies to integrate the essential insights to guide customer interactions.

If you take a look at Chordiant’s solutions, you’ll see that this is exactly what we do. Chordiant coined the phrase “Next-Best-Action™” to recognize our solutions are more than just offers and we do it in real-time.  We operationalize analytics at the point of interaction just like Tracy Porter did!

— Scott Andrick, Director, Product Marketing – Financial Services