Digital Insurance Agents - The Future is Now

We just finished research on the independent agent channel in the insurance industry. Here are some interesting highlights:

• The independent agent channel is responsible for nearly 95% of small and middle market insurance, which contributes 72% of revenues to carriers, according to the Independent Agents of America 2008 Agent Universe Study.


• The average age of an insurance professional is 54, and 60% of insurance professionals are older than 45, according to the same study. With 60% of the industry’s professionals set to retire in the coming years, the profile of the insurance agent and his/her customer is about to change drastically.


• Will the industry and its traditional, stodgy image be able to attract the necessary talent it needs to replace its most productive agents? Unfortunately, as our research indicates, it typically takes 3 years for a new agent to become productive, and over 2/3 of new agents fail.
• This means that with roughly 160,000 independent agents in the market today, agencies would need to hire 30,000 new agents annually to account for the productivity lost by retiring agents.

This is industry is about to undergo a major shift in how it does business. The learn more see the following links.

• To read more on the topic download the Executive Brief on the research


• Register for the May 7th Webcast on the topic

Here's the funny part: after we completed the research and shared the Executive Brief with others in the firm they said the same trend is ocurring in other industries, for example, in Hi-Tech business partners (in particular, VAR's) are aging at a similar rate and at least half are looking to retire over the next 5-10 years. Stay tuned for more on the "greying" of the channel to come.

VODcast: Measuring Marketing Effectiveness

I recently sat down with Andy Hasselwander, the head of our Marketing Science group, to discuss how companies can improve the effectiveness of their marketing measurement efforts. In the video Andy lays out a simple 5 step plan that I think most companies can implement. Also, check out Andy's Blog for more informaton on Marketing Measurement and Analytics.

The Price/Value Equation and The $1 Razor

A few weeks ago, my wife and I got a chance to get away for the weekend. On our way to the hotel I realized that I had forgotten to pack a razor. We were passing a shopping center at the time so we pulled in and spotted a Dollar General store.  I went in and bought a $1 pack of razors. A commodity product, down economy, it was necessity, so I figured it was a good decision until…I used it.

The only way I can describe the experience is to say that I couldn’t tell if the razor had a blade on it until it sunk deeply into my skin. It skipped over some parts of my face and dug in on other areas. I had nicks and cuts everywhere; I looked like a school boy after his first shave. The lesson I took from this is that sometimes you have to feel the pain to understand and/or appreciate the value of quality.

From what I have observed lately, companies are starting to, or will come to this same realization soon. We’ve all cut back to weather the economic storm. Are companies doing a much better job at managing costs now? Absolutely. Have they finally made the cuts they should have made a year ago? Yep. Have they perhaps gone too far with some of their cost cutting? We’ll see.

What’s important to remember about this economic downturn is that it started in 2007. It’s only gotten dramatically worse in the past six months, but many companies started cutting back long before the “crisis” hit. As a result, three or four rounds of adjusting cost to meet declining revenues have already occured. The fat got cut a long time ago. They cut into the muscle around mid-year last year and now are cutting into the bone in many industries.

If you’re a vendor or service provider like us, you may have experienced this first hand. But hang in there, I believe that companies will return to quality providers. It’s only a matter of time before the results of the “nicks” and “cuts” really begin to hurt. Each company has a different tolerance for pain, but when, for example, the "cost saving" decision to change your outsourced customer service provider leads to rising customer attrition and declining service levels, those “cuts” will begin to sting. When this happens, and customers can see recovery on the horizon, they will come back to quality.

The question you need to ask yourself is; has your organization created the $1 razor? With all the cost cutting, is your product/service at the same quality level and/or can you deliver the same customer experience. When customers do return…so do their expectations.

Be careful, during an economic downturn the price/value equation can become unbalanced. Like many companies, you’ve probably created a lower cost, stripped down model, hoping to gain or hang on to market share. If customers return with smaller budgets, will they adjust their expectations of value as well? Should they expect less? Probably, but will they? Not unless you manage their expectations.

Adjustments will have to be made, and it will not be a smooth shave. You may already have the “nicks” to prove it but don't let your customers end up feeling the pain.