Here’s how your insurance agency can pass the Shark Tank test

“I’m out”

Those are the two words that hundreds of business owners and startups have heard throughout the years as guests on the popular TV show Shark Tank.

These are people and businesses that often times have highly practical, game breaking ideas and products. Even still, they are denied in the cold hard, callused way that we’re all familiar with.

As I think about the insurance industry and how many agencies operate, I can’t help but wonder how Mark Cuban or Kevin O’Leary would respond to an investment offer made by the average agency owner.

I don’t think it would be pretty. There are some things you can do to fix it though so you can avoid hearing those two words yourself —

When you’re a Shark, and your job is to essentially inject millions of dollars of capital into someone else’s business, there are certain things you need to be sure of, before you can write that check.

More than anything else you need to have a great gauge on the long term profitability of that business.

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Of course, there are a lot of variables that go into that equation —

Is the business brand-able and marketable?

How competitive is the industry/marketplace?

Is there already a similar product/service that works better?

Are there any outside forces threatening the market?

Can the overhead be minimized without impacting the product or service?

Are the margins strong? Will they be strong for a while?

Can the product/service be consumed on a main stream level?

These are just some of the boxes that the Sharks need to be able to check off, otherwise there’s a good chance that the business owner or startup is going to get laughed off that stage.

If you’re an agency owner, there are some things you need to do first, to Shark-proof your business before you even get the idea of walking onto that stage.

Embrace and Leverage Technology

Don’t hate technology. You need it to survive.

Consumers expect an on-demand experience and you simply can’t provide that without technology.

There was a conference recently in Las Vegas called InsureTech Connect. The conference was packed with a lot of industry people, as well as some outside tech companies, startups and venture capitalists who are aggressively trying to reinvent the way insurance is researched, purchased and distributed.

According to some people I know who were at the conference, these tech companies and VCs were talking as if insurance agents will be like travel agents in a few years —mostly extinct.

While you may think that’s hogwash, the reality is, in 2015 alone, there was $2.65 Billion invested into insurance tech startups.

Outsiders look at our industry and lick their chops.

They view our industry as ripe for disruption because of how far behind we are (as a whole) when it comes to technology and the customer experience. And guess what — they’re right to do so.

It’s not just insurance agencies

It’s carriers and agency management systems too.

Exhibit A: Travelers Homesaver/Plus quoting system. It’s almost 2019. Is there really a reason why that interface operates and feels like it was created in 1948? Carriers need to create a better experience for their users as well.

#sorrynotsorrytravelers

Literally the entire insurance ecosystem is 15 years or more behind the times with technology and customer experience.

It’s no wonder why you have just about everybody and their brother trying to get their hands in a $4.8 Trillion cookie jar.

Whether or not you can compete with a bleeding edge startup is well,…… highly unlikely as we sit here today.

However, there are multiple things you can do as it relates to technology and customer experience that can put your agency on the right path —

Number one:

Learn how to use more than 20% of your agency management system

I’ll be honest, I don’t remember exactly where this stat is from, but there was a survey done a couple years ago (possibly by Vertafore?), where respondents stated that they used on average about 20% of what their agency management system was actually capable of.

I’ll be the first one to tell you that I’m not exactly thrilled by the current state of agency management systems, but as they continue to evolve, it’s imperative that you understand how to use them to their fullest capability.

Some of them are at least trying to get better, and there are some newer players on the horizon with some very promising functionality.

I talk to agents all the time who are paying over $300/mo for complex automation programs (that don’t talk to their AMS), only to use them for about 10% of what they can do. What’s worse is some (if not all) of what they’re paying all that money for can be handled inside of their agency management system — for free.

They just don’t understand how to use them.

Basic automation sequences and text messaging are things that several major agency management systems can offer now natively. EZLynx has been doing this for about 2 or 3 years now.

Before you spend money on 3rd party tools, make sure you know how to use your agency management system to it’s fullest potential. You could be spending unnecessary money on things that can be done at a fraction of the cost, or for free.

Get a better website and actually use it

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Advisor Evolved was an exhibitor at a trade show last week in the Philly area and I had the chance to speak face-to-face with about 30+ agency owners throughout the day. There was a question that kept coming up from some of the older agency owners at the show that honestly boggled my mind:

“Chris, do I really need a website for my agency?”

These are people who were in their late 40’s to early 60’s who literally didn’t have a website. I knew these types of agencies still existed, but it was shocking to meet them in person one right after the other. On one of the agents’ business cards, he was using an AOL email address instead of his own branded domain.

My response — Absolutely — it’s almost 2019 folks.

Over 90% of purchasing cycles start with a search query in a search engine. This means that your website is setting the first impression with your potential customers 90% of the time. Think about that for a second.

Yes — you absolutely need a great insurance agency website. What’s more, you need to actually put forth effort and use your website as the marketing, sales, and relationship building tool that it’s meant to be.

Not sure what to do with your website to get the most out of it? We have that covered here too.

Bottom line, if you stood in front of a Shark and told them you were trying to run a business without a great website they would almost immediately back out. A technically sound, conversion optimized website is a requirement in 2018 and beyond for any business. Stop looking at it as an expense — it’s the cost of doing business folks.

Btw, this is a message I got from one of our new AE website clients as I was in the middle of writing this very article. His site launched about 6 days ago:

leads bro

You Need A Mobile Experience

There was a point in time where I saw the novelty, but not the necessity in mobile apps for insurance. However, as I’ve learned more about the available options out there, and given the fact that in less than 5 years, more than 50% of our economy will be controlled by millennials, it only makes sense to have a mobile app for your insurance agency.

And it’s not expensive!

I recently had the chance to speak with Matt Aaron, co-founder of Insurance Agent Mobile App. I admitted to him that I initially didn’t notice the value in an agency having a mobile app, especially given the advances in mobile website technology, and the fact that email in some way replicates what a push notification does.

However after learning more about the awesome functionality of his product, it became evident to me that every independent agency out there needs to have a mobile app. Seriously, it’s that good. You can laser target push notifications to clients, both in bulk and at the individual level from their backend interface.

Here’s a quick video that talks more about the app:

It’s not about the agency, it’s about the experience that the modern consumer expects.

And no, I’m not affiliated with their product or any other mobile app platform in any way. I just believe it’s something that consumers expect now, and given the amount of time people spend on their phones it just makes sense.

In 2017 alone, 60% of all internet traffic happened on mobile devices. Everyone from banks, to eCommerce, grocery stores, and even mom-and-pop operations are using mobile apps to not only create a more modern customer experience, but to also alleviate customer support costs.

Saving time and money on customer servicing alone is worth the cost of having a mobile app for your agency.

There are many other things you could be doing in your agency rather than swapping out cars, dealing with billing issues, and filing documents. More on that in a second.

Re-evaluate your brand and the appearance of your agency, online and off

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Take a look around at some of the most successful businesses in the world. They are all marketable. They have clean, impactful branding that stands out from the crowd.

Apple. Google. Amazon. Zappos. The list goes on. Their game-plan is simplicity and memorability.

Did you know when many companies choose their name and colors, they often times could care less what (if anything) it has to do with their company. It’s all about being brand-able and marketable.

Zappos? What does that have to do with shoes? Nothing. It’s simple, and memorable though.

Apple? It’s a food, not a computer. Google? What does that have to do with searching for content? It’s now it’s own verb. It was going to be called BackRub, but they changed it to Google.

In the 50’s and 60’s ad agencies used to write catchy, but yet corny jingles for businesses for one reason and one reason only — to get their brand stuck in the mind of the consumer.

There are a ton of companies who still use jingles, including Nationwide Insurance, who successfully turned Peyton Manning’s “Nationwide is on your side” humming jingle into a multi-part commercial series that drew the attention of millions of consumers.

Who doesn’t know that jingle??

When is the last time you re-evaluated the branding, memorability, and appearance of your company?

I’m talking everything — your logo, the inside of your office, your business cards, your website, your actual name.

The harsh reality is, people are shallow when it comes to appearances. The modern consumer doesn’t want to do business with an outdated company, and truthfully, they don’t know who John Jones Insurance Agency is. Who is John Jones?

Many agency owners name their agencies after themselves, but it could be one of the worst things you could do for the marketability, memorability, and resale of your business.

We never planned on offering a branding package for insurance agencies, but after seeing many of the sites coming through during the signup process, we realized pretty quickly there was/is a major need for branding in this industry.

Take some time and re-evaluate everything about your appearance. It could make a huge difference in your business, and a Shark wouldn’t have to think twice about denying your offer if you showed up looking like it was 1994.

Invest in acquisition. Don’t reduce.

Understand that your marketing costs are not expenses, they are customer acquisition dollars. You can’t view marketing as a budgetary expense. That’s not what it is.

Marketing is like your electric or internet bill — it’s an operational expense — a cost of doing business. It’s something that some agencies can’t afford to do, and something that all agencies can’t afford not to do.

If you don’t have a plan for customer acquisition, you’re not going to last very long in this business or any business for that matter. Seriously. If your agency doesn’t have a customer acquisition funnel, what you’re seeing now in your agency is a slow death.

Word of mouth referrals are great, but you can’t rely solely on one source of leads. You need a multi-prong customer acquisition funnel for your business.

This is something that a Shark will investigate thoroughly before dumping money into a business. How much money can this business make, and how fast — thats the question they’ll need an answer to.

Reign in overhead and outsource customer service

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You need to have great margins if you want to attract a Shark. Running a lean ship is critical when asking for startup capital.

Something I don’t think a lot of agency owners realize is the true impact of customer service on their agency.

Servicing policies and customer questions, especially in a small or one-man agency setting can significantly derail an agency’s ability to focus on customer acquisition and profitability.

Customer service costs a lot of money in this business, especially if you’re heavily weighted towards personal lines.

No matter how big or small your agency is, you need to have a game-plan for customer service whether it be a carrier call center, 3rd party answering service, or a full time, exclusive customer service staff.

When I began my career in this business at AIG, there was a sales department and a service department and one never bled into the other. In sales, we weren’t allowed to help someone with a policy question — we had to transfer it immediately to the service department.

Our only job was to write premium — again, customer acquisition/profit. Bring the money in.

There are way too many agencies who are operating on a “chief cook and bottle washer” mentality, where agents are responsible for everything from sales, servicing, stapling papers and taking out the trash.

Trust me, I know that sometimes it seems like there is no other way to operate. I’ve been in that exact position. However, every minute spent on anything other than customer acquisition (and retention) is money lost.

Customer service makes you feel like your a slave to your phone and email. It kills momentum and motivation to sell.

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Figure out a way to outsource it completely or use the carrier call centers to alleviate some of the constraint. It took me a few years to finally pull the trigger on using carrier call centers, but believe me when I tell you it was worth every penny and then some.

It made a huge difference in my business. You just need to be disciplined with the extra time you’ll have when you do it. Make sure you reinvest that time into sales and marketing.

Conclusion

Close your eyes and imagine yourself standing in front of Mark Cuban, pulling back the curtain on your business while pitching him for a couple million dollars. Would he like your answers to his questions? Would your business be attractive to him?

Could he check off all the boxes on your business?

At the end of the day you’re not running an insurance agency, you’re running a business, and the goal should always be to be as profitable as possible.

You need to run a well oiled machine, both internally and externally.

In the new world of Google and consumer buying patterns, you simply would never survive without technology, a marketable brand, and a lean business model.

If you can master all three of those things, you might actually have a chance in front of the Sharks!

1 comment add yours

  1. Chris, bravo my dude, you hit the nail on the head. There is such a disconnect in the insurance space that we have made our industry ripe for the picking. So few AO’s are using technology to their benefit let alone being able to successfully wrap their minds around social marketing. However all is not lost and there is still time for those that want to remain relevant, provide intrinsic value to their clients and community while being able to successfully leverage tech to stay viable to the emerging generation.

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