The U.S. insurance industry is enormous, generating trillions of dollars in annual revenue through the sale of complex financial products. Carriers must constantly work to comply with rigorous regulations, engage and retain customers, manage multiple sales channels, and motivate agents to perform. All this can be a struggle, but with a high-quality distribution management process, you can transform your business for the better.
Let’s take a look at where your business stands in this world of fierce competition, endless regulation, and complex commission structures.
Are you still playing by the old handbook?
This isn’t your grandfather’s insurance business anymore. Sure, insurance sales is often a family affair, with the business passed on from generation to generation, but the world has changed. Both onboarding and the sales process need to reflect demographic changes and the modern realities of engagement.
More than ever, technology plays an essential role in this process. Shifting training to a self-service mode can lower costs significantly – and Learning Management Systems (LMS) can help ensure that the required training, certification, and licensing are done quickly and correctly to ensure compliance.
The new way of doing business
Savvy insurers don’t just break the mold – they build an entirely new mold that incorporates the best practices of other companies. They also deploy technology that both supports and drives change. The old adage still remains true: the whole is greater than the sum of the parts.
Effective distribution management involves building smart business processes.
To manage distribution management and sales operations most effectively, you have to approach the issue as a “trans-process” business process – one that incorporates elements of sales, IT, HR, legal, and other departments. Utilizing systems like incentive compensation, LMS, or analytics in isolation can significantly increase your costs while decreasing productivity.
Keep in mind that changes made in one area can have a ripple effect throughout the company – and that can be either good or bad.
Ask yourself a few crucial questions about your business model:
1. How quickly do you leverage your data?
What gets measured gets managed. This is an essential concept: organizational transformations must be based on data, not gut feelings or intuition. Identify and measure any and all factors that have an impact (be it direct or indirect) on individual productivity and organizational results.
Equally important: turning your data into actionable analytics in a timely manner. If it takes 90 days to compile and analyze your data, you’re bound to lose out to nimbler, more tech-enabled businesses. Being slow to market is rarely a winning position.
2. How well do you know your customers?
Are you selling what the customer is buying, the way they want to buy it?
One leading multi-line insurance company recently studied its customers’ portfolios. The study found that those who purchased only one product were customers for an average of three years, customers who bought two products remained for seven years on average, and customers who bought three or more products from them became “customers for life.” Indeed, cross-selling enhances revenue, profitability, and agent satisfaction – and yet it remains largely unused in insurance sales.
3. Do you know what drives your customers?
To gather and manage data effectively, you’ll need more than periodic representative samples. The broader and timelier your data set, the more accurate your analysis. As of 2016, 93% of insurance CEOs identified data mining and analysis as a key priority; those who don’t are inevitably left struggling with inaccurate and outdated information. Correct data for modeling, pricing, and forecasting are essential – and it’s equally important to arm your salespeople with analytics that make them more motivated and productive.
4. Are you handling your agents’ compensation correctly?
It’s hard to think of any greater motivator for a salesperson than compensation. Commissions, bonuses, and other awards are the lifeblood of the sales force, whether captive or external agents/brokers.
However, even a lucrative plan must be administered correctly and in a timely fashion; companies that fail to do so risk demotivating their sales forces.
Similarly, it’s crucial to build trust in case of disputes by providing transparency through a self-service agent portal. Immediate resolution isn’t necessary, but if agents can follow the status of a dispute, it’ll prevent any sense of anxiety from infiltrating the process. This is especially important when dealing with non-captive agents, who can choose which products they sell. If you fail to meet their compensation expectations, they may turn to promoting the products of a competitor who’s easier to work with.
Long story short: customers have a choice of what to buy, and agents have a choice of what to sell. Both need to be motivated for sales to happen.
Check out our exclusive infographic for help determining whether changes to your personnel, processes, and technologies can help transform your distribution management to meet the needs of the 21st century.