The US insurance industry is enormous, generating trillions of dollars in annual revenue through the sale of complex financial products. Carriers are continuously concerned about complying with rigorous regulations, engaging and retaining customers, managing multiple sales channels, and motivating agents to perform. A good distribution management process has the ability to transform your business.
Let’s take a look at where your business stands in this world of fierce competition, endless regulation, and complex commission structure.
Are you still playing by the old handbook?
It’s not your grandfather’s insurance company anymore. Often selling insurance can be a generational thing, passed on from grandfather to father to son. But the world has changed. Both the onboarding and the sales process needs to reflect the changing demographics and how they seek to be engaged.
Increasingly, technology plays an essential role in this process. Moving more of the training to a self-service mode can significantly lower costs. Deploying ‘Learning Management Systems’ (LMS) can help to ensure that the required training, certification, and licensing are done, both correctly and in a timely manner, to ensure compliance.
The new way of doing business
Savvy insurers don’t just break the mold, they build an entirely new mold which embraces the best practices of other companies and deploy technology to both support and drive the business change. The old adage still remains true – the whole is greater than the sum of the parts.
Effective distribution management involves building right business processes.
It is important to recognize that to effectively manage Distribution Management/Sales Operations, one must look at the issue as a ‘trans-process’ business process – incorporating elements of sales, IT, HR, legal, and other departments. To look at just incentive compensation systems, LMS, analytics and other ‘systems’ in isolation can significantly increase your costs while concurrently decreasing productivity.
Changes made in one area can have a ripple effect throughout the company – effects that can be both good and bad.
Some questions you need to ask yourself about your business model:
1. How fast do you leverage your data?
As the infographic points out, what gets measured gets managed. This is an essential concept to embrace to help an organization transform based on factual data, not ‘gut-feel’ or intuition. Key to measurement pertaining to sales is to measure all factors that have a direct as well as an indirect impact on individual productivity and overall results.
Equally important is to gather the data and transform it into information from which you can derive knowledge to take action in a timely manner. If it takes 90 days to compile and analyze the data, you are losing to those who invest in enabling technologies that allow them to be nimbler.
Being slow to market is not a winning position.
2. How well do you know your customers?
Are you selling what the customer is buying? Are you selling it in a manner in which they want to buy?
One leading multi-line insurance company studied their customers’ portfolios and found that their customers who purchased only one product were customers for an average of 3 years, customers who bought 2 products were customers for 7 years, while customers who bought 3 or more products from them were “customers for life”. This reinforces that cross-selling is an essential consideration to enhance revenue, profitability and agent satisfaction.
Cross-selling remains largely untapped in insurance.
3. Do you know what drives your customers?
But to gather and effectively manage such data, you need more than a representative sampling taken periodically. The larger the swath of the data, and the more current it is, the more accurate will be your analysis. It is 2016, and while 93% of CEOs stated that data mining and analysis is a key priority, the other 40% are struggling with inaccurate information as a result of fragmented data when it is collected. While correct data for modeling, pricing and forecasting are essential, equally important is being able to arm the sales force so they can be more targeted, productive and motivated.
93% of insurance CEOs agree data mining and analysis is a key priority.
4. Are you handling your agents’ compensation correctly?
Sales people are coin operated. Few things, if any, will motivate a salesperson more than compensation. Commissions, bonuses and other awards are the lifeblood of the salesforce, whether captive or external agents/brokers.
However, even if your plan is lucrative, if it is not administered correctly and in a timely fashion, it will serve to demotivate the sales force. A slightly less lucrative plan, administered in a timely and painless manner, will motivate the agents more.
When disputes arise, providing transparency through a self-service agent portal can be another trust building activity. While people do not need immediate resolution, being able to follow the status of a dispute, knowing where it is and who is working on it, can often mitigate any feeling of ill will. This is especially important when dealing with non-captive agents, who have a choice as to whose products they will represent. If you do not meet their expectations when it comes to compensation, they may show their dissatisfaction by promoting a competitor’s products, one who is easier to work with.
Agent commission in insurance is the lifeblood of sales.
Customers have a choice what to buy and agents have a choice what to sell. Both need to be motivated to make the sale happen.
For more such questions, take a look at the infographic that can help you determine whether a change to your people, processes and enabling technologies can help transform your distribution management to meet the needs of the 21st century customer.