I had lunch today with a local agent for a top 10 U.S. P&C carrier where we discussed the economy and other changes impacting his business. Surprisingly, he was bullish on his future, and ability to grow his business in 2009 despite the recession. He attributed his year-over-year growth to his increased use of the Web for lead generation.
The agent said his home office has made significant incentive and process changes to improve the multichannel customer and agent experience. It appears that many major traditional, agent-based insurers are starting to figure out the formula to create a complimentary direct and agent-based distribution strategy.
Here are three key elements to consider when developing a direct and agent channel strategy. These steps help insurers create channel harmony versus channel warfare with their agent force.
I have interviewed several major agent-based carriers in the last few months on multichannel distribution strategy. Many carriers still have strong dissent from their agent force as the home office builds an online direct-binding capability. The firms that are getting it right provide renewal commission on Internet sales to policies assigned to agents. The customer binds online, and then that policy is assigned to an agent. In the past, many firms would assign online-bound policies to agents, but would not provide commission on the new or renewal sale creating channel conflict. Now, most carriers realize agents will deliver better service and higher lifetime customer value when they are paid at renewal for online business. The agent wins because he receives a larger universe of paying customers. The agent channel also has the ability to x-sell and up-sell most Internet sales with full new business commission. Rewarding agents with renewal and new business commission on Internet business could affect the profitability of the Internet channel. However, if a carrier is truly creating a channel agnostic distribution strategy, it should reward its agent sales force with renewal commission on Internet sales, and offer the ability to earn full commission on up-sell and x-sell business.
The second pillar to a successful Internet / agent distribution strategy is an integrated lead distribution process. Our data shows that most consumers start online for a quote or shopping, but bind through a call center or agent channel. Internet conversion and binding is still low, even for leading direct writers. Chris Rauber from the San Francisco Business Times reported last year that only one out of 10 Web or call center quotes for Esurance converts into a sale. That means 90% of leads abandon the quote process. These are fully engaged prospects that visited your site; started a quote and are “in-the-red zone” to purchase insurance. Leading agent-based carriers take these quote abandoners and immediately route the lead to top-performing agents via e-mail. The agent receives an urgent e-mail message at their desktop or mobile device along with the full quote and contact information for the customer (e.g. where available). These leads convert up to 33% higher than self-generated agent leads through traditional direct mail or telemarketing efforts. Lead integration is critical to improve conversion; monetize online traffic and interactive marketing spend; and create channel harmony with your agents.
Tell your agents the truth about your Internet strategy. It sounds strange, but many carriers continue to reorganize their distribution and Web organizations, but don’t communicate the enterprise vision to agents. The leads to speculation and fear in the field with your agent channel. Senior leadership must first create an eBusiness /agent strategy and vision. Secondly, this vision and strategy must be communicated to all agents, and highlight the benefits for the in-person channel (e.g. renewal commission, Internet leads). Lastly, communicate your strategy to customers and the public demonstrating your commitment to the Web and your agents. Keepings things quiet only makes things worse for your agent sales force.
There are several other elements to consider when developing an agent and eBusiness strategy such as differential pricing and online-only products. Leading agent-based carriers are rewarding agents, integrating the lead process and communicating the value of the Web to their agents. All of these elements create channel harmony versus channel warfare.
Chad Mitchell is a senior analyst with Forrester Research. He covers trends in global insurance; eBusiness and channel strategy; emerging Web and call center technologies; consumer trends in researching and buying insurance; and best practices and rankings of leading insurers. He can be reached at firstname.lastname@example.org.
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