Creating Separation: Insights into Overcoming the Competition

June 20, 2018 4:00 PM | Vaughn Lawrence (Administrator)

By Victor T. Ehre, Jr.

Ours is a competitive industry and in a changing world which has added online multi-carrier marketing, multi-distributional selling (including those who are competing directly with their own independent agents), and even direct writers with their own agencies selling non-direct writer policies, everyone is looking for the “secret sauce” which can create separation from their competitors and with it, success.

Watch any football game and multiple times one announcer or another will reference the receiver’s attempt to create separation to improve the potential for a successful pass reception.  Seeking advantages in sports may take the form of enhanced equipment, all to gain that separation which hopefully results in success.  But, what about our industry?   Our technical enhancements may take the form of improved computer systems, unique product tweaks (Drone insurance, Cyber policies, etc.) not to mention new social media, apps, blogs and more.  Your competition, however, is often exploring similar paths, so any perceived advantages sought are usually short-lived.

In the search for that elusive “secret sauce,” management may create internal task forces to develop new directions to pursue.  Consider the following “P’s” which are some of the first tossed out in those committees:  Product.  Management frequently looks at the products the company offers and considers one of two things.  First, they may look at ways to tweak an existing product’s coverages, scope, and market.  What frills or expanded coverages can they add to separate their product from others?

Years ago, I was with a company which decided to enhance some BOP classes and presumably make them hot tickets for their agents.  When launched, I was sent out to do sales meeting to ramp up interest.  One of the classes was funeral parlors.  We bombed!  The brainchild of senior management, it had corporate underwriting research the rates for the top 20 commercial writers in the state without verifying that those carriers wrote any funeral parlors.  Done without any outside research by marketing, no one knew that those carriers, while having the class, were NOT active writers of the product.  A little research with funeral directors or even their agents would have uncovered the fact that a non-top 20 commercial carrier had the monopoly on a statewide program!

Besides the tweaking of an existing product, there is the whole impetus to add a completely new product line to a portfolio.  The pressure may come from outside the company (the agency plant) and be pushed up the line by marketing, department management or others.  I have seen that all too often the necessary supporting infrastructure is forgotten.  How involved was underwriting?  Do they have underwriters with the expertise to assess the exposures of a new product line?  Were appropriate underwriting guidelines created, so all know what is acceptable?  Was the company’s claims department brought into the picture?  Will their Claims personnel have the necessary knowledge and training to be assured of the proper assessment of coverages to competently adjust a potentially unique set of exposures, unlike anything they have known and worked with before? 

Then, of course, there is Price.  Talk about a topic to potentially divide the camps in a company!  Marketing, as a proxy for the agency plant, is promoting lowering prices, sending presumed solid marketing data showing what the competition is doing.  Meanwhile, underwriting is pulling company data defending the need for no change or, heaven forbid, a rate increase!  And frankly, pricing remains the two-edged sword: it may cut a temporary swath of increased writings, but it may equally cut one’s profitability if that pricing was poorly thought out.

I believe that the most tried and true ways of creating separation and success lie in the Third “P,” our People.  Recently I was rereading a chapter I had contributed to a book entitled The Effective Manager, written by Karl F. Gretz and Steven R. Drozdeck.  The title of the chapter I contributed was Internal Branch Communications.  As I reread it, I was reminded of every company’s “not so secret” sauce for growth and success: its staff and the right types of communication within the company internally as well as externally with their agency plant.

Regardless of a company’s size, our Front Line is not our systems, but our people and their understanding and embracing of their roles and the value they add to the company’s success.

Systems and factors such as products and price may add temporary advantages over your competition.  One of the biggest “catch phrases” in our industry is the ease of doing business.  Rating systems, online applications, and other programs attempt to offer unique attractions to the customer.  As noted before, these are often short-lived advantages since these are the focus of so many other carriers.  But it is the very uniqueness of our people, which when properly cultivated, will lead to a truly positive experience for your customers AND ultimately to creating the separation which will lead to long-term success.

If you have ever watched the reality TV show “The Profit,” you know the premise is for billionaire Markus Lemonis to look into businesses which might have the potential to be saved with changes in approach and operation (and yes, some additional capital).  In one of his episodes, he expounded on his 10 Rules for Success.  Rule #2:  Make your employees #1, not your customers!  Why?  Your employees are the ones who “touch” your customers.  To the extent your people see and understand how they fit into the business, they will understand their value in building the positive separation every company seeks.

Most company Mission Statements I have read usually note the importance of their employees.   Sadly, all too often it is relegated to “lip service.”  While the right people are willing to work and dedicate themselves to your company, it will only become a reality with a true corporate commitment to the following two halves of the “communication” whole.

Having worked in all sizes of companies, I observed early on the dozens of different positions companies may have.  Now assuming that every position has actual value to the success of the company:

This is, unfortunately, not always the case.  I once sat in an agent’s office with one of the CSR’s.  When I asked what her job was, her response was “Oh, I’m just a CSR.”  That response told me all I needed to know about her feeling of worth to that agency.  Knowing how valuable a good CSR is, I responded: “Oh, so you’re about the most important person in the agency!”  After confirming that her role included being the first line of contact with the agency’s clients (at the counter or answering the phone), the quoting of business for producers, making changes to policies, and so much more, she began to see her true worth in the agency.  Her posture straightened and the smile that crossed her face was worth it.  She now saw the value of her role in that agency.

Answer this: if your employee were at a family picnic and a relative asked him or her about their job, how would they begin their response?  If the response starts out, “Oh I’m just a …,” your company communication is falling short, and with it, the feeling of pride one seeks in their work.  Communication is not solely telling an individual the procedures associated with the job, but also adding an understanding of the position’s value and worth to the company. 

The SILO effect

If one looks at their organization with an eye toward how communication is disseminated, there may be a significant cause for alarm.  I have worked with many companies during my career.  In nearly all, I have observed and often been in the middle of what one might call the SILO effect.

At the executive level, communication meetings among department heads either seldom move down the “silo” to department personnel, or are filtered so significantly that by the time the message reaches those on the “front line,” it is of little value.

This communication, all too often, is vertical in nature, and sadly, often one way.  In addition, as communication is passed down the layers, the sanitized version may look like a redacted “top secret” communique leaving the staff feeling uninformed and unimportant.  Elon Musk once sent an email setting policy that any employee has not only the right, but the duty to reach out to any other department if that communication is critical to the tasks assigned to them.

While silos on a farm are separated to avoid “cross-contamination,” departmental silos create barriers to “cross-communication” and, with it, departmental isolation.  Consider a pricing strategy proposed by Underwriting without communication to IT or Marketing.  It is the implementation and the sharing in advance of strategies that will help avoid serious problems internally and negative issues externally.

In summary, products and pricing are superficial and short-lived attempts to separate oneself from the competition.  The competition all too easily and quickly duplicates them.  Your “secret sauce” to success lies in your employees understanding of their value in your organization and the willingness to permit cross communication.  Implementing these will create an atmosphere of inclusion and self-worth which will lead to the creation of separation and long-term success.

The article was published in part in the PAMIC 360.

Victor T. Ehre, Jr. is the General manager of Centre County Mutual Fire Insurance Co and a member of PAMIC.  He is the author of the motivational book The Three Legged Table, The three Principles of Life Living.  Vic holds a BS in Economics from the Wharton School of Business with a Major in Insurance as well as a Master of Insurance degree from Georgia State University.  In his 45 years in our, industry Vic has been an agent, a casualty facultative reinsurance underwriter, founder, and president of an Excess and Surplus Lines Agency, as well as holding senior management positions with both stock and mutual carriers.  Vic served in the United States Army as a Lieutenant and platoon leader and earned his Airborne Jump Wings.  Vic is a father of three and grandfather of five and shortly will celebrate his 45th wedding anniversary.

Comments

  • July 11, 2018 7:23 AM | Charles
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    Link  •  Reply

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