Yes, this is a scary time in our industry, but let's face it: Fear is just a natural part of doing business. Whether you're building a business or a book of business, there's nothing easy about it. There are always threats, and if we let our fears get in the way, we'll never achieve anything.

Fear itself shouldn't automatically be seen as negative. A healthy level of fear can keep you sharp and focused and may actually help ensure your survival. To paraphrase the old saying, courage isn't the absence of fear, it's willingness to face the fear. Fear is a problem when it becomes irrational or comes from a source over which we have no control.

In working with producers and agencies, recently I have seen more fear in eyes and heard more fear in voices than at any time in the past.

Understandably, many of you are saying: "Of course we're scared! Do you have any idea what health care reform is going to do to our business?"

Let me ask a question in return: Just exactly what business are you in?

Before you answer that question, consider the message in an article I read recently in Inc. magazine. Back in 2000, the author was the CEO of a startup entertainment company. As part of a promotional activity, he found himself standing in the Times Square location of a national record store chain with the owners of the chain. He asked the owners why they thought so many people came into their store.

The CEO of the record store chain replied to what he obviously thought was a ridiculous question: "Well, to buy CDs."

To which the startup CEO responded: "I don't think so. I don't think anybody wants to buy a CD."

Record store CEO: "Do you have any idea how many millions of CDs we sell each year?"

Startup CEO: "Oh, I get that. But nobody wakes up in the morning wanting to go out and buy a round piece of plastic with a hole in it. They wake up wanting to hear that new song they heard yesterday, and they want to hear it now. They have to buy the CD, but what they want is to hear the song."

Record store CEO: "What's the difference?"

The difference, as pointed out by the startup CEO, is that if the record store owners had understood what their customers really wanted, they might have invented the iPod and iTunes. Instead, they are now in bankruptcy liquidation.

Fear of the business model

Now answer the question: Just exactly what business are you in?

Are you selling pieces of round plastic, or are you putting music into the ears of your clients? Are you selling a health insurance policy, or are you helping your clients become the employer of choice?

These are critical questions. Your answer will either legitimize your fear or reduce it to a manageable, healthy level. Your clients have to buy the health policy, but what they really want is to be sure they have the strongest value proposition to offer their employees. In other words, they want to be the employer of choice.

If you identify your business as selling traditional employee benefits (i.e., insurance policies), there are basically two ways you can help your clients and get paid: (1) Sell them an insurance policy, and (2) fix the problems that result from the policy you just sold them. I see this as the epicenter of the fear I have been seeing and hearing:

The fear arises from the inadequacy of the typical agency's business model.

Even in the best of times, this seems legitimately scary to me. At a moment's notice, the foundation of your business can be taken away or altered almost beyond recognition. If your carriers, or the government, decide your services are no longer required, you're out of business. (This is a clear example of fear emanating from a source over which you have no control.)

Now, imagine having a business model based on "putting music in people's ears."

Let's say that you are in the business of helping your clients become the employer of choice. Start by listing how many ways you can help your clients (and how many ways you can get paid):

• Help your clients communicate more effectively with their employees
• Educate the employer and employees on how best to use their benefits
• Help design a new employee orientation package
• Develop an employee handbook
• Help with compliance issues
• Implement a successful wellness program
• Provide HR training
• Provide outsourced HR assistance
• Create a template for an exit interview to help the employer gather important information from soon-to-be ex-employees

Oh, and don't forget:

• Help choose the right benefits package. (They still need help with this.)

This list could go on almost indefinitely.

I can hear you saying, "We already do all those things." Exactly! (Well, sort of.)

In all likelihood, your primary focus is on selling insurance, and, in an attempt to "differentiate" yourself, you give away many of the services listed above. Unfortunately, anything given away for free is worth exactly what is paid for it: nothing. It's worth nothing not because it doesn't have potential value, but because it isn't a primary focus of the business model/value proposition, and, as a result, it isn't used effectively, if at all.

The answer to most of our fears is right in front of us. It starts with redefining your role with your client. Here's how:

Take responsibility for creating "employer of choice" clients; look at all of your resources (including insurance) as possible solutions to help achieve that outcome; and assume the responsibility for helping your clients use what you provide.

Now you've begun to build a relationship that will be music in the ears of your clients. This is a business model that can't be taken away from you. This is how you face the fear that's associated with the typical agency's business model.

Unfortunately, the impact of business model fear doesn't stop here. I believe this fear creates other fears that have been an ingrained part of our industry for a long time: producers' fear of their clients and agencies' fear of their producers.

Fear of clients

Sad to say, I often find that producers are actually afraid of their clients. I believe this fear exists because many producers have ceded control of the relationship to the client. Most producers realize that they get more out of the relationship than they give. In their hearts, they know they are being paid too much for what they actually do (assuming the model of placing coverage and fixing problems). And because what they do is largely transactional, they also know they can be replaced in a heartbeat.

Now let's look at the producer-client relationship in an "employer of choice" model. In this relationship, insurance coverage and problem solving are just two promises among many made by the producer. Fulfilling the other promises (see the list above) moves the relationship beyond the transactional. When producers deliver on these promises, they are delivering real value; they are contributing to the success of their clients. When the value you deliver increases, so does your confidence. When your confidence increases, so does your standing in the relationship.

Although the employer of choice model may have an element of fear, I believe it's a healthy fear. If we are selling based on a promise of delivering results, we'll always have some fear about not delivering on our promises. Unlike with the "place insurance and fix problems" model, however, the ability to deliver is now within our control. In this model, fear is a positive, driving force toward enhancing client value, not a negative, suffocating force that causes us to dread every renewal meeting. We now have complete control over our standing in each client relationship.

Fear of producers

This may sound crazy, but I believe that some agency principals are actually afraid of their producers. Good news and bad news both come from the same misguided "place insurance/fix problems" model.

In the transactional model described above, the agency adds only one element: the relationship. And that relationship is almost always tied to the producer. In many agencies, principals avoid upsetting the producer-agency relationship at all costs. As a result, these principals end up behaving as if they work for the producer.

Don't believe me? In the typical agency, who has the lowest level of accountability? Producers. No other position has fewer defined expectations or less accountability than a producer. Why? Because the agency has ceded control of the relationship to the producer.

The good news is that by redefining the business model, by becoming an agency that creates "employer of choice" clients, the principals can expand their value proposition well beyond the producer relationship. The responsibility for meeting client expectations is now spread throughout the agency, restoring a balance that makes for healthier relationships and a stronger business model. Nobody wants good producers to leave; but, if they do, a majority of what drives client value is still intact.

So let's face our fears. I'm convinced that both producers and agencies will have much greater confidence in the value they bring to the client relationship if they contribute measurably to helping each client become that "employer of choice." That is a relationship that any business owner will value.

The alternative is to quote the insurance once a year and fix the problems that arise. That's a business model whose time has passed. That's a relationship that can be replaced in a heartbeat. That's a relationship that would scare me too. Is this a fear you are capable of facing and overcoming? Absolutely, but you have to ask yourself, "How badly do I really want to?"

Originally published in Rough Notes Magazine December 2012.

Photo by Kevin B 3.

@kevintrokey

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We recently received what may be the greatest compliment anyone could give us.

The compliment came from Reid Rasmussen (www.FreshBenies.com) in response to a recent blog post where we introduced our new name and the reasons why we chose the name we did. Reid wasn't complimenting the blog, but rather the actions it described.

@kevintrokey So you're not just telling brokers how to change business for the future? You're doing it yourself. That's credibility!

— Reid Rasmussen (@ReidCRasmussen) March 9, 2013

There is nothing in which we take greater pride than leading by example. Hearing someone recognize and comment on that effort is infinitely rewarding. It makes all of the hard work worthwhile and energizes us to do more. And here's why it's most important of all: we know if we can do it, you can too.

It immediately reminded me of a conversation I had recently with an agency owner. During the conversation she was questioning if I truly believe an agency of her size is capable of surviving the current challenges facing our industry. My strong, definitive answer . . . . "Well, it depends." Okay, not very strong and definitely not definitive, but let me continue.

It depends on what business you decide you are committed to. If you are in the business of selling insurance, then at a certain size, you likely cannot survive (at least with the level of financial reward to which you have become accustomed).

However, if you define your business as one whose Purpose it is to make your clients more successful at what they do; if you see insurance as only one of many solutions to drive that success; if you see your greatest value is in your advice and consultation, then my answer changes dramatically. In that case, I will stand up and shout, "Yes you can survive! Not only can you survive, if you will change your business to one with that Purpose, your most successful days are ahead of you!!"

So, this agency owner, liking what she heard, but still not completely convinced, asked me another question. "Will businesses really take advice from a small "consulting" firm and pay for that advice and guidance?" My response, "We (BGN) have built our entire business on the fact that they will."

So sometimes, like for us, changing your business model is a matter of meeting changing customer demands. At other times, like in the face of major industry changes, it's a matter of survival. We know it can be done. We're doing it ourselves. And, like I said earlier, if we can do it, so can you.

Photo by woodleywonderworks.

@kevintrokey

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We recently announced that we're changing our name, and we're keeping you up-to-date on the process as we go along. Plus, we're also sharing some of the lessons we've learned for you to use in your own agency evaluation.

In the last post, we talked about realizing you've outgrown your name because your value proposition and/or purpose have changed or expanded. In this article we're going to explain a bit about how our model has changed and how that led us to choosing our new name:

Q4intelligence
An Agency Transformation Network

As the business evolves

The original focus of BGN was to help benefits agencies, departments, and producers sell more effectively through a benefits-specific sales system. The more time we spent coaching around the system, the more we realized it wasn't a complete answer. Not only did our clients need sales help in the non-benefits part of their sales operation, they needed deeper help in the execution of the sales system by way of more resources and guidance. And once we built out a more robust, multi-lined sales system, we saw the inner-connectivity of the sales system to the rest of agency operations and the need for complementary resources and guidance in those areas as well.

It became apparent that only focusing on the sales department was a band-aid approach. Instead, we needed a way to treat the entire agency for what it is, a "sales organization". This became our mission: to bring the whole agency system and client experience together to improve the overall performance of the business. This meant taking a broader approach to building a healthy organization where the entire team becomes involved in the selling and reselling efforts and delivering on the client experience.

Our goal has since become even more focused on helping agencies transform from the traditional model of brokering an insurance product to taking control of their business model. We want our agencies to forego the dependence on getting paid for the placement of a product and instead embrace an ability to get paid for the value they create.

It became obvious that our original name no longer reflected our value proposition or business model. And, as difficult as it is to let go of a name and a brand, we knew we wanted (and needed) to rename our company to reflect more accurately who we had become through our own transformation process.

Q4: Making planning a priority

This idea of the whole agency integration has taken us to reviewing the entire agency and focusing on the importance of strategic planning as the blueprint of the transformation process. The role planning plays for any agency/business is critical. However, it is never more critical than when a agency/business is working to transform itself.

Strategic planning, done properly, is what allows us to step away from the myopic view we have in the day-to-day operations and spend time looking at the bigger picture. It is only with the perspective of the big picture that we can start to see the potential and vision of who we can become. It is only with an appropriate level of introspection that we can identify what is working well and not so well. It is only with this clarity that we can lay out a plan of action that will put us on our desired path. And, it is only with this detail of plan that the leaders can communicate effectively to the rest of the team and build the collective confidence.

Our goal in helping agencies plan for their future isn't just about ensuring survival, it is about creating opportunities and finding new levels of success. We understand that any product or service (not regularly analyzed and improved) will eventually run a course that leads to irrelevance, either because of commoditization or antiquation.

Using that business life cycle as a foundation for understanding where to focus time and efforts, we break this out into quadrants for planning. It is through this planning process that we take agencies off of the irrelevance path and instead help them create a path of innovation. Contrary to the typical agency planning, just adding more products or reducing costs is not enough to maintain and grow a business. Instead it requires always remaining on the forefront of emerging trends and offering clients services that are valuable to them at the time.

The key is to recognize that irrelevance is not inevitable. Knowing how to put focused time and effort into each quadrant is a critical piece for ensuring long-term survival, growth, and opportunity creation.

intelligence: What have you learned lately

Businesses owners everywhere crave advice and insights that can make them more successful at whatever they do. They don't crave another vendor, but they all hunger for advisors. They want to be around people who can teach them how to be more successful.

It becomes obvious: the most effective sales organizations are teachers at heart. And, knowing you can't teach until you have been a student yourself has driven us to a very strong belief in education and constant learning.

This has become an increasingly important theme; one that we believe agencies must adopt and develop as a part of their culture. The information you learn, the insights you develop, and the advice you give are the foundation of a consulting business. In order to deliver on a model like this, agencies need to be fueled by the confidence in their abilities to offer advice and make solid recommendations. That confidence comes from constant learning, challenging, developing, and practicing your ideas both internally and with others outside the agency.

An Agency Transformation Network: Who you know influences results

Finally, a key part of the transformation process is due to the networking and exchanging of ideas with other agencies. The power of networking with a purpose cannot be overstated: sharing ideas; discussing them; refining them; expanding on them; gaining the confidence to take on new challenges; and transforming at an accelerated rate by working together. These are some of the incredible benefits of working in a group to help propel your own vision of change.

Bringing it all together

Putting all of these key ideas together form the basis of how we work with our member agencies and where we're going with our business model: combining the business planning quadrants, continuous learning and insight to help clients build more effective businesses, and capitalizing on the power of a peer network committed to similar transformations.

Rather than starting with a name and seeing if it was a good fit, we started by evaluating our model, our value proposition, and our purpose. Those evaluations developed into many options that would be representative of our business. Choosing Q4intelligence came down to personal preference, however; we repeatedly asked ourselves the following questions to be sure it was a right fit, not just a comfortable fit:

• Does the name reflect where we're going as an organization and the speed with which we want to move?
• Does it convey our personality and essence of the organization?
• Is it a name that draws people in out of curiosity and/or wanting to be a part of it?

We believe this name does all of these things for us, and we hope that you do as well!

That was our situation, but what about yours?

What clients want and need can be a powerful influence on how to run a business. How you respond should be largely determined by what you choose to pursue as the purpose of your company. If you're in the business of selling employee benefit or commercial risk packages, then adding services outside the scope of those products might not make sense. If you're in the business of helping clients run more efficient and profitable companies through effective employee and risk management, then stepping outside of the products and into related consulting services might make all the sense in the world. Only you can determine which direction to go.

Here are some questions to consider as you make that determination:

• What do you offer to clients? Be realistic about what you're offering and for what you're getting paid.
• If that revenue stream went away, could you replace it? Do you have multiple revenue streams or only the one?
• Do your clients have needs in areas that are similar/related to your current offering into which you can expand?
• If you were to expand into related areas, does the expansion fit with your company purpose?
• In order to expand the offering, what would you need to do to get it started and deliver effectively for your clients? What would you need to cut?
• Would this expansion make you a better, more attractive business partner to your clients and prospects? Or would it simply be a distraction from the core business?
• Will this change make your client businesses better? If yes, then they'll pay for it. If not, then it's just a free add-on that is distracting everyone from the core business.

After you've gone through a thorough evaluation, take a look at what the expanded model looks like, and create a name that evolves from the purpose and reflects where you're going. The name should be about your future, and not about your history. You can preserve and honor that history on a history page, but it doesn't need to be in your name.

Instead, having a modern, forward-looking business that clients feel is in alignment with what's happening in their businesses is important for your future growth. Especially in an industry where competitive businesses tend to look and sound alike, and have names that are usually more reflective of their ownership teams and their product rather than the value they create for their clients.

Next up in the rebranding series....the people we're working with to bring this vision to life and some behind-the-scenes looks.

Photo by Betsy Weber.

@wendykeneipp

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 Guest Blogger

Sue Mason is President and co-owner of Preferred Benefits in Ada, MI. She is a member of Benefits Growth Network and is actively making changes in the way thier agecny operates, both internally and externally, to better serve their clients. We are delighted to share Sue's ideas with you and hope they inspire you to to rethink your own "Why".

I recently read the book Start with the Why by Simon Sinek. The lessons in this book went straight to the heart of the insurance agency business. Agencies are trying to reinvent themselves because they have always sold their services as a commodity, forcing them to respond to the market as opposed to driving the market. The Affordable Care Act has given brokers a new focus. If you are not running your business by asking the "Why" questions first - your purpose, the reason you get up in the morning - you will be missing the boat as it ventures into unchartered waters.

As this author so eloquently points out, if the railroads had been running their business by saying "we are responsible for the ever changing world of mass transportation", they might still be in business today and probably running the aeronautics industry. Instead they defined their business as building railroads, so when that was over, their customers moved on to the bright shiny penny that provided what they wanted next.

Brokers need to realize that selling insurance should not be their "why". Agents are more than selling insurance; they help make businesses better. Insurance is a secondary issue, a commodity, if you will. You need to inspire others with your "why".

Apple is a fine example of starting with the why. They are no more innovative than most technology companies. They have customer loyalty because they came up with the idea of telling their customers they were not in the business of computers but they were in the business of innovative ideas. This is their "Why" factor. They stopped calling themselves Apple Computers and just kept the name Apple.

Customers need to believe in what you believe in to develop a fruitful, loyal and long lasting commitment. Sell people your core beliefs and the purpose of your agency. If they believe what you believe, a relationship will flourish.

Remember your "Why" is your purpose – enjoy the next adventure of your career. Embrace the changes and learn how to inspire others around you, whether it is your clients, your employees or your community. The Why is your new path.

Photo by markheybo.

Connect with Sue on LinkedIn:

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So the story goes

Back in the 1960's the wine industry in Napa Valley was still largely in its infancy and had a long way to go to be competitive with France. Robert Mondavi, now considered the patriarch of Napa Valley, noticed an especially large discrepancy between Napa Valley and France: the popularity of a varietal called Sauvignon Blanc.

At the time, Sauvignon Blanc was quite popular in France, but in Napa it was dead last. Mondavi did some research on the name and the taste preferences of the US market.

Sauvignon Blancs in the States at the time were pretty sweet and were obviously not very appealing to the market, so Mondavi decided to make some changes. He moved away from the sweet flavor and instead created a crisp, dry style using the Sauvignon Blanc grape.

Along with the change in taste, he also made the decision to rebrand Sauvignon Blanc into the easier-to-pronounce Fumé Blanc. And he chose to not trademark the term Fumé Blanc; he wanted it to be part of the public domain so it could be available for anyone to use it, while also ensuring it could not be claimed and protected by anyone else. The industry embraced the new style and rebranding suggestion, and soon Fumé Blanc became a huge success in the U.S.

So why did Mondavi pass up on what seemed like such a huge personal opportunity? He knew that by doing so he would benefit all of his neighboring wineries in Napa Valley and an entire industry. He understood that a rising tide raises all ships.

And what's the point?

Rightfully, you are probably wondering what the point of this story is and why we're sharing it. Well, I think it is a powerful story that speaks to the idea that sometimes you need to be embracing your competition and actually working together rather than always fighting against one another.

We definitely see the need for this in our industry. The independent agency system is under attack and, some might even argue, facing extinction. While we agree it is under attack, we don't believe for a moment it's facing extinction. In fact, we believe the best days of the industry are still ahead, not by way of the status quo, but still ahead nonetheless.

In fact, we believe in this so strongly that we have built our entire business on this belief and focused it on this purpose - to save and strengthen the independent agency system. And, we're not alone; there are many other consultants out there with the same belief and purpose.

Do we compete for some of the same clients with these other consultants? Sure, at times. But it's a big industry and there is room for all of us. And, as much as any of us might like to be the only game in town, we know that isn't possible. In fact, it wouldn't even be good for the industry. The industry needs different ideas and different perspectives.

Yes, we believe coopetition is a legitimate word

So, what are we doing about it? We've decided to bring together a group of these industry consultants to discuss how we can create our own "Fumé Tide" for the independent agency system.

We have invited about a dozen of our "competitors" to a meeting in February with the sole purpose of sharing our individual perspectives on the future of the industry and to look at how, together, we might raise the tide for all of our agency clients.

Nobody will be sharing their trade secrets; we're just interested in various perspectives on how we can ensure that the insurance industry not only survives, but also finds new ways to thrive. If the industry can't survive, then it isn't likely any of us will either.

While the first meeting is set, we're not sure if it will be a one-time only event or maybe it will be something that we do on a regular basis. That's something the meeting itself will determine.

What about you, does the idea of a meeting organized in the spirit of "coopetition" make sense to you?

Photo by oatsy40.

@kevintrokey

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We are making a big change at BGN and wanted to let you know:

We've decided to undergo a rebrand and change our company name.

This is no small decision. It's a huge project to take on and will require us to transition all of the awareness and recognition we've built thus far onto the new identity. But we see this as an important move for our company today and moving into the future. So while it's a lot of work, it's important and necessary work for us as a company and for our members as well.

As we are going through this rebranding process, we see many lessons that can be shared, lessons which might prove helpful for anyone contemplating the current state of their business – and really, that ought to be all independent insurance agencies. Just because something was right when you started doesn't make it right today or tomorrow. Self-reflection and evaluation should be a regular part of working on your business.

We'll keep you updated on our progress through blogs posts here, as well as on our Twitter (@kevintrokey | @wendykeneipp) and LinkedIn (Kevin | Wendy) accounts. Our updates will include progress on where we are in the process, but more importantly will also include a healthy dose of Why and How for each of these stages.

And here's the first lesson we'd like to share...

When you've outgrown your name

We felt we had outgrown our name and were really feeling the limits we had placed on ourselves with it. We have added additional services, tools, and curriculum that expanded beyond a benefits selling system. We knew what direction we were moving with the business and thought that a name change would likely be important at some point, but had to decide when it would be the right timing.

And we knew the time was right when the feedback started rolling in from all directions – it was like everyone could sense it coming. We had clients and partners telling us we were more than the limited name implied. We had prospects telling us we needed to drop the niche focus because, even though we offered services for an entire multi-lines agency, our name was a barrier to selling it internally to the whole team. And then when you start to see your own company name and cringe a little because you feel it's become outdated, you know the time is now.

That was our situation, but what about yours?

Words are incredibly powerful and can influence how we perceive ourselves and how others perceive us. But how do you know when/if it's the right decision to make a change? As you evaluate where you are as an organization, also spend time evaluating what your name says about your company, your offering, and your team.

What does it say today and how does it reflect your future? Does it allow growth or is it simply reflective of the past? Does it hold you back from moving into a new model? Whether you're in the middle of changing your business now or thinking about it in the future, now is the time to start working on any potential name changes. Do an honest evaluation of your name. Ask other people in the agency, your peers, clients, and your own business partners/advisors what they think, as well. It can be very eye opening.

Here are some questions to carefully consider:

• Are the words you use in your name separating you from your competition or are they saying the same thing and making you look indistinguishable in the eyes of clients/prospects?
• Are those words encouraging prospective clients to contact you or are they actually preventing contact?
• Is the name interesting enough to make people curious to learn more or do they feel they already know what you have to offer?
• Do the words properly reflect everything you bring to your clients or do they pigeonhole you into a product, market, or niche?
• How well do the words in your name reflect the culture of your organization? Does the name say stodgy, but you're really a young, energetic group?
• Do the words encourage and allow you to expand your thinking and offering about your business or do those words hold you back in the way you see your own business?

Company names can be beneficial, detrimental, or just inconsequential. Look at any list of businesses and you'll immediately be able to start placing them into these three categories. While you're at it, place your own business into the right category as well. It's an interesting exercise.

If you see obvious disparities and you've determined that you need to make a change, another big factor to consider is timing. Start out by recognizing that there never will be a perfect time. Instead, ask yourself how much longer can you afford to project an image that doesn't properly reflect the value you bring to clients. That will determine your timing.

Boil it down

If you don't feel good about what you've got for whatever reason, it's up to you to change it. No one else will do it for you. When you make the commitment, do it with a purpose. Make the commitment and go all in – even if it's going to be a lot of work.

People are watching and possibly making decisions to contact or buy (or not) from you based on their perceptions. The amount of business you are potentially missing out on because of those misperceptions may be substantial. Instead, make it easy for those potential clients to want to contact you. And make it a point of pride for your current clients and employees to want to be a part of what you offer.

Next up in the rebranding series...the new name we chosen and why we've chosen it.

 Photo by Mads Bødker.

@wendykeneipp

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As a consumer, do you ever see a business that is in such obvious need of fixing, or see a huge opportunity for improvement, that you just shake your head and wonder what in the world is the owner doing? How can they possibly miss this?!

If they would just offer (this feature) I would pay a premium!

Or

How in the world can they continue to let that person be their front line representative?! They are losing business as a result and don't even know it.

Or

Why doesn't the coffee shop have someplace to pour out the excess/leftover coffee? Why have it poured in the trashcan only to leak all over the floor? (Admittedly this is a personal frustration that comes from not taking care of the details or not taking the time to experience your own business as a customer does.)

Or

Do they have any idea how antiquated their model is? If I started competing with them tomorrow, they would be out of business by the end of the year.

It's all about perspective

The thing is, from the distance of a consumer or outsider, it is often much easier to see the vulnerabilities or missed opportunities of someone else's business. Sometimes those vulnerabilities and missed opportunities seem to apply to an entire industry. This last point was reinforced recently through a conversation I had with someone brand new to the insurance industry.

This gentlemen had spent 20 years in another industry and was brought in to an independent agency with the task of "making them relevant again". After just a few months in our industry, and 400 hours of analysis (believe me, he analyzed every aspect of our industry thoroughly), here is a partial summary of his analysis.

• The brokers who are chasing individual and small group business are "dead men walking".
• The industry is rapidly aging and filled with (primarily) men who had an amazing run of luck over the past 20+ years.
• Most brokers know little to nothing about how to truly run a business.
• Most owners are "rugged individuals" who are not going to be able to meet the consultative, technological and cultural changes demanded by the changes resulting from healthcare reform.
• Providing quotes and answering your own phones and calling that customer services isn't gonna cut it.
• Because most owners don't really have a "business owner" mindset, they will be slow and cheap to execute any real and meaningful change that the marketplace will demand (i.e. human capital, technology platforms, cultural change, structure/systems, mentorship and accountability) thereby making them...well, like the dinosaurs...extinct.

Is that an overly harsh assessment? I don't think so. I think it fairly and accurately describes some of the fundamental vulnerabilities we have as an industry.

With the exception of the coffee question, I think every one of the questions I ask above could be applied to almost every agency's business model. In particular, the last question/observation I mention above should scare the hell out of you.

Do they have any idea how antiquated their model is? If I started competing with them tomorrow, they would be out of business by the end of the year.

Who is asking this question and making this observation of your business? Is it one of your own employees who could go out on their own tomorrow? Is it a forward thinking competitor? Or, is it somebody you can't even see? It's safe to assume that somewhere there is someone (intentionally or by accidental observation) evaluating this industry and your business. And what they see may have a bright neon sign above it flashing "OPPORTUNITY!!" And with such obvious opportunity, they may now be plotting to take over. Kind of a scary thought isn't it?

Well, instead of being paralyzed by that fear, capitalize on the vulnerability of the industry yourself. As best you can, step back and analyze your agency, and this industry, with the eyes of an outsider (I would also include asking clients/prospects to offer a critique). Do so and you can be the one putting your competitors out of business by the end of the year.

Photo by North West Air Ambulance.

@kevintrokey

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As an industry, we have to start delivering more value. Anybody in this industry who doesn't, won't find themselves in the industry much longer.

By its purest definition, value is getting something of equivalent worth compared to what we pay. In the book "Go-Giver", the authors define the Law of Value in the following manner: your true worth is determined by how much more you give in value than you take in payment. By either of these definitions, I would argue we are not an industry that truly delivers good Value.

Let's start off by talking about the payment side of the equation

First of all, let me ask you a question:

How many people do you have that do any work for you that you don't know exactly how much you pay them? I'm guessing it's a very short list.

Now another question:

How many people do you work for who have no idea at all what they pay for you? If you are like most brokers, and are being honest, that list is way longer than it should be.

The reason is, in our hearts, we don't believe we aren't a good Value for our clients. If you believed you were, you would have no problem going into that $40,000 account and having an open and honest conversation about what you are getting paid and, more importantly, what you deliver in return.

If your business model is like too many, what you are doing for that $40,000 is placing the insurance and then fixing the problems that arise from those same policies. It would be hard to argue that many are truly doing $40,000 worth of work, much less delivering more than what is being received in payment.

So, it appears that if you want to be someone who is considered a good Value, you need to adjust one side of the equation or the other. I'll argue that the right answer isn't on the payment side. If you take that route, you will be setting yourself up to compete against those competitors who will always do it for less. That's a race to the no-profit zone.

So let's focus on the delivery side of the equation

The business model of the typical agency needs to be overhauled. To that point, a future blog will explain what I mean in more detail. I will tell you that it has to stop being about selling insurance and has to start focusing on how to improve the business of your clients. However, even before you start overhauling your business model, there are opportunities at every step of the current way to deliver more value than your prospects/clients are expecting.

Here are a few examples:

Marketing – Look at your collective marketing efforts: brochures, website, LinkedIn profiles, blogs, etc. Do you sound like most every other agency bragging about your 112 years in business, offering a free quote, and listing the carriers you represent? Or, do you demonstrate how you truly understand the issues being faced by your clients and make it clear you can offer a solution?

Value test in Marketing – Even if the audience never engaged you in a face-to-face conversation, they should have learned something that will help them in their business as a result of your marketing efforts. Especially with your social media marketing, you should be a regular stop as they look to build their own business acumen.

Selling Process – This is a natural extension of your marketing efforts. Your selling process has to be focused on the needs (known and otherwise) of the buyer and be more of a process of education than anything else.

Value test in Selling – Someone would write a check to go through your sales process. (Don't snicker, I see it happen all the time.)

Customer Service – I know that many of you provide countless Value Added Services to your clients. You probably think that this makes you the exception to the Value deficit I have described. It doesn't. Most of your VASs never get used and therefore have zero value. Worse than that, the frustration that comes from them not being used actually hurts you.

Add value by ensuring that every VAS you offer to your client is implemented and executed as intended. If you aren't going to have a formal implementation plan, then don't even offer the VAS.

Value test in Customer Service – If asked what you do for them, your clients would state the implementation/execution of your Value Added Services ahead of quoting insurance and fixing problems.

No matter what you do, there is always an opportunity to add more Value than was expected. Be a Value Driven producer/agency and you will quickly become invaluable to your clients. You might even be able to ask for a raise.

Photo by Karl Baron.

@kevintrokey

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We all know the old saying, "You can lead the horse to water; but you can't make him drink."

Perhaps no better saying applies to agencies and producers changing their model than this. They can surround themselves with people who will tell them all the reasons they need to take a drink; they will even find people to teach them how to drink the water. But we all know they can't have someone who drinks the water for them, someone who wants that drink more for them more than they do themselves. Well, I suppose that sometimes that becomes the case, but it just doesn't do any good.

We all need to find our thirst and do whatever is necessary to be sure it is quenched. As you watch the industry, there comes a point where it becomes obvious some people just don't want it bad enough to take that drink. With all due respect, they need to move back from the shoreline and not block those who are ready.

"We need to change!"

This is something we hear and see from agencies and producers every day in industry conversations. Most everyone recognizes the need to change, but so many seem to be paralyzed by the fear of change that they're willing to die at the edge of the pool getting up the nerve to take a drink.

We see agencies say they are willing to take baby steps toward something that might look like change, but let's be realistic – that kind of "change" will never get you anywhere. Making minor adjustments (picking the easy things) to the way you've always done business will get you more of the same business. And will always result in reverting to the old, tried and true ways, whose days are numbered.

Changes are happening around us

This is not a time to dip your toe in the water; it's time to jump into the deep end. Carriers have made a major change in the way they are doing business, and it's directly impacting agencies. Yet, what we see are agencies just wringing their hands in fear and hoping for someone to save them from themselves. One court battle after another; waiting on yet another election in hopes that things will go back to the way they were.

Well, that's not going to happen. Even those waiting in fear know that it will not go back to the way it was. And if there are some reversals, it will never be the same. The agency business has changed.

Some agencies have already given up. We see acquisitions and mergers every day. For those who are ready to get out of the independent system, those who no longer want to be in control, that may be the right answer. But, unless you want to be one of those agencies, the time has come to stop looking at that pool of water and to take a drink.

Decision time

What's the worst that will happen? You might fall into the water and get really wet. We're saying, embrace it, jump in before you fall or are pushed. The chances of survival from falling into the pool are much greater than the chances of survival from standing at the edge, fretting over what might happen and dying a slow death of thirst.

As you think about where you're standing and how much fear you've got, don't think about just yourself. It goes far beyond just one person. Think about every other person who is on your payroll and on your list of vendors and partners. When you are in the position of being a leader, you've accepted the responsibility of looking out for the best interests of all your stakeholders. All of those people are depending on you to keep the business growing and thriving.

Being the first one to take a drink is scary. Most will never face the fear of the unknown. As a leader (either by title or by example), you have a whole team waiting for you to take a drink, to jump in the deep end. They're waiting for your signal that, "The water is fine!!"

And hey, when you find yourself at that pool, take a look around. You'll find most people are standing fearfully at the side watching and waiting. Some are drinking. And a few have just jumped right in. What are you and your team going to do?

Photo by João Paulo Corrêa de Carvalho.

@wendykeneipp

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If you have read any of my past articles, you have seen me make a case for changing the model of today's benefits producer/department/agency. I have talked regularly about how our role with clients needs to change. I've even described in some detail what that role should encompass and how innovation is no longer a luxury but a necessity for our very survival. 

We all know that change is usually difficult and that the gravity of "how we've always done it" is a strong force indeed. Rarely do we push through the challenges of change until we realize it is more difficult to live in our current reality than it is to do the hard work of moving ahead. 

As benefits producers, we are challenged to change by a number of new and emerging realities: 

New client needs—With employee engagement and morale at an all-time low, your clients are looking for help in new ways.

Competitive advantage—Those most adept at change will always have an edge.

Control—You must have control over what you sell and how you get paid. 

Commission cuts—Enough said.

Disintermediation—Exchanges and direct writers are looking to eliminate you as the middleman.

Economic uncertainty—Experts predict that companies that are able to innovate within their industry (whatever the industry) will be the first to enjoy economic recovery. 

Health care reform—Again, enough said.

Desperate competition—No one is in more danger than someone forced to fight for his very existence.

Okay, these challenges may make it obvious why benefits producers need to be innovating right now, but it's essential that we do so on a regular basis, not just this one time. Let's stop for a quick economics reminder of why continuous innovation is so critical. 

Four-stage life cycle

Every product and service goes through a four-stage life cycle. 

1. The first stage is the entry point: Innovation. In this stage you are offering something not seen before by the market (think Apple and the iPad, iPhone, etc.). In this stage, profit margin is very high. Of course, the competition is always watching, and soon they show up and want some of that healthy margin.
2. This moves you to the second phase, Sales and Marketing. The focus here is on acquiring market share. And, while not as high as in the Innovation phase, profits are still quite healthy.
3. Once the market perceives that what you are offering is available from additional sources or at a lower price, you cross the line of commoditization into the third phase, Operations. In the Operations phase, the focus is on lowering costs to protect a diminishing profit margin.
4. Eventually no more expenses can be cut, and the only way margin can be maintained is through the economies of scale that come with Consolidation, the fourth and final phase.

Obviously, it is desirable to have your product or service positioned in the first two phases. That's where the profits are. Unfortunately, too many of us in the benefits business are using models that place us in the third or even fourth phase. 

Hopefully you agree that it is obvious that we need to innovate. And, let's be honest, coming up with new ideas is relatively easy. The hard part is making that new model a reality. At our recent networking conference, we spent a lot of time discussing exactly what innovation is, as well as what is needed to actually execute.

Innovation equation 

In his book The Other Side of Innovation, Vijay Govindarajan addresses these key aspects of innovation:

• Does Innovation = Ideas? As I've said, ideas are the easy part, but they're only the beginning.
• Innovation = Ideas + Motivation.  While some think just putting out a rallying cry around the new ideas will get them implemented, this approach rarely produces sustainable results.
• Innovation = Ideas + Leader. Others will put a leader in charge of implementing the ideas, but one person alone cannot bring change to an entire organization. 

The innovation equation is simple to understand but challenging to apply:

Innovation = Ideas + Execution. As you might expect, the only thing that really matters is execution. Without execution, not only are new ideas of no value, they are actually detrimental to an organization that has to come to grips with its inability to do anything with them. 

Now you get to decide.

How comfortable are you that your current model will allow you to successfully address the industry and economic challenges you face? 

If your answer makes you uneasy, that's okay; you still have time to find the innovation and create the plan that will give you the confidence you need. I'll walk you through the steps you need to take.

Creating a plan

We need to deal with innovation the same way we deal with our current operations, which means planning for what needs to happen. With operations, we do a pretty good job of setting goals, identifying action items, and then following through. Unfortunately, with innovation, we tend to take the approach of: "That's a great idea; let's do it!" and never think through the details of what it will take to make it happen.

If you don't create a plan to help you reach your destination, you will end up on the path of least resistance. That's a crowded path that tends to lead to commoditization rather than innovation. 

A plan has three critical elements: 

1. A detailed vision of where you want to go 
2. An honest assessment of where you are currently 
3. Clearly defined steps to move from vision to desired change

At a minimum, you need to have clarity about these critical aspects of your business:

• What do you sell?
• To whom do you sell it?
• How do you earn new clients?
• How do you get paid?
• How do you retain clients?
• How do you ensure profitability?

First, I encourage you to discuss and describe in detail the way you would like to be able to answer these questions for your future agency. Identify the value proposition and sales approach you would like to take to your prospects and clients. Include solutions and resources that go well beyond the traditional product/service focus so common in the industry, and be sure to look at your clients' HR needs. 

Second, answer each of the above questions based on your current business model. You need to be brutally honest about your current model and where you are vulnerable to the challenges/threats I described earlier.

Sometimes it's hard to get started with this exercise, so I offer the following examples. Of course, you will need to go into much greater detail.

What do you sell? (Now—Insurance; Future—Client solutions)

To whom do you sell it? (Now—anyone; Future—Our "ideal client")

How do you earn new clients? (Now—Spreadsheet; Future—Listening to their needs)

How do you get paid? (Now—Commissions; Future—Fees)

How do you retain clients? (Now—Great service/re-quoting; Future—Improving clients' bottom line)

How do you ensure profitability? (Now—Huh? Future—Get paid based on the value we deliver)

Finally, in each area, lay out a detailed plan of what you need to do to move from where you are now to that future vision. As in any good plan, be sure you include details about who is leading each item, what resources are needed to accomplish each goal, and when each item will be implemented.

It may seem easier now to keep doing things the way you've always done them, but taking on the hard work now will make your future work much easier.

Originally published in Rough Notes Magazine, September 2011.

Photo by yachtfan.

@kevintrokey

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