According to Jack McMahan, CEO, of Baetis Inc., three years ago independent agents derived 92% of their revenue from traditional P&C policies. Today, only 85% comes from traditional sources. The message? Growth opportunities lie in broadening the agency product offering and realizing more revenue per customer. Agents whom I’ve talked to confirm the trend toward offering benefits, life, and even general business consulting services. The margins are often higher, the competition weaker, and the agency in a strong position to leverage its relationship with the customer.
One implication of offering more product variety is that agents find themselves creating and using more than one database/software package because their agency management systems don’t support the proliferation of products they now want to sell. And databases created and maintained for contact management and other processes aren’t supported well by management systems.
So agents face a dilemma. They can expand their businesses outside typical P&C boundaries and suffer the consequences of multiple, non-integrated systems and databases, which may generate more revenue, but create an ad hoc operating environment. Or, they can remain within the confines of their management systems and look for more customers to generate more revenue. Generally, more revenue per customer is a better business strategy than more customers with the same revenue.
Baetis offers at least part of the solution to the multi-database problem. Its eMerge product allows agencies to consolidate information from all their databases into one. In some cases the source database can then be eliminated because eMerge can accommodate both the data and the operations that need to be done on it. That’s especially true with sales, contact, and campaign systems. All can be handled by eMerge.
From the Baetis point of view, really effective marketing depends on understanding your customers/prospects. Agency management and other systems do not contain sufficient information — even when key information is consolidated to one database. So Baetis offers a data enrichment service as well, adding information from third party sources. The result is a comprehensive and accurate view of each customer/prospect.
The revelation
The first order of business for a Baetis subscriber is to extract data from its existing databases and make it available to Baetis. Baetis then goes through its scrubbing and enrichment steps and makes the resulting consolidated, improved database available on the Internet through the Baetis site and software. The agency can then view the database in a number of different ways to understand what their book of business really represents.
McMahan reports that agents rarely really understand their customer base. One large California agency told Baetis they didn’t deal in small commercial lines accounts. But they were mistaken. The Baetis database for the agency showed that more than half their business came from small commercial accounts and a large number of those with ten or fewer employees. An agency that doesn’t accurately understand its existing customer base isn’t likely to successfully cross sell to them. Their sales and marketing effort is likely to be misdirected and fail to match the real needs of the customers.
When an agency does accurately understand its customer base, it can create specific marketing tactics and eMerge campaigns that can mix mailings, calls, visits, provide automatic administration, and then provide the analysis of the results for tuning subsequent programs.
High touch
According to a Baetis study, small business owners complain their agents don’t contact them enough, especially after the sale. The prime time for making contact turns out to be a month or two after the sale, but most producers have gone on to other things and consider the customer only at renewal time. That’s rational because small margins don’t justify extended personal attention. But eMerge allows the agency to maintain what McMahan calls a “dialog” with its customers, a process that’s satisfying to the customer, but inexpensive for the agency.
Many agencies provide some sort of touch to their customers through mailings, newsletters, holiday cards, or whatever. What they’re not likely to do is to give much consideration to customizing the communication content, media, and scheduling according to the needs and desires of each customer. Generally, everyone is treated the same, and that’s not an effective marketing approach.
It’s not a surprise that agencies fail to execute the one-to-one marketing that customers increasingly want and experts say is most effective. Agencies don’t have the right information about their customers, they can’t analyze what they have in relevant ways, and they can’t execute fine-grained marketing. The eMerge and Baetis process is intended to consolidate and improve data, support relevant analysis and strategy setting, and then enable efficient execution of the strategies.
Why bother?
I’ve looked at and reviewed many sales management, campaign management, marketing, and CRM (customer relationship management) systems over the years. All had something useful to offer, but none of them hit it big in the agency world. Most agencies consider their management system their CRM system. So why have two?
McMahan points out that agency management systems are weak at marketing conventional insurance products and worse when trying to go beyond. Management systems are intended to handle what comes after the sale. They do policy administration and accounting, not intelligent marketing, which is the focus of eMerge.
But will all the work and expense of the Baetis approach pay off? In the larger world it’s an open question whether CRM systems are a success. McMahan too has seen many useless CRM installations in agencies and carriers. The problem, he says, is that CRM is seen as a technology rather than a business strategy. It’s only after the technology is installed that people begin to ask what it’s for but no one seems to know. From McMahan’s point of view, CRM is about the intelligent use of information to support successful marketing. Once you’re clear about that, you can use any method you want, including 3 x 5 cards, though eMerge is a lot more convenient.
Most agents are skeptical about automated marketing, CRM, or whatever you want to call it. Though it sounds attractive on the surface, it’s a lot less fun than playing golf with a customer or prospect. Most agencies will remain content to acquire new business through referrals and pursue growth in a more leisurely way. But for those who want to be more systematic and efficient, eMerge may be just the ticket.
Two issues
First, though eMerge can accept data from management systems (as often as an agency pleases), the process is one way. eMerge cannot push data into management systems, in part because management system vendors aren’t yet ready to support that kind of integration with eMerge. McMahan has attempted to rationalize that shortcoming by pointing out that the obsessive focus on single-entry can be counterproductive to the health of an agency. Sometimes you can be more successful overall by doing something that isn’t ideal. The point is well taken. But two-way integration would be better.
Second, though eMerge is available through the Inter-net as an in-facing service, Baetis hasn’t done much to figure out how agency Web sites and out-facing services in general can play a role in eMerge campaigns. According to McMahan, that’s because survey results suggest that’s not what agency business customers/prospects want. Perhaps. But I think at least some experimentation is in order. E-mail with links to online information can sometimes be a powerful and useful way for agencies to communicate, and superior, for some purposes, to paper mail.
From my point of view, Baetis understands more of the potential and solves more of the problems of automated agency marketing than most other approaches I’ve seen. For agencies (or carriers looking to help their agencies on their behalf), Baetis and eMerge are worth a look. Check out www.baetis.com.
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