JA: You joined the IIAA in early 1986 to help agents and the industry become more successful with automation. I remember the industry meeting in which you introduced the term "SEMCI" (single-entry, multi-company interface). You were an enormously energetic and effective advocate for successful agency automation for 14 years. I, for one, miss your presence at industry events. Why the change to Reagan Consulting?
SL: When I joined the IIAA, I told them I'd do my best, but if the time came when I was no longer excited about what I was doing, I'd probably leave. I remember during a meeting at the ACORD conference in the spring of 1998 rolling my eyes at something someone had said and thinking "Been there, done that." I was beginning to see a repetition of issues that we had already been through. I decided it was time to leave the industry and do something else. At the conference, Bobby Reagan advised me to stay in the industry. He said I knew too much and had too much invested to leave.
I thought about going into business with my daughter, but finally, at Bobby's invitation, I joined his consulting group in Atlanta, where I could continue some of the work I had initiated with Best Practices in 1992 at the IIAA, but without the continuous travel. I'm happy not to have to get on airplanes and be gone weekends. I like seeing more of my husband, Tom, and the family I have in Atlanta.
JA: Do you think others in the industry also feel they're watching a film that they've seen before, thinking, "This is where I came in," and losing the passion they had for personal and industry automation struggles?
SL: Not necessarily. We've come a long way in the last fifteen years. What was a mystery then is common sense now. There's no need to convince people about a whole new way of doing business. Now, it's more about making one improvement after another — and that doesn't require the passion we saw in the past. But I do see passion in younger agents. They're able to embrace change much more easily than some of the older agents.
On the other hand, as I step back and look at things today, I'm more surprised at what hasn't changed than what has. I've been reading David McCullough's book on John Adams and I've come to realize that the "Founding Fathers" were just like people today. They were excited about the movement, but had to get their hands dirty and deal with politics just like we do today.
Agency automation tools have changed over the last 20 years, but the really important problems are still the same. We've even got company proprietary terminals back again, though perhaps in a more convenient form. Technology isn't really the solution to perennial agency problems. Only good management and leadership can solve problems. Agents who use technology without it being an element of an agency business strategy are making a big mistake. One agent I talked to wanted to be paperless and installed an image system and then had his staff scan every scrap of paper that came into the agency. That doesn't make any sense. Technology needs to serve a business purpose.
JA: Technology changes but human nature doesn't. In your Best Practices research do you find a correlation between technology and agency success? Put another way, can a well-managed agency do without technology?
SL: Many really successful agencies don't use their systems fully but they do pay attention to workflow, customer service, carrier relations and so on. But no agency could compete for long today without technology. How could CSRs handle the volume of accounts they do today?
But as I said, technology on its own doesn't work. I had an agent call me who was really disappointed about how his premium per employee ratio compared with Best Practices ratios. He thought he was doing a great job until he compared himself with other agencies. He didn't know what he was doing wrong. I asked whether he had a management system. Yes. Is policy detail loaded? Personal lines, but not commercial lines. Doing transactional filing? No, the staff doesn't want to give up paper files. He had automation but he wasn't managing it.
Agencies have to struggle to be successful if they don't take strategic advantage of technology. But without effective management and leadership, they'll never be successful, no matter how much they spend on technology. And by the way, too many agencies waste money on unmanaged technology.
Is technology important? Very. Is it the whole answer? Absolutely not. But technology is key to improving productivity. Consumers now expect a high level of automation from agents. And agents can't attract good staff without the right kind of technology to help them do their jobs better.
JA: The IIAA Best Practices initiative is intended to make public some of the practices that make agencies successful so that other agencies can model the behavior they find relevant. How did it start? How does the process work?
SL: In 1992 ACORD changed its dues structure, reducing what associations needed to pay. That freed up some money at IIAA to spend for other technology-related purposes. Rick Gustafson, who was president of the association that year, suggested we used the money to help agents use technology better. Joe Feitelberg, the chairman of the automation committee, and I thought that the issue was really broader, that the successful use of technology was part of managing an agency well. Agents were having problems then with agency value and competition. So we decided to take a larger view and invest the money in finding out how great agencies got that way. The IIAA chose Reagan Consulting to do the first study and it's been an important IIAA process and offering to its agents ever since.
Every three years we ask our company partners to nominate their best agencies for the Best Practices process. We had about 800 nominations in 2001 to add to our existing group of Best Practices agencies. We invited all the agencies to participate and asked them to submit detailed year-end financial and operational results for analysis. We got about 270 back. I've got a computer program that ranks the agencies according to their results. We selected the top 30 in each of six different agency size categories and then interviewed the five or so best agencies in each category.
We'll follow the group for two more years until it's time to start the process all over. Our published report provides statistics and narratives in a number of different agency areas. Those narratives provide ideas for products, services, seminars and so on. The IIAA Web site and the Reagan Consulting Research section provide access to the Best Practices products. I think there are about 25 items in the Best Practices toolkit. (www.iiaa.org and www.reaganconsulting.com).
JA: Do some of the Best Practice reports deal specifically with technology and what do they report?
SL: Since technology is really implied in most of what agents do, it isn't necessarily separated out. For instance, if the topic is how to be successful at and manage the sales process, technology is discussed as part of that process.
But here's an example of what one of our Best Practices agents did with the Internet. Al Shank has a small agency in Kansas and is very knowledgeable and thoughtful about technology. He wanted to be on the Internet early and thought that it was better to be first than perfect. He said to himself, "How will the right people in my community find my Web site." He thought the first place they might look was the Chamber of Commerce site, so he made arrangements with the Chamber to run his banner ad on their site (in the only banner space they have available), and he pays a flat monthly fee for it. Next he decided that the local newspaper site might be a community magnet, so he made arrangements to be listed there. Then he got to thinking about how to encourage revisits by local people and added local news and weather to his site.
JA: Do you see your Best Practices agencies going beyond typical P&C business to grow revenue and what are the implications for technology?
SL: Absolutely. They're looking at all kinds of things, from life, to benefits, to being a P.E.O., to selling financial planning services, to providing IT services for other businesses. Since classic agency automation doesn't support some of these efforts, they're installing additional technology but then have to manage it and integrate it with what they already have - and that's not easy. They find that their more sophisticated marketing efforts can't be supported by the marketing functionality of their management system, so they install ACT!, Goldmine, or some other sales management package.
This year, for the first time I can remember, Best Practices agents are talking about how difficult it has becoming to manage technology in their agencies. It's one thing to handle a management system and some rating software but now agencies have to call in consultants to help them with what amounts to a data center.
It's a new expense and more trouble for agencies and it's going to get worse. Agents I've talked to say management system vendors, perhaps understandably, aren't much interested in getting involved with these integration and technology management problems.
JA: Thanks for the insight. It's obvious agents could benefit by making use of the Best Practices tools. One more question. Earlier in our discussion you pointed to carrier Web sites as similar to the proprietary terminals that emerged in the 70's — and they created all kinds of problems for agents. What do Best Practices agents say about carrier Web sites? Do they feel that the disruption caused by these sites makes it harder for them to succeed?
SL: It's mixed. They really like being in control of the process. They can enter the information directly and don't have to worry about the company introducing errors. Right now, the Web sites seem to help more than they disrupt. As long as the agency is getting download, they don't need to do double entry. On the other hand, maybe agents haven't really experienced the negative impact of these sites. Years ago agents found they could deal with maybe three company terminals, but once they hit four, it was just too much and they wanted to throw them all out. Maybe agents just haven't gotten to the saturation point. Companies that think they can use technology, that is, isolated proprietary Web sites, to gain competitive advantage are dead wrong. That might work for a little while, but ultimately agents will gravitate toward the best products, service, price, and commission.
JA: Thanks Shirley.
SL: You're welcome. I've enjoyed being able to discuss some of the on-going issues I've spent so much time working on.
© Copyright 2002 by Sound Internet Strategy. All rights reserved