Our business and social worlds are being transformed right before our eyes. As technology forecaster Daniel Burrus said in his January 2009 newsletter TechnoTrends: "We are now at the dawn of a profound technology-driven transformation that will make the changes we have experienced over the past 25 years seems small and slow. We are about to transform how we sell, market, communicate, collaborate, innovate, watch TV, learn and, as you might guess, much more."
As these technologies evolve, the implications for the insurance industry are significant. The marketing, sales, communication, and customer service activities that agencies have relied on for years to grow their organizations are changing. Young, Internet-savvy consumers are using search engines and web sites to research all types of online purchases. They are communicating and meeting through social networks. They don't call when they need something, they text.
This new generation of consumers wants do business with companies that mirror their personal and business lifestyles. The successful agency of the future will understand this and leverage this "technology-driven transformation," harnessing the power of the Internet and new electronic tools to enhance customer value.
For insurance agencies (actually, for all companies), the key to success in this new environment is making sure technology does not overshadow business strategy. It is important to remember that strategy always comes first, technology second. When considering all options, your first question should be: What is my strategy to capture the attention of this new consumer? Then, and only then, should you explore the technology that is available to help you support your strategy.
A review of some of the trends that will affect how you market, sell, and service a wide range of insurance and financial services products may aid in your decision.
Demographics
We are a nation of generations. The more you are able to understand the thoughts, fears, motivations, and expectations of each generation the better able you will be to market to and service diverse groups of people. Age does matter. The majority of agency owners and staff are part of the Baby Boomer generation. If you are going to attract younger consumers you need to understand them better.
Members of Generation X were born between 1965-1976 and make up about 17 percent of the U.S. population. As a whole, this group is both independent and skeptical, existing in the shadow of Baby Boomers. As this group moves into their 30s and 40s, Gen Xers are establishing themselves as consumers who are starting families and buying homes.
Generation Y are individuals born between 1977-1994 and make up about 25 percent of the U.S. population. This group is generally idealistic, optimistic, and patriotic. They consume media in extremely fragmented ways.
Gen Xers and Gen Yers have a number of things in common. Both groups grew up with recessions, single-parent households, cable TV, the Internet and other personal technology. Consequently, these groups consume advertising and media differently than earlier generations. Communicating with them through traditional marketing channels can be difficult.
This demographic trend affects not only who your future clients will be, but also who your future employees will be. A question you should ask about your organization is: How many of my existing staff are eligible for retirement in the next five years? As the Baby Boomer generation grows older, many will be retiring. Those vacant positions will need to be filled by younger generations of employees. Will you be able to attract and retain younger generations into your organization? What type of work environment will you need to create? What strategies are you creating today to prepare your organization for the future?
Agency Systems
Over the past 25 years, agencies have experienced technology change within their companies mainly through the adoption of agency management systems. Along with these systems, companies now have access to benefit management systems, document management systems, and marketing and sales systems. All of these systems can be implemented in an agency as part of a single solution from one vendor or as multiple systems integrated together. The technology involved is continually evolving and improving, enabling agencies to process business more efficiently and giving staff more time to develop client relationships.
Areas where vendors and agencies already are, will be, or should be enhancing their systems to provide better functionality include:
? Real-Time: The ability of agency management systems to communicate with carrier systems and provide policy information in "real time" has been available for several years. It provides significant time savings for both agencies and carriers. While adoption by agencies has been slow, that is starting to change.
? Data Transparency: For many years, client and policy information have been locked within an agency management system, with the vendor tightly controlling how and when information could be used. Agency staff entered information into the system but could not easily extract information out of the system. That is starting to change partly because of web services. This technology allows information to be extracted and used by the agency with other applications in real-time. Using web services, agencies can create Internet producer portals so staff can enter and view prospect information without having to log-in to the agency management system.
? Live Customer Service: An increasing number of clients expect to be able to go online and perform processing and servicing tasks anytime, day or night. To meet this demand, agencies will need to provide an Internet portal that allows their clients to look up policy information, start the claim process, pay a bill, and perform other customer service functions. Vendors can respond to this need by providing the ability, maybe using web services, for an agency to add this functionality to their web sites.
? Document Management: The first generation of document management was a simple scanning system that allowed you to replace the paper filing cabinet. The second generation allows for the management of paper as well as various electronic documents. The next generation will allow you to manage document content and workflow.
The idea of content management is that any type of document can be tagged with information and then processed automatically based on that information. For example, when a policy arrives into your agency (either in the mail as paper or electronically as a PDF) you already have information within your agency management system that can identify that document. When the operator capturing the document into your content management system enters the policy number, the content management system pulls all the information from your policy management system and associates it with that document.
With that information, you can create business rules within the content management system to automatically move the document to the next step in the process. Ultimately this will do away with the need for suspense or diary systems within your agency management system. Your content management system will take over that function.
e-Signature: With the right processes in place, you can send an application to a client, have him sign it electronically, and return it to you, all without anyone printing a piece of paper. Federal legislation enacted in October 2000 provided the legal foundation for electronic signatures. The insurance industry has been slow to adopt e-Signature; that needs to change.
Mobile Computing
Consumers today are surrounded by more information, with more immediate access to that information, than ever before. Traditional cell phones have morphed into mobile computing platforms. According to a recent presentation by Morgan Stanley, mobile Internet usage adoption is increasing faster than desktop Internet adoption did. Morgan Stanley predicts that within five years mobile Internet users will outnumber desktop Internet users.
Smart phones — cell phones with a big screen, a keyboard (physical or virtual) and the ability to run add-on programs — are not just phones to the people who use them. Their versatility allows them to impersonate other handheld devices. In reality, a smart phone may be a calendar, a web browser, an e-mail portal, or an MP3 player that also happens to operate on occasion as a phone.
While consumers have a number of smart phone choices such as the Blackberry, Android (Google), Treo, and Windows Mobile, the leader in this transformation in mobile information access is the Apple iPhone. According to AT&T, people who have iPhones use 350 percent more data than other smart phones owners on their network.
Nationwide, Allstate, State Farm, and USAA are a few of the insurance companies that have created free smart phone applications for their policyholders. The applications allow customers to access personal insurance information and to streamline the claim process by sending pictures of accidents and submitting claim information before they leave the accident site. USAA's application allows those clients who also have bank accounts to take a picture of both sides of a paper check and electronically deposit the check.
To tap into this trend, your best option is to provide your mobile customers with as much information as possible, as instantly as possible. The more you are able to empower your customers with instant access to information, the more they will view you as a valued provider and want to continue as your client.
The Social Web
One of the best opportunities in years for an agency to communicate and collaborate with clients and prospects is via the social web. While many opportunities on the social web merit discussion, one that an agency of any size should be considering is Facebook.
As this is published, there are 113,130,240 people in the U.S. over the age of 18 with a Facebook account. Insurance agencies that want to grow cannot ignore using this platform as a way to interact with prospects and clients. Facebook is one of the most underutilized connection points available for marketing to and communicating with people. This is especially true for insurance agencies.
There are three ways to create a presence on Facebook. Most individuals or companies start with a profile, the "face" of Facebook. It is designed as a place where people can post information about themselves and share it with their "friends." A Facebook group is similar to a club in real life; it is used by people who have similar interests. A Facebook page allows a company to create community connections without the limitations found in the other options.
A Facebook page is the right choice for you if you want to create a connection on Facebook between your agency and prospects and clients who have their own Facebook profiles. Your page ultimately becomes a free online community that extends your web site and provides a reflection of you and your organization.
Facebook advertising is one of the most targeted forms of advertising currently available on the Internet. It opens a new avenue for insurance agents to communicate and connect to audiences based on specific demographic information contained in user profiles. If you already have a Facebook account, then you almost certainly have seen sponsored links or advertisements that seem particularly relevant to you. How does Facebook know you work in the insurance industry and might be interested in ACORD forms? Because that information is part of your Facebook profile.
Next Steps
The best way to begin to figure out how these trends will affect your organization is to explore and experiment with the new tools. Find someone in your office who has a passion for this new environment and provide them with the time to "play" so they can learn how these tools might help the agency. Always keep in mind that your business strategy comes first. Then select the right technology to support your strategy.
Steve Anderson has been a licensed independent agent for 30 years. He is executive editor of The Anderson Agency Report, a monthly newsletter that provides independent agents with insurance technology information. He is also president of The Anderson Network, Inc., which helps agents and brokers maximize productivity and profits using practical technology. www.steveanderson.com.
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