Bryant Rousseau speaks with Mike Davidson, State Farm's recently retired vice chairman and chief marketing and agency officer, and SVP Rand Harbert, who succeeded Davidson as leader of the company's nearly 18,000 agents.
The issue of attracting the next generation of agent talent into the business is a core issue for the industry, with some saying we're approaching a succession crisis as baby boomers start to retire. How is this event going to help State Farm address this issue of finding the most effective way to attract the Millennial generation into insurance?
Mike Davidson: For years, there was thinking that to be successful in the insurance business you need to get seven or eight years of experience somewhere else, breaking yourself into the business world. Then, once you get some maturity, you can become an agent. We've got reams of data back home that will show there's actually no difference whether a person starts as an agent at 21 or at 41 in terms of his or her overall long-term performance. And this event reinforces to us what kind of high-quality young adults are out there, and it helps us as the leadership of the organization to go back to the people who are actually recruiting agents and say, "Don't overlook this generation! They've got skills and competencies that far surpass people in prior generations."
How is the skill-set profile of an agent going to be different five years, 10 years down the road? An agent used to have to be good at sitting down at a kitchen table with clients and closing a deal: What are they going to need to be good at over the next decade?
Rand Harbert: If you look at the profile of our most successful agents, there's something that you see. It's truly a balance of depth—I know what I'm doing and have built up expertise in an area—with the combination of a lot of breadth—I know a lot about a lot of things. That starts to show up in how I participate in my community, what I care about and how people perceive me when I'm providing professional advice. The people who will succeed in a business as complex as insurance going forward are people who possess both of those skill sets.
Davidson: Obviously, you're going to have to understand and have the ability to adapt to emerging technology as time goes by. And there are just such a wide variety of products available that agents have to understand. And the marketing techniques that companies use today are based much more on analytics than they have been in the past, so you have to be a pretty sharp cookie to be in this business.
From last year's event, were you able to extract any ideas, put them into the business and get any real results?
Harbert: One of the students last year was talking about QR codes—and there were people in the room who just weren't familiar with the concept of QR codes. I look a year later at how QR codes are being used in State Farm all the way down to the independent-agent office—and it's amazing the change that has taken place. The first time I heard about how you could use QR codes to market the local-agency concept was in this very conference room a year ago.
What has stood out already today from what you've seen so far?
Harbert: Social media, and the power that lies within social media, is not new. But what I heard today at a couple of presentations was how to think about using social media in more practical ways that can help drive our biz. So if I left here right now, even in the early hours of this competition, I would have two or three thoughts around the utilization of social media that I'll go back and think about.
Such as…?
One was simply this: How are you going to go from using social media as a way to communicate to a way of doing business? Young-adult customers want to do more than communicate that way—they expect to transact through that particular mode. We're watching organizations right before our very eyes figure out how to use social media as a mode of commerce, not just as a mode of communication. We have to be thinking about it as an organization. What I thought was so important a year ago—how do you think about using social media to communicate with tomorrow's customer—is already yesterday's thought, because tomorrow's thought is: How are you going to allow people to do business with you through those channels?
Mike, what's your take on the role social media is already playing at State Farm and will play in the future?
Davidson: From a compliance standpoint with social media, you've got to ride herd over that just a little bit. But it has not been a big issue for us so far. There are agents today that will tell you that 50-70 percent of their new business comes as a result of referrals they've gotten off of their Facebook page or Craigslist. The old way of gaining referrals is sitting around at the coffee shop or a cocktail party and someone says, "Go see Rand; he's a good agent." That still works, but the bulk of those [peer recommendations] are coming through social media so we've encouraged all our agents to get Facebook pages. And the biggest issue we've got is helping some of our more senior agents learn how to do it. The challenge is not a matter of them resisting social media; it's helping them transition to how they go about conducting a big portion of their business this way.
What will be the biggest challenge to the agency system over the next couple of years?
Harbert: If you're going to truly be a customer-centric organization, you have to quickly get a handle that customers don't wake up in the morning and think, "Which channel am I going to shop in today to get my insurance." So the objective long term is that you really have to be channel-neutral: We don't care how you come to us, but when you come to us you're going to have a wonderful end-to-end experience, and if you want to come in through one channel and move to the other channel, that's fine. That's the game going forward: You can't be great in only one space. Call centers, Internet, mobile—the great company of tomorrow has to be very comfortable in all those spaces, and a customer is going to have to be able to move in and out of those spaces in a way that feels seamless.
Davidson: For me it's how an agent maintains relevance to the customer: That's both the biggest challenge and biggest opportunity. State Farm is a multiline insurance company with such a wide array of products that there is more opportunity than ever to make a difference in the life of customers. The challenge is if you don't stay close to the customer. Given the glut of advertising that exists in the marketplace today, you're not going to be able to keep a certain portion of the marketplace from shopping if you haven't maintained a substantial relationship with the customer.
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