Understanding Value From The Customer’s Point Of View

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In this episode of The Digital Broker, Ryan Deeds and Olivia Schmitt explore how insurance agencies can define and understand value from the customer’s point of view. By listening to this episode, you will learn:

• How to determine what your customers consider valuable in the absence of a universal definition of value
• How you can talk about value with your customers by creating a culture of conversation inside your office
• How to act on what you learn and how to endure the challenges of the innovation that follows
• How stewardship reports work, what they’re meant to do, and how to put one together to retain top customers

Dealing with insurance agencies used to be a pretty one-sided experience. The agency would define value for the customer, whose viewpoint was of secondary importance. Those days are gone. Agencies that have empowered the customer have made gains. Customers are better educated about which coverages they want to, need to, and can afford to buy. If they don’t get what they’re looking for from one agency, they will move on to a more amenable one.

Which agency do you want to be? Probably the one keeping customers, not driving them away. And yet, understanding value from the customer’s point of view remains a challenge at many agencies. Much of what an agency thinks it knows about value is sourced from conventional wisdom, or from conversations with the people at the other agency up the street. This is not a bad way to learn, but it is incomplete.

What if the agency up the street isn’t catering to the same customers you are? We have examined the phenomenon of niching in our previous episode with Olivia Schmitt, who returns to join us for this follow-up conversation. Understanding value from the customer’s point of view isn’t as easy as borrowing someone else’s definition of value, because value means different things to different people. Your job isn’t to give in and pander to every single prospect who knocks on your door but to figure out what value looks like from the point of view of the customers you need to serve, and then to make sure you are delivering on that value.

How to go about establishing those avenues of communication will be covered in upcoming episodes. In the meantime, we will get you started on some key principles:

Create a culture of conversation. This is easier than it sounds, and you can start right away. Do you know who is already having countless conversations with your customers? That’s right: your producers and account managers. They probably already have much to say about what they think your customers consider valuable. Let them tell you about it. By creating a culture of conversation inside the office, you will be having a conversation with your customers by proxy.

Conversations also stimulate creativity, which is not as trivial an indulgence as you might think these days. Your agency’s survival depends on it. We don’t need to tell you that it’s a competitive market out there, but a lot of the competition is taking place where you might not even be looking. The most innovative agencies are figuring out what the customers want before the customers are even aware they want it. Open exchanges of views and ideas accelerate the discovery of these insights.

Take what you learn and act on it. You probably will discover that to deliver better value to your customers, or more of it, you will need to implement a change or make some sort of investment. First, figure out what constitutes your customers’ conception of value, and try to reduce it to a word or a concept. Speed, for example, is important in any segment, but it is especially important in personal lines. If you determined that speed is a key part of your value proposition, you would keep it in mind the next time you are selecting routines, strategies, and technologies to invest in. If you discovered that your customers value loss control, you would make it a point to contract some experts or talk about it with your carriers.

Even if you find out that your customers are completely happy with what you’re giving them, you still need to be on guard. Popular conceptions of value are always evolving.

Understand that innovation is tough, and go through with it anyway. Nothing is guaranteed to succeed the first time around; in fact, most attempts at implementing change don’t. Innovation is always hard work. It is sometimes painful and frequently fails too. Agencies that understand this are the ones that start winning sooner.

Look at it this way: you have an “innovation quotient” at your agency. The more you fail and learn from your failures, the higher your innovation quotient grows, preparing you for the next time you need to implement another change—and there will be a next time.

Explain value to the customer simply and accurately. Stewardship reports are a good idea here. A stewardship report is a comprehensive, customer-facing report detailing every service that the agency has provided over a period of time. Don’t assume that you can get away without presenting these. Even if it seems like most of your customers aren’t interested in these reports, remember that others are—usually, the larger accounts, who have good reason to monitor where their money is going. You can’t be taken off-guard when a customer asks you to produce a summary of what you’ve done for them. Other agencies are trying to court these customers away from you. You must be able to show what you’ve done to earn their business: which promises you’ve kept, and which, perhaps, you have yet to deliver on.

Whatever you need to show the customer, be it a large account or small, make sure it is easy to understand. Olivia has a good trick for this: show the report to your spouse first, or any relative who is not in the insurance business, and see whether they understand it. Still, don’t make it so simple that you omit essential information. Stewardship reports have to tell the whole story. Imagine showing a customer a chart that shows their premium has only gone up during their time with your agency. What is responsible for that trend? Has the customer’s business grown? Has it suffered damages? Be sure to put everything into the proper perspective.

Be they with your customers, your team, or other people in this industry, conversations are so important, we’ve created the Digital Broker LinkedIn group to help agents and brokers connect and learn from each other. Are you struggling to define value at your agency? What do you think about stewardship reports, and how would you go about assembling and presenting one? Join us and let’s talk about it.