The course of the COVID-19 crisis thus far has been turbulent, and no one can predict the impact it will have on the world, the economy, or your business going forward. It’s hard to know how to evolve your agency to fit the new normal. What we do know is that (1) opportunities can come out of crises and (2) strategic thinking is required to take advantage of those opportunities. As an agency owner, this is a good time to reflect on opportunities that came out of the pandemic for your agency, so you can emerge with a stronger and more resilient business.
Throughout the crisis-phase of the pandemic, your focus was likely on your agency’s continuity, customer service, and employee support. Many of the changes you initiated in response to the crisis have probably become your agency’s new standard operations. Those pandemic-related changes can also provide you with a starting point from which to reflect, refine your strategy and business model, and create an updated Agency Game Plan.
Your agency’s mid-to-long range future will be impacted by a number of factors, including the course of the economic recovery and the product lines you offer. Generally speaking, though — and according to industry leaders and publications — all agencies should take into consideration five broad strategic areas when planning their Future Game Plan:
- Market Indicators.
Obviously, none of these is a new concept; you’ve probably included all of them in your past strategic planning. What is different now is the post-COVID context, and the shifting competitive landscape in which you need to consider your agency’s future path. These five strategic areas provide a good framework for you to think about your agency’s future capabilities, strategies, operations, and partnerships, so you’re best prepared to operate and compete in the “new normal”. We offer the following thoughts as a means to spark your thinking.
- TIGHTEN UP YOUR AGENCY’S FINANCES.
The insurance industry has fared relatively well to this point in the pandemic. Individual agencies have experienced different business fluctuations depending on the product lines they carry. That will continue to be true as we move forward, and economic impacts hit private and commercial customers differently. By focusing on your agency’s financials now, you’ll be best prepared to manage future economic uncertainty.
- Preserve your liquidity by eliminating all non-essential business expenses. Closely monitor selling, general, administrative, and discretionary spending.
- Focus on maintaining positive cash flow.
- Aim to have at least 3 months of working capital on hand.
- Position yourself for the possible need to borrow (whether to take advantage of an opportunity or address a financial need) by keeping your agency and personal funds separate, and your financial records updated and organized. This includes your bank, P&L, and commission statements; book of business details; carrier and third-party contracts, and employee records.
- Monitor your business credit and do whatever’s necessary to strengthen it.
- Anticipate future growth. The M&A market seems to be recovering from its slight pause. That fact, along with the results of November’s election, may create an M&A uptick in Q4. If you anticipate being involved in an acquisition during the second half of the year, having solid financials will enhance your ability to move quickly and close your deal before year’s end. Be in touch with a lending partner now, to get on their radar and discuss your plans.
2. FOCUS ON YOUR CUSTOMERS.
You have more opportunities and reasons than ever to connect with your customers. Providing exceptional customer service experiences now will help you build customer loyalty and increase retention rates later. Let your customers know that you appreciate them and that they can consider you a resource.
- This is a stressful time for businesses and individuals. Bring empathy to all of your customer interactions. Look for opportunities to extend goodwill using short-term payment deferrals or discounts.
- Set up a system for your customer outreach efforts. This will ensure that you connect with your entire client base regularly and miss no one.
- In each conversation, be sure to listen for new and emerging needs. Business and life are changing rapidly now. Conversations can reveal opportunities to better serve your customers.
- Look for ways to add, bundle, or create products and services to meet emerging customer needs or serve new markets. Consider investing in new lines.
- Can you use customer data to better understand their buying preferences and behavior? Can this help you personalize customer support?
- How can you innovate your product offerings? Beyond traditional insurance, what services could you offer? Consider usage-based plans, on-demand policies, and modular offerings.
- Are there pandemic-specific products and services you could offer immediately?
- Revisit your policy language from the perspective of your customers. Can you simplify it or make it more transparent? Review any updates with your customers (that’s another opportunity for a touchpoint with them).
- Are you letting your customers know about all of your existing and new products and services? Make sure you are by designing a detailed communication and engagement plan that describes your updated value proposition. Review all of your marketing materials to make sure your messaging aligns.
3. DETERMINE THE FUTURE OF WORK AT YOUR AGENCY
The pandemic has completely changed how we’re working. Take time to focus on your employees’ experience of working for you. Make sure they are engaged, motivated, and satisfied. Do they have the skills and the willingness to embrace the changes that your agency might make now? Look also at the systems they use to to do their work. How will you manage and support staff and producers working in your offices and from home, and ensure their success?
- If remote work has gone well for your agency, is it feasible to continue remote or hybrid working arrangements? You’ll need the technology infrastructure to support such arrangements. Your employees should be prepared to pivot as needed to a remote work model. Consider how this will affect future hiring, training, and performance management.
- Tap into your team’s intellectual capital and creativity. Your staff is your most valuable resource. They know your business and your customers better than anyone. Empower them to play a part in your agency’s strategic planning.
- Genuinely encourage employee growth. Offer training to help them develop the skills they’ll need to succeed and support your agency through these challenging times.
- Update systems, structure, and processes to support your producers. Do you need to design a new sales strategy that integrates with these systems?
- Look for opportunities to automate manual processes in order to increase efficiency.
- Consider forming cross-functional teams within your agency to increase staff effectiveness.
- Does hiring new talent makes sense right now? Many talented people have been displaced during the pandemic. If you need to build your team, it may be a good time to draw from this pool of professionals.
- Think about your physical space. Do your employees need as much as they used to, given remote working arrangements? Are you using space effectively? Will the new normal change your staffing and the way you work?
4. HOW WILL YOUR AGENCY HARNESS TECHNOLOGY?
We’ve all learned to rapidly adapt to new technology during the pandemic. We all seem to be living on Zoom calls. Your customers are probably also becoming increasingly comfortable with technology and accepting it as a normal part of doing business.
But here’s an interesting fact: half of all insurance agencies don’t currently have a digital strategy. If you’ve ignored this important operational area, stop and assess ways you can leverage technology to improve your customer and employee experiences. The right technology can help you increase efficiency, make it easier than ever to do business with you, and distinguish your brand in the marketplace. But be mindful of the additional exposure and cyber risk that come with moving to digital channels.
- Look at all aspects of technology in your agency, including your call center, agency management system, mobile apps or client portals, insurer connectivity, analytics, and cloud software hosting.
- Does your existing technology capacity allow you to be responsive and compete effectively? Many tech solutions are becoming more affordable, making them a viable option for small and medium sized agencies who couldn’t consider them before.
- Can you harness technology to streamline your operations? Could tech products lower costs for customers and make access to their policies and payments easier?
- How can you learn, improve, and build systems that will provide information to your customers in ways they want to receive it?
- Are there ways to automate customer education or onboarding presentations using technology? Automated programs can enhance your customers’ experience while freeing up staff time for other tasks.
- Consider adding new features to your website like a chat-bot to answer real-time questions from potential customers.
- Technology can boost agency efficiency through improved underwriting (for example, using updated risk and pricing models), remote claims access or automated no-touch claims, and desktop or virtual adjusting. Familiarize yourself with these options.
- Support your sales team with technology that models, maintains, nurtures, and stores information on new prospects.
- Seek out third party partners to improve your agency’s critical fraud detection capabilities.
5. KEEP YOUR EYE ON MARKET INDICATORS.
- Track market indicators to guide your recovery and strategic Game Plan. Make market-sensing part of your ongoing agency activities.
- Watch for competitors and new substitutes to your market.
- Look for opportunities to form new partnerships that will add value for your customers and deepen brand loyalty. Watch for M&A opportunities that align with your agency strategy.
- Look for opportunities to leverage partnerships. Cultivate the awareness, mindset and agility to collaborate across sectors.
- Follow market trends. Stay on top of government and industry reports.
- Monitor consumer conduct, sentiment, and attitudes. They often indicate shifts in values and buying behavior, and may allow you to identify opportunities faster than competitors.
- On a larger scale, can you participate in the insurance industry’s response to the pandemic? Consider engaging with legislators through industry associations to shape new regulation or propose solutions. Monitor proposed legislative changes and pending lawsuits.
As we emerge from the pandemic crisis into a new economic and business reality, you may be motivated to evolve your agency in order to better compete in the “new normal”. As you do, you might find you need funding to make your new plans happen. Our Lending Advisory Team is in your corner, ready to talk about how we can support your plans with funding that is fast, flexible, and tailored to your agency’s needs. Fill out the form below and we’ll get in touch with you to discuss any aspect of your future Game Plan.