Company helps its agents become consultative salespeople
By Dennis Pillsbury
President Dick Hoag (Left) and Senior Vice President of Field Operations Reg Stith stand in front of Providence Washington's headquarters building in Providence, Rhode Island.
After more than a decade of soft market conditions, there is little dispute that we now are in a hard market. And many agents found themselves unprepared for the serious dislocations and unhappy clients that have resulted from these new market conditions.
The key to retaining clients in this environment is to provide strong value-added services that help ameliorate the cost increases and position the agent as the client's professional advisor rather than as merely a purveyor of coverage. Consultative and relationship selling helps to create a clientele that is not just concerned about price. Unfortunately, this can be a difficult task, especially for small and mid-sized agencies that lack the capital to invest in developing some of the value-added services that larger agencies use to differentiate themselves.
Providence Washington Insurance Co., Providence, Rhode Island, however, has committed its resources to helping its agents develop strong value-added services and a sales culture based on consultation and relationship-building. The company is providing to its agents contractual "pay for performance" incentives and value-added services, many in the technology area. Senior Vice President of Field Operations Reg Stith points out that this continues a long history of support for the independent agency system. "Providence Washington is widely known as the founder of the American Independent Agency System, having appointed the first independent agent in America in 1803, four years after its founding in 1799. And we continue to distribute our products only through independent agents," Stith adds, noting that other companies have experimented with alternative distribution channels, while continuing to claim total support for the Independent Agency System.
Steve McGrath, vice president-agency development, teaches at a PIPS training workshop.
Prov Wash President Dick Hoag adds that this multi-distributional-channel strategy on the part of other companies has tended to skew results of surveys that attempt to determine the vitality of the Independent Agency System. "You have to be careful when looking at statistics regarding varying distribution systems and their growth," Hoag says. "For example, many large insurance carriers have made it clear that they believe in multiple distribution methods and will sell their products in whatever fashion the insurance-buying public desires. Yet statisticians may allocate the premiums generated by these companies as all coming from the Independent Agency System when in fact much of the growth may be coming from Internet sales or other direct channels. You need to be very careful with your interpretations and assumptions."
Reg Stith adds that, unlike some companies, "our vision of the future is clear and unambiguous and based on distributing our product through independent agents who share our philosophy. When we appoint a new agency or work with an existing agency, we look carefully at whether the agency's philosophy matches up well with our Vision Statement to be: 'the carrier of choice of agents seeking a special relationship with an insurance company exclusively committed to the American Independent Agency System and to the growth and long-term business success of our customers, individual independent agents.'"
Stith continues, "If the agency shares our view, Prov Wash will go all-out in helping build a successful and more profitable agency."
Enhancing their agencies' bottom line
Providence Washington has invested in a number of tools and programs that are designed to improve retention rates and increase new sales for their agencies.
"Our Business Development Contract with our agents is the best in the industry for overall agency expansion," Hoag maintains. "For example, for all eligible agencies, our contract supports the ability to have a new producer's compensation subsidized by us for up to three years at 50% of its cost. We recognize that adding a producer is a major financial commitment for an agency, but we also believe that this is where the long-term investment for the future must be made."
The contract also provides financial assistance to an agency with acquisitions opportunities when Prov Wash is the agency's carrier of choice. Stith adds: "We can show an agency owner how we can assist them in purchasing another agency with minimal out-of-pocket expenses as part of our Business Development Contract. Our financial support isn't a low-interest loan, but rather an integral part of our agents' total compensation package."
The Prov Wash Agency Development Plan provides producers and agency sales managers with a number of tools designed to help them become consultative salespeople.
"It's critical that agencies avoid price as the primary reason a policyholder buys insurance from an agency," Stith explains. "When you 'commodotize' insurance in that way, then the policyholder's natural destination will be the Internet or another low-cost distribution channel. And both the agent and policyholder lose when this occurs. The policyholder no longer receives the consultative services that are absolutely vital in keeping pace with changing risk profiles; and the agent loses a customer. Many companies have launched multiple distribution systems to capture these 'shoppers.' Agents, however, have the power to reduce the number of 'shoppers' by providing consultative services and by conducting business with carriers who have their best long-term interests at heart."
Dick and Reg stand in front of a portrait of George Washington, after whom the company was named.
A winning combination
"We want to establish a partnership with agents who believe in forming relationships with their clients," Stith continues. "We look for agencies that promote service and education of their customers and develop long-term relationships with those clients. As I learned a long time ago, 'the business that stays is the business that pays.' And we want to help those agencies develop a professional, consultative selling approach. We believe so strongly in this component that we have purchased access for every single Prov Wash agency to The Rough Notes Agency Online software package. However, we have done more than provide financial assistance for The Agency Online System; we have created an entire sales approach of consultative selling using the information contained in the system. We call the selling process PIPS, an acronym for Prepare, Interview, Propose and Sell. We have launched this program through roughly 25 agency workshops and created a follow-up system through our field personnel, videotapes and weekly e-mailing of 'PIPS Tips.' The PIPS process allows even new producers to be a consultative sales person with the ability to add immediate value to virtually any sales situation."
The PIPS process is as follows:
Prepare: Agents can implement a prospecting plan using the Business Building Letters section in The Agency Online product. At the same time, they use the Coverages Applicable and PF&M (Policy Forms & Manuals) sections to gain specific risk management knowledge about the prospect's business. The PIPS seminar covers areas such as: program eligibility, underwriting considerations, ACORD form considerations, and court cases. In essence, this is the information-gathering stage of the selling process where the agent determines underwriting considerations and risk management needs of the client in order to develop a professional insurance program based on asset protection.
Interview: The interview phase provides agents with an opportunity to find unrealized needs and demonstrate professionalism. Using the PF&M Exposure Analysis Checklist and Commercial Risk Survey Questionnaire, agents can provide a comprehensive review of all risk characteristics and customize the insurance program for each individual prospect.
Propose: This phase is performed after the initial visit to the prospective customers. The formal insurance proposal must be well planned and executed to result in a legitimate opportunity to close the deal. In this phase, the focus is on what should be purchased to meet the client's risk management needs as opposed to pricing against another agent's program. The key in this phase is to get the prospect or client in the habit of saying "yes," as you go through the list of risk management considerations, using what is known as the "assumptive close," where the client actually closes for you. Pre-formatted proposal letters are available in The Agency Online product.
Sell: In this section of the seminar, Providence Washington provides agents with several additional closing techniques as well as ways to ask for the sale. Agents also learn how to handle objections.
The seminar also shows agents how to use The Agency Online for E&O protection. For example, the checklist of coverages delineates whether the coverage was accepted or rejected by the client and provides for both the agent's and client's signature at the bottom.
Feedback from agents "has been outstanding," Stith reports. "We expect to continue promoting The Agency Online to our existing agency force as well as offering it to new agencies as they come on board."
Jason Rua, vice president of Giroux-Audet-Rua Insurance Agency, Fall River, Massachusetts, says: "The most we agents can ask for from a company is to give us the tools that we need to make our agency successful and profitable. Providence Washington does a great job of giving us tools to accomplish our goals. The PIPS process, including The Agency Online system, is a wonderful tool for developing a consultative sales approach based on a coverage analysis of what the actual client needs. It helps make sure that all the concerns of an individual account are addressed."
Future plans
Providence Washington soon will introduce a real-time, multiline commercial lines quoting system with an interactive feature for accounts with complex underwriting requirements. BOP and commercial auto are being piloted now, and all lines will be piloted in the fourth quarter. It will be launched late in the first quarter of 2003. "This addition, when incorporated into the PIPS process, will enable an agency to complete the selling cycle in a single day if desired," Stith says. "This new quoting system will tremendously enhance an agent's selling opportunities. The only limits will be the agent's time management skills and energy level."
Hoag concludes: "Technology has given companies a number of opportunities. Some companies have used technology to conduct business in ways that compete with independent agents. Our belief in the vitality of the Independent Agency System has led us to create technological tools for the independent agent. With Providence Washington's current online technologies and the soon-to-arrive commercial lines quoting system, complemented with the PIPS system, we believe we offer independent agents a company committed to them and capable of furthering their long-term success." *
For more information
Web site: www.provwash.com