GROWTH STRATEGY REVIEW

CUSTOMER SERVICE AS PROFIT CENTER

Strategies for achieving better profitability
by enhancing customer service

By G. Edward Kalbaugh

In a service business, customer relationships fuel the engine of sales. This tenet is especially important for insurance agents, where the cost of account acquisition remains high in comparison to account revenue. Yet the customer service function--the foundation for account relationships--continues to lag other agency functions in terms of resources committed. One way to change this is to refocus customer service as a profit center. Accordingly, in this column we present 10 strategies for improving profitability via customer service.

1. Define customer and agency expectations. This requires a thorough understanding of how your customers' requirements align with agency products, services, business goals and objectives. Developing this understanding will go a long way in clarifying the agency/customer relationship.

2. Establish the image you want to portray to your customers. Your agency image is portrayed to your customers, and all others that deal with your agency, through your staff, your products, and all other forms of communication generated by your agency. Collectively, this is your agency's brand.

3. Employ only the very best customer service agents. Insurance is a knowledge business, and success is highly dependent on the expertise of your staff. Do not compromise on this issue. Paying less money for less than competent staff is a false economy that will cost more money in the long run.

4. Make extraordinary service routine. Give considerable thought to defining what "extraordinary service" truly means. Don't accept weak definitions. Understand what it takes to translate extraordinary service into the routine of everyday actions.

5. Conduct customer service in real time. This requires immediate access to all information relevant to customer transactions, as well as the ability to interact with third parties in real time. This is most important regarding decisions relating to the outcome of customer transactions--quoting for example.

6. Encourage self-service and make it an attractive option. Consider even simple steps such as account status look-up on your Web site, or automated e-mail. Self-service increases customer convenience and account profitability.

7. Exploit technology. Integrate interactive Web technology into the account servicing process. Connect via the Web, PDAs, cell phones, fax, land phones and e-mail. Ensure that customer management systems integrate all touch points.

8. Develop processes that ensure consistent efficiency and quality. Employ the "Once and Done" principle so there is no duplicate effort. Ensure that quality is built into the product or service so that oversight requirements are minimized and everyone is productively engaged.

9. Train, train and retrain. Employees automatically seek a course of least resistance, which is often counter to agency requirements. Training ensures proper expertise and process. Conduct training regularly.

10. Measure results. Adhere to the axiom: "You can't manage it if you can't measure it." Ensure that all customer service staff understand and embrace performance measurement as an important part of delivering excellent service. Share results.

Implementation

Agencies wishing to implement the strategies outlined above should first construct a simple project plan that defines the following elements for each strategy:

1) Who will be responsible for each strategy?

2) What will each person do?--This includes the end result or "Deliverable" and the tasks required.

3) When is each task and/or deliverable required?

This project plan then provides a road map for accomplishing the strategies.

Summary

The agency customer service function should be viewed as a profit center, both for new account production and account retention. The 10 steps outlined above will help agency owners ensure that the customer service function performs to meet agency goals and objectives for profitability. In addition, these steps help create a customer service experience that is pleasurable for all parties involved, thus improving account retention.

The author

G. Edward Kalbaugh is a partner in Allegent Growth Strategies. Allegent is a full-service consulting firm specializing in services to the insurance industry. It is located at 100 Crossways Park Drive West, Suite 104, Woodbury, NY 11797. The company can be reached by phone: (516) 364-7034, fax (516) 364-7036, or e-mail: info@allegentgsi.com. Allegent's Web site is: www.allegentgsi.com.*