How intermediary partnerships deliver real benefits
At two very large insurers in North America, the challenge was to develop new business through independent agents. Key motivations of independent agents are, typically, the ease and productivity for both sales and administration of handling the supplier’s business and the profitability of the relationship, in terms of fees earned, revenues and profit.
Difficulties anticipated by the project teams included a wide variation of systems and IT skills within the many intermediaries. There was initially no natural or implied feedback loop for capture of customer responses and purchases. A customer management project addressed these through a Web-based central system, requiring the intermediary to have only a basic Web browser to access any marketing and sales facility. This included built-in capture of feedback, ensuring prospecting information was understood before others could continue.
The project resulted in a dramatic acceptance by intermediaries and excellent business results for the supplier and intermediary through better targeted efforts. Sales productivity increased between 100% and 300% in different situations.
Many new e-business examples exist of sound “closed loop” operations. For example, confirmation of a Web, e-mail or telephone order can be sent by e-mail, with supportive and personalised offer and delivery information accessible through the URL embedded within the e-mail. The customer can receive confirmation of receipt of product or fulfilment pack in the same way. Items such as a PC or other software, or even digital music and books, can even be supplied in a similar electronic fashion — with immediate, 24-hour confirmed delivery.
Supportive direct actions
In the UK, General Motors offers a scheme for company car users to loan a prospective car for a two-day period. This enables the purchaser to test drive the car in normal use, rather than for just 20 minutes accompanied by a salesperson. The car provided is closely matched to the prospective order, and is, in fact, a hire car supplied by Budget. The test drive is followed by a telephone questionnaire, but purchase is still via local dealers.
A major UK bank gained a better understanding of its customers’ needs than that of the insurers whose products it sold. The customer base developed quickly. With the bank now in the driving seat, the products and services were specified by the bank and delivered by three insurance suppliers.
The future did not look good for the insurers, with commoditisation of their role. Inevitably, the role of each would be negotiable and interchangeable depending upon performance.
One of the insurers approached the bank with a proposition to create a joint-venture company owned by the bank and insurer and utilising the customer knowledge, assets and skills of both. The two other insurers probably received “Dear John” letters, as they were no longer required in the relationship — causing them to reduce their fixed costs of supporting this business rapidly.
Value add expectations
A substantial relationship between an insurer as supplier and bank as intermediary had existed as long as anyone could remember. The relationship was administrative and arms length in the sharing of customer and business knowledge.
Over time, the intermediary demanded ever more value-added from the relationship. The insurer responded by allocating more capable “account executives” and training them through the acknowledged IBM sales training programme.
New services were introduced to add value to the relationship, many of which depended on sharing customer and business knowledge for joint benefit. These actions tend to cement relationships and make them more difficult to break.
Successful club schemes
Independent Insurance is recognised as the first UK insurer to create a “club” scheme, which is still accepted as a premier example in the UK market-place. Broker clubs are one high-profile way of showing that an insurer is “broker friendly”.
In fact, Independent Insurance consistently achieves highest ratings from brokers in the annual insurance awards. The Independent club has been running for more than 10 years, offering special facilities for a select number of quality insurance intermediaries with whom the company wishes to forge long-term and profitable relationships.
The club began with more than 100 members in 1988. Independent also founded a “nursery” for club brokers called Select in 1991 for those able to offer quality business but not necessarily in quantity. Different types of relationships are available for volume or specialist brokers.
Benefits for broker members of the Independent club include:
- Exclusive access to certain products and services.
- Facility for placing difficult or complex risks.
- Targeted products.
- Exclusive access to disaster recovery facility.
- Bespoke training courses.
- Marketing support on joint initiatives.
- Financial benefits including extended credit, profit commission and increased brokerage.
The influence of technology
Internet/intranet technology or software such as Lotus Notes or e-mail is enabling much closer linkages to be made between partner organisations. Delta Lloyd in the Netherlands, part of the CGU insurance company uses an extranet to provide support to its agents. The Delta Lloyd Digital Domain has four components:
- The store, where information on its products are found.
- The counter, where users questions are answered.
- The kiosk, where the latest information is made available.
- The office for back-up information such as telemarketing scripts and advertisements.
This has resulted in a big reduction in Delta Lloyd’s agent support costs, as well as an improvement in quality. Many agents have their own Web sites too, while new intermediaries are springing up offering their services only through the Web. The issue of speed of reaction to customers when both partners are involved becomes much less of an issue when these technologies are in use. Such technologies are also enabling more innovative and global partnerships to change the propositions organisations are able to make to the customer base. New partnerships are being built between intranet “context” providers, such as Freeserve, and “content” providers, such as the BBC.
Each of the programmes described in this panel have core elements in common:
- High level of expertise on offer by the organisation
- A strong brand for the partners.
- High level of commitment by the partners to building the programme
- Strong, customer-focused teams managing/working with the partner base.
- A strict approach to profitability and cost management.
For further information and to purchase contact Colin Coulson-Thomas