Tag Archives: consumers

5 Transformational Changes for Clients

In January 1993, I began preaching the Gospel of Change – its management and architecture.

One of my first presentations was to a very successful community bank’s senior management team. I said, “Today, General Motors, Sears and IBM are kings of their respective jungles. I believe in my lifetime (I was 46 at the time) one of these companies will go bankrupt!” The audience rolled their collective eyes! In 16 years, I was vindicated.

GM filed for Chapter 11 reorganization in the Manhattan New York federal bankruptcy court on June 1, 2009. The filing reported $82.29 billion in assets and $172.81 billion in debt.

Then, Sears filed for Chapter 11 bankruptcy protection on Oct. 15, 2018, with $6.9 billion of assets and $11.3 billion of debts, after a decade-plus as a train wreck in slow motion.

See also: How to Earn Consumers’ Trust  

Today, I’m not going to scare you into change – I’ll merely shine a spot light on the changes that are already occurring in the world and you decide if these innovations are friends or foes. Don’t ask what threats these changes mean for you. Ask instead what these changes mean to the marketplace – to each of us as consumers. The consumer is king, and now consumers shop in a global marketplace – when, where and how they want. Below are five transformational changes that are affecting the world for your clients and you–and a word of hope.

Generational Change: Many of us grew up in a “Father Knows Best” world. Today, the universe is more similar to a “Modern Family.”

Look at the demographics. The youngest members of the Greatest or Silent generation are nearing 75. The youngest members of the Baby Boomers are in their mid-50s. The youngest Gen Xers are in their mid-30s. And the youngest millennials are already 15.

As Paul Harvey said often, “We’re not one world.” He was so right. In terms of marketing reality – One size does not fit all.

Big Data and Artificial Intelligence: Yesterday, I opened an e-mail offering me a “deal” on a new Toyota. Within an hour, I had received similar e-mails from most other brands that I might be interested in. Big Brother (or Big Sister) is watching everything we do. Now, sophisticated sellers can anticipate your needs and be first to market with a solution for each need. Can you do this?

Global Marketplace/Virtual Marketplace: As a consumer, you can buy anything you want, wherever you want. As a seller, your competitors are not down the street – they are everywhere.

Language/Diversity: Robert Young as Jim Anderson in “Father Knows Best” was an insurance agent and also an OWGIC (Old White Guy in Charge). Today, ours is a much more diverse and multilingual world. Everyone can be in charge of their own world. Do you speak enough languages to serve this marketplace? Who is/will be your marketplace (Hispanic, Laotian, Muslim, etc.)? Remember that many “youn-‘uns” communicate very differently. If you don’t believe me, call a teen and see she answers. Text, and she will.

Innovation of Products/Services/Competitors: What, where and how you sell has no meaning. What, where and how people buy is all that matters. Remember social media, robotic surgery, driverless cars, Amazon, Expedia, Uber, Google, AirBnB: Innovations change options and in some cases bankrupt organizations and industries that are fat, dumb and happy.

See also: Why More Don’t Go Direct-to-Consumer  

Your Hope/Opportunity:

John Naisbitt developed the concept of high tech, high touch in his 1982 bestseller “Megatrends.” He theorized that, in a world of technology, people long for personal, human contact.

He was so right. Become client-defined and client-driven. Develop client intimacy. Be engaged with the people and markets you serve. Don’t sell them; facilitate their buying. Be a concierge, a friend, a shoulder to cry on and voice of encouragement. Build intimacy – be a professional, expert, trusted resource.

Data Breach Law Could Hurt Consumers

With each passing brand name mega-breach—Home Depot, Target, JPMorgan Chase, Anthem—it becomes ever more urgent for government and industry to get on the same page about how to protect consumers.

Sadly, not all laws are created equal, and there are few better examples of this homespun truth than a would-be federal law currently wending its way through Congress. The Data Security and Breach Notification Act of 2015, in its current form, has a long way to go before it should become the law of the land.

The Data Security and Breach Notification Act of 2015 says it “aims to tackle the nation’s growing data security threats and challenges.” So far, that sounds pretty good to me. The bill was written by Energy and Commerce Committee Vice Chairman Marsha Blackburn (R-TN) and Rep. Peter Welch (D-VT), making it a bipartisan effort. The goal: to implement “a comprehensive plan to help safeguard sensitive consumer information and shield Americans from the harmful consequences of cyber attacks.”

I’ve written elsewhere about the need for a federal breach notification law, so in theory I’m on board. A strong federal law that requires businesses and government entities to inform people that their personal information has been compromised in a data breach can absolutely be a good thing…if it’s done right.

The problem with this proposal is that there are far more effective laws already on the books in several states, and they could be preempted were the bill to pass. If that weren’t bad enough, the proposed bill could also supersede stronger rules already put in play by the FCC with regard to telephone, broadband Internet, cable and satellite user information.

The undermining of better laws is bad, but worse is the way the Data Security and Breach Notification Act of 2015 underscores a continuing failure of our leaders to fully understand the nature of the problems we face in the mare’s nest that is consumer privacy and data security. In a widely publicized survey conducted by the Pew Research Center, “91% of adults in the survey ‘agree’ or ‘strongly agree’ that consumers have lost control over how personal information is collected and used by companies.” Data breaches, and the identity theft that flows from them, have become the third certainty in life. We need a strong federal law, but as I argued in my op-ed about the Data Breach Disclosure Box, any proposed bill that threatens to weaken existing laws has to be challenged, quickly and without equivocation.

Why It’s an Issue

Senior Policy Counsel at New America’s Open Technology Institute Laura Moy eloquently outlined the problems this bill could create in her testimony before the House of Representatives.

In a wide-ranging discussion of the major concerns raised by the bill, Moy pointed out some of the laws that could be preempted. One was California’s Song-Beverly Credit Card Act, which made it illegal to record a credit card holder’s personal identification information during a transaction. Another law in Connecticut outlawing the public posting of any individual’s Social Security number was also named. Both state laws represent solid advances in the realm of data security, and both might be preempted were the bill moving through Congress to succeed.

And here’s the really bad news: they would be two of the less alarming casualties.

The problem with the bill hinges on the way that it tries to separate privacy from data security, but they are inextricably intertwined. This could weaken or even eliminate protections for the many kinds of information – like your email address, for one — that fall outside the bill’s narrow definition of the personal data that is covered. That’s why this matters so much.

As Moy argued during her testimony, “Many laws that protect consumers’ personal information [can] be thought of simultaneously in terms of both privacy and security.” I will go one step further and say that I do not believe it is possible to discuss data security until we have a worst-case scenario definition of what constitutes personally identifiable information in the eyes of an identity thief.

To give an example of the kinds of preemption that are possible here, Florida’s privacy law includes email and a consumer’s username-password combination in its definition of personal information, the logic being that consumers use the same combination for many different login pages, including financial accounts. Eight other states currently mandate the same standard—California, Missouri, New Hampshire, North Dakota, Texas, Virginia and, as of July 1, Hawaii and Wyoming. Under the currently proposed bill, a business would not have to notify you if your email and username-password combination were involved in a breach. Meanwhile, the above kinds of information continue to be highly exploitable data points in an identity thief’s toolkit.

In addition to the exemption of breaches that “only” include email addresses or user login details, the bill is unclear about personal information related to telecommunications, cable and satellite customers, which hinge on a trigger of “authorized access,” and Moy believes it may supersede important protections created by the Communications Act. Most alarming is the prospect of less robust notifications regarding compromised customer proprietary network information (CPNI) – that includes texts, phone calls, every location where you were when you made this or that phone call, your location when you didn’t make a phone call and the location of all your network-connected devices. All this information could be breached, and this proposed law in Congress says you don’t need to know about it. The same goes for what you watch on television, including any items you may have purchased on pay-per-view. All of it could, hypothetically, be out there open to public perusal. Every site you ever visited on line. Every call. Every text.

And what about your protected health information (PHI)? Critics note the bill doesn’t mention it, which at first blush seems like a four-alarm-fire level of non-comprehension. However, whether the product of partisan warfare or common sense, it’s actually a bit of good news. Because it has been entirely carved out here, most forms of PHI actually would still be covered by the notification requirements of the HIPPA/HITECH Act — with a few notable preemptions of existing state law affecting over-the-counter purchases and other health-related items.

Defining Harm

According to the narrow logic of the proposed legislation, a breach of any of the above information will not result in financial damage, which is the reason it isn’t covered. It’s a position easily brushed aside with one mind-blowing word of refutation: extortion. Scam artists have countless tricks up their sleeves, and the onus to anticipate the adaptive nature of crime falls on legislators. A single text or rented video could potentially ruin a person’s life, and fraudsters know that. If the wrong person has access to the above data points—and any of those bytes contain information that might harm you professionally or personally—they most certainly could be used against you for financial gain.

A recent Science study showed that with just a few data points (Instagram posts and tweets) it was possible to re-identify anonymized data about credit card purchases with the unique consumer who made them. While it may seem off the beaten path, the proposed bill, with its narrow definition of what should be covered, would not cover a glitch in Instagram’s code that revealed protected accounts to the public. For the end user unaware that their private posts were viewable, and that those posts could be used to re-identify data that is publicly available, the above hypothetical scenario featuring a “financially harmless” compromise (that revealed every purchase made on an individual’s credit card) could be a life changer—and not for the better.

What we really need in the federal government is someone in a position of authority with the expertise and knowledge to make sure anyone exposed in a breach knows about it, and is informed about the potential fallout as far as current intel permits as quickly as possible. Call this person a Breach Tzar, if you will. Since data-related crimes are often quite ingenious, isn’t it best to err on the side of caution? The fact is that any federal law aimed at protecting consumers from the danger of identity-related crime needs to be best-in-class, and far better than all the existing state laws combined, and, while it should go without saying, it must not supersede stronger existing protections afforded by non-state agencies.

There is still a yawning gulf between what’s been done so far and what needs to happen in the realm of cyber legislation. The protections we deserve are a work in progress, one that the entire constellation of consumer advocates and data-security experts must solve in concert. In the same way that data-related crimes are constantly evolving, we need to get into the habit of responding to the very biggest picture we can imagine.

How to Maintain a Competitive Edge

The recent speculation about Google entering the U.S. insurance market adds to the growing list of non-traditional competitors turning their attention to insurance — a list that already includes Overstock, Facebook, IKEA and Walmart. While personal auto remains the popular entry point for these outside competitors, the impact is more far-reaching for property and casualty insurers. The question is no longer “if” outside competition will affect the insurance industry, but rather “how” agents and insurers can maintain a competitive edge and protect their businesses.

Agents need to adjust their customer service approach to reflect the reality that younger consumers are not as loyal as their predecessors, while at the same time facing the increased threat of a direct sales channel. Insurers must grapple with the reality that tech companies will be relentless in finding ways to lower costs for consumers and circumvent agents.

Insurers like Progressive, Geico and State Farm are already playing in the digital arena and are better positioned than mid-sized and small insurers, because they understand how the online game is played. The same is true for large national agents vs. regional or local agents. The big question is: Will the industry as a whole take a step back, identify its distinct advantages in today’s rapidly changing insurance market and start a wave of unprecedented innovation? Or, will the industry go the way of those that have come before (i.e., Blockbuster, credit card lenders in the ’80s, travel agents, Yellow Pages, taxicabs, etc.)?

The New-Entrant Advantage

Before we discuss agents, let’s look at the advantages of the non-traditional competitor. It should come as no surprise that major tech companies and e-commerce giants have an interest in insurance. It’s one of the last remaining industries to not reach full digitization and root the business in analytics — a weakness that can be exploited by the data-rich competitors with deep pockets.  Additionally, with the lack of customer loyalty, the struggle will boil down to who will win the customer: the agent or a company like Google.

At the forefront of customers willing to jump ship are Millennials, who have surpassed the Baby Boomers to become the largest population in the country at 76.6 million strong. If insurance doesn’t take the extra steps to innovate and entice this generation, Millennials will more than likely gravitate toward a well-known tech company that already understands what they are searching for and what they are buying. Most Millennials were raised on Google — whether it be for research, directions or email — so why wouldn’t they feel more comfortable purchasing insurance from Google?

For this reason, it’s no surprise that the top three priority areas for agents this year are found in retaining and servicing customers, as opposed to growing their business. The opportunity for agents is that this disruption from new competitors is forcing an urgency to evolve the customer engagement model to better serve Millennials, who have grown up using technology. This needed to happen regardless, and the sooner the industry modernizes its customer acquisition and retention strategies, the better.

The Agent Advantage

Though there is increased pressure for agents to stay relevant in this quickly evolving insurance industry, agents who leverage their distinct advantages for both customers and insurers will thrive. According to an Accenture consumer survey, customers value the insights they gain from face-to-face interactions with their insurance agent more than any other method, yet agents themselves often downplay the importance of their expertise as a competitive advantage. This is a mistake.

When you consider that insurance enters our lives at times of personal turmoil, agents serve as a trusted adviser during critical moments. Agents help both the consumer and the insurer navigate the process of making the consumers’ lives whole again when tragedy strikes. Agents who adopt digital technologies and analytics will gain greater customer insights and will bring insurers the right business at the right price.

According to a recent Applied Systems survey, 48% of participants listed competition as a top factor driving agency technology investments. Agents who allow a disparity in analytically driven risk management between themselves and their insurers will begin to lose their foothold in the industry.

The Insurer Advantage

There’s only one place where mass adoption of data-driven decision making, product innovation and modern customer engagement strategies can all take off at the same time. Insurers alone yield the largest ability to transform the industry in better service of their customers and fight back against the pure commoditization of insurance. There’s likely no stopping this trend, but there is a lot of opportunity to provide innovative solutions so that traditional insurance players maintain ownership of the customer.

There is no time to waste, however. Just because the early focus is on personal auto, it should not drive a “wait and see” mentality for the property and casualty industry. Learn from industries that have gone before us in the digital revolution and suffered from technology disruption. Once the trend takes hold, the ripple effect of change industry-wide happens very quickly.

The Bottom Line

The best chance for agents to stay competitive and relevant is to work together with insurers, utilize data-driven strategies and engage consumers on a more personal level using technology as an enabler. The face-to-face interaction with clients is still extremely important, and analytics can effectively collect and store invaluable insights so you can make the best connection between insurer and consumer. Remaining a relevant and trusted adviser is the name of the customer relationship game.

Look Up, Look Out, Think New!

“The stalking weasel has its nose to the ground. It never hears the descent of the hawk.       Until. . . ”  

-Andrew Vachss, author

Are you like the weasel? Are you so focused on what you’re doing that you don’t hear the hawk that will soon take you out of the marketplace?

You may very well be staring at your hawk as you read this article!

You see, one of the “hawks” in today’s world is technology — iPhones, iPads, other mobile devices, the Internet, social media, Siri, artificial intelligence, big data, 3-D printing, etc. These “hawks,” along with a global economy, shifting demographics and new power players, have made the world a very dangerous place for “weasels” like you and me.

From Mohan Nair’s book, Strategic Business Transformation, we learn that the following companies were all profitable in 2007 and by 2010 were dead:

American Home Mortgage
Bombay Company
Comp USA
Circuit City
Lehman Brothers
Levitz Furniture
Linens and Things
Sharper Image
Ziff Davis
Bearing Point
Charter Communications
KB Toys
Monaco Coach
R.H. Donnelley
Silicon Graphics
Hollywood Video

From this same source, we also learn that in yesterday’s world 80% of change was cyclical and 20% was structural or transformational. Tomorrow, the opposite will be true – 80% will be structural and only 20% incremental.

Time, place and pace have changed. Today we live in a 24/7/365 world without borders and with an expectation of instant gratification. We want what we want, and we want it now! Don’t believe me? Google it!

In the days of Ozzie and Harriet, big threes dictated to a mass market. The auto industry was defined by GM, Ford and Chrysler. Broadcast television was owned by CBS, NBC and ABC. The magazine industry was controlled by Time, Life and Look.

Fast forward two or three decades, and power has fragmented. Today, more than 40 automobile manufacturers sell hundreds of models of cars in the U.S. Visit any newsstand in your town or the equivalent on your computer, and you can find magazines specializing in everything from fly-fishing to quilting to cigars to Sudoku. You can view hundreds of broadcast, cable or other channels — and from any screen you own, not just from a TV.

We are no longer a mass market but rather are a series of niches being served by specialty manufacturers and distributers using mass customization to meet the demands of each niche. In fact, as we walk toward the horizon of unlimited possibilities that is tomorrow, we see where each of us is a niche of one whose needs will be served uniquely.

Big data allows manufacturers and distributors (and others) to know our wants and needs before we even express them. (Yes, we are sacrificing privacy for convenience.) Innovation is now at the point where 3-D printers can manufacture body parts for us.

The market has switched from selling to facilitating buying: A Wall Street Journal headline in July 2012 read, “The Customer as a God.”

The Baby Boomers (a.k.a. hippies) are finally on the “center stage” of life but are being told to exit stage left so Gen Xers can have their turn. Waiting behind the curtain with the Gen Xers are the Millennials and the Gen C — and they will not be as patient as the Gen Xers have been. The Millennials and Gen C are the new world. They don’t want to intern under us. They want to do their own thing. Now.

The boomers and their world of analog are about yesterday. Selling products, developing relationships, drinks at the City Club, civic and church groups, letters, prospecting and cold calls: These are not tomorrow’s world.

As Scott Walchek wrote on this site, “The Last Analog Generation — let’s call them LAGards — are departing, and in their wake a fascinating new world is emerging.”

Gen C — the newest generation and the only digital natives currently on the planet — were born into tomorrow and don’t give a damn how we did it back in the day. As a Booz & Co. study says, “They are Generation C (born after 1990) — connected, communicating, content-centric, computerized, community-oriented, always clicking. By 2020, they will make up 40% of the population in the U.S., Europe and the BRIC countries, and 10% of the rest of the world, and by then they will constitute the largest group of consumers worldwide.”

Their biggest impact is that as teenagers they are not learning from us (their parents and grandparents) how to be good consumers. They are teaching us: how to use the power of technology and social media to be great consumers. They are teaching us how to buy in a digital and nonverbal world.

As a result, every manufacturer, distributor and salesperson will be changed sooner rather than later and much more deeply than they would change if left to their own devices.

Today is/was a world driven by products and services and product and service sellers. Tomorrow is about being defined and driven by clients. Siri will know more about products and services (even those you offer) than you do. Product knowledge will not be as important as understanding a client — a finger on their pulse. Tomorrow, you must be an expert in your client and their industry. You must build intimacy with each client and affinity with his or her world. Within this focus and framework, they will choose to buy from you — you won’t sell to them.

Each of us is who, what and where we are today because of the way we think. If we want to change, survive, prosper and enjoy longevity, we must think new! We must innovate or evaporate.

Does Knowledge Really Matter for Agents?

What does an agency sell? The answer to this question will make or break many an agency.One might say an agency sells price. Fair enough. But what is it selling for price? An insurance policy? Any policy? Is whether the policy provides the coverages the insured needs secondary, to be discovered in court together?

Is an agency selling insurance I.D. cards and evidences of insurance for a price? That is all some insureds want, and it makes sense to only sell them what they want, right? Do these insureds then even need an agent? What value does an agent selling pure price really provide that software cannot?

Consumers do get two benefits. First, they benefit from the agency’s E&O policy when coverage proves inadequate. Second, they gain false comfort by believing agents know what they are doing.

Computer processing is so fast and powerful today that, when combined with massive advertising, the agent is often obviated. This is a fact. It is not an opinion, no matter how much many readers may protest.

The I.D. card portion of the insurance market is already lost. Agents obviously still write this business, but the future is dire.

The rest of the market can be saved if knowledge, rather than price, is sold. Computers can bring price faster and more cheaply than humans. The human value is knowledge. Fortunately, a great percentage of the market still cares about buying from a resource that offers personal knowledge.

Unfortunately, I see too many producers literally running away from knowledge. Here is the proof: When I ask producers why they do not use coverage checklists, they regularly tell me they’re afraid the customer will ask about a coverage for which they do not have knowledge! Think about this! They think the consumer values knowledge but refuse to gain the knowledge the consumer wants! Those producers should just find another career.

Think about this a different way. Do you want a doctor who, because he does not understand cardiac medicine, refuses to test or discuss cardiac issues?

Consumers want to buy from a professional who understands their needs and can match their needs to the prices and products available. At the moment, only professional independent agencies can do this. These people and businesses are the market. Do not run away! Embrace this market and gain the knowledge required to meet it.

A key difference between the younger generation and older generations in the industry is that knowledge used to be less important, because company underwriters knew much more, and producers could rely on their knowledge. Company underwriters today, as a rule, do not know coverages nearly as well. Deficiencies create opportunity, and this is a great opportunity because a majority of people never will expend enough effort to gain adequate technical knowledge. Those who do will have a competitive advantage that will endure.

Much to the disbelief of some, Google does not offer all the answers. Consumers cannot competently look up coverages and apply them correctly. Truly understanding coverages and forms requires a full context. This is what a large and important consumer segment and a huge proportion of the B2B segment clearly want from their agent, so why not give them what they want just like so many agents are willing to give I.D. card shoppers what they want?

The alternative is that if knowledge is not advertised and emphasized, the rest of the market will eventually turn into commodity seekers, too. Several new research studies suggest the small commercial market is already turning that direction. The small commercial market is the bread and butter of many agencies. Are you ready to lose those clients, too?

Technical insurance knowledge is a great asset. Sometimes, the people possessing the most are not the greatest salespeople, and sometimes the best salespeople are just not geared to possess considerable insurance knowledge. This is no reason to ignore the opportunity. In fact, ignore the opportunity at your peril because, if you do not provide the client knowledge, someone else eventually will.

Perhaps the best solution is to create a team that combines knowledge with sales skills. Creating a team may result in less commission to the producer but will gain the producer more sales, more than making up the difference.

Knowledge makes a difference. Gain and use knowledge, or let the competition take advantage of your ignorance.

NOTE:  None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules and regulations.