High expenses, high turnover, and low growth are the nightmares that keep agency managers up at night. As a company that has overcome these challenges, Baltimore Life shared its experiences with attendees of GAMA International’s LAMP meeting here recently.
By developing a new agency model, Baltimore Life says it has made some significant improvements in its growth, productivity, and profitability.
“We had the choice to cut agencies and close offices, or to find a better way to manage our agencies and expenses,” said Damien Salvi, a vice president at Baltimore Life, in a breakout session.
According to Salvi, Baltimore Life was experiencing mediocre sales growth at 3-4% a year, its agent productivity was low, and turnover was high.
“We had an unclear focus,” he said.
This forced Baltimore Life to develop and implement a strategy that Salvi called “The Team Advantage Agency Structure.”
This new agency structure included additional support people for the company’s agents, including a director of marketing, agency service associates, and new responsibilities for the office managers.
With this structure in place, Salvi says he employed a concept from The Discipline of Market Leaders, by Michael Treacy and Fred Wiersema.
Salvi used the model that a successful agency is built with a structured, process-driven system based on 3 factors: customer intimacy, product excellence, and operational efficiency.
“We first focused on customer intimacy,” Salvi explained.
The first step to improve customer intimacy involved an “unbundling” of the agents’ activities.
“Prior to this strategy, our agents did a little bit of everything,” he said.
Now, tasks are divided between the agency’s director of marketing, agency service associates, and the office manager. “Now, everything we do revolves around the agent,” he said.
Tasks formerly done by agents, such as lead generation, appointment setting, contact management, and marketing are now delegated to the new agency staff. Because of their increased responsibilities, hiring quality support people has also become a priority.
“We’re not just recruiting agents, we’re recruiting support personnel,” Salvi explained.
One of the additional responsibilities for the new agency personnel involves increasing their community involvement. Salvi said that working more with community charities increases the agency’s visibility, giving agents the opportunity to market to that community.
Salvi said that when agents are seen active in the community on a non-sales basis, people in the community find it easier to approach them when they have questions or need information.
Salvi also noted how Baltimore Life improved customer support and satisfaction through the development of a new contact support system. Now every client is expected to be contacted at least once or twice a year, he said.
Baltimore Life has also added a new dimension to its agent-training program, by teaching agents about different social and behavioral styles.
“We are trying to get the agents to understand someone’s personality type, so they can better understand how the prospect will react to certain questions,” said Salvi.
The next step he discussed was an improvement in product excellence. Since Baltimore Life only offers fixed products, Salvi said it was very important to form strategic alliances to make variable products available through their agents.
In addition, an alliance was formed to make a long term care product available to the field. This strategy was meant to fill the gaps in the company’s product portfolio, he explained.
The company then went on to build specific marketing concepts around special needs, such as funding lifecare (long term care) needs, income replacement, and guaranteed lifetime income, he said.
Following the transition to the Team Advantage in 1998, Baltimore Life experienced an 11% increase in production for 1999, a 22% increase in 2000, and a 37.7% increase in 2001.
Persistency has also improved, with surrenders dropping by 26% last year. Agency growth is also on the rise with a 26% increase in the number of agents in 2000 and a 20% rise in 2001.
“We’ve had an increase in overall productivity,” Salvi explained. “We’ve done that by investing in the future while controlling expenses.”
He noted that Baltimore Life has set some lofty goals for this year, with a planned 30% increase in production and an expected 20% growth in its agency field force.
Reproduced from National Underwriter Life & Health/Financial Services Edition, April 8, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.