Are you a cow . . . or a buffalo?

You'll learn why that's important for your economic survival in a moment but, first, here's a $1 million - or fill in your agency's annual revenue - question for you: What will the successful post-reform 21st century agency look like?

Along with almost every other industry expert, I'm predicting a major shakeout for benefits agencies, with consolidations, acquisitions and closures expected to greatly thin the herd. The few winners in each market will be the agencies that can transform themselves to adapt to the new realities - and new opportunities!

What worked for benefits agencies yesterday simply won't work tomorrow. So brokers and agency principals from across the country are asking me what they must do to be one of the winners. (Hint: Worksite voluntary benefits play a major role.)

In our work with agencies, we've identified four critical areas - selling style; portfolio; marketing and prospecting; agency and sales management - as necessary for an agency to survive the next five years and emerge a long-term winner.

"Oh, is that all?!" you ask.

You're right, to survive the thinning of the herd and be a winner in the post-reform world, an agency will have to change just about everything in its business model. Successful agencies will be those that reinvent themselves from the ground up. Out with the old, in with the new business model - the 21st century agency. The real post-reform winners, those agencies that will acquire the losers and amass market share, will be the agencies that act on the imperative for radical and wholesale change.

I know this sounds overwhelming and possibly demoralizing. But it's the hard truth. So let's take a closer look at the four areas of agency transformation.


Selling: No more quote engines

Most benefits agencies have been transactional, that is, their role has been to facilitate the client's transaction with the carrier to purchase health insurance. Doing a bit of plan design, shopping the carriers, spreadsheeting and then carrying the lowest quote to the client used to earn a substantial commission on the medical.

Helping a client get a lower price on a product they must have and intend to buy, that's not selling. And being a human quote engine is no longer sufficient to earn or keep the business.

The days when agency revenues were derived from commissions on the medical and clients had no greater expectation than a low quote are over. The one carrier that already has eliminated commissions on large group medical plans and moved to a fee-for-service model is just the point of the spear; other carriers are soon to follow.

The majority of brokers and consultants recognize this, according to MetLife's 2011 Broker and Consultant Study, 58% said they plan to become more consultative in their selling.

To justify the fee to the client, an agency must adopt a consultative approach that provides value by solving client problems and eliminating client pain points. Becoming consultative is one of the key transformations that agencies must affect to become a 21st century agency.


A diversified portfolio

For years, brokers have known the need to cross-sell beyond the traditional core benefits. Yet, most agencies lack a broad portfolio of products and services with which to solve client problems. If you don't have the products and services, you greatly restrict your revenue potential.

More importantly, for a broker to be consultative, he must have a large toolbox of solutions that he can pull from to eliminate client pain points. Being consultative assumes that you can provide meaningful and effective solutions to the problems you identify in your consultative process.

To their credit, 58% of brokers and consultants plan to sell more voluntary benefits, according to the MetLife study. But voluntary benefits must be one of many product and service offerings.

Building a well-stocked portfolio of both insurance and non-insurance products and services is a necessary change that will help create a 21st century agency.


High ROI marketing and prospecting

In our experience with agencies across the U.S., we find that most agencies are extremely inept at marketing their business and prospecting for new clients.

This is completely understandable. Why should insurance agents know how to market and prospect?

I'm being totally serious. Marketing and prospecting isn't taught as part of your insurance school and carriers only offer training on products. So how should an agency know effective marketing strategies or be able to teach solid prospecting tactics to its brokers?

Agencies and brokers have done the best they know how in this vital area. But in the post-reform era, mediocre, inefficient and costly marketing and prospecting are not sustainable.

Look, if you're going to become consultative in your selling, if you're now able to provide huge value to your clients, you must let your prospects know that. How will a consultative agency differentiate itself from its old-school competition? By spending thousands to put its name and logo on a banner at the golf tournament? Please.

With commissions in decline and a diet of leaner fees on the horizon, agencies can't afford to waste valuable marketing dollars on brand building. They will need serious and immediate results from their marketing investment. And their producers must produce serious results with their prospecting efforts.


Agency and sales management: No margin for error

Much like marketing and prospecting, agency management of operations and sales must become more productive and efficient in the 21st century agency. The new economics means there is no margin for error and no place for inefficiency. Agency operations must become leaner and more streamlined, with best practices including automation and outsourcing to create maximum efficiency.

With lower per-client revenue driving a need for more and better clients, rigorous sales management that demands true accountability is imperative to ensure that producers become more efficient and effective in prospecting and closing sales. As the old saying goes, if you don't measure it, you can't manage it. And if you don't manage it, it's not important. Far too many sales organizations are hampered by poor sales management efforts that do not really manage producers at all.

The 21st century agency will have superior sales and operations management in order to maximize its resources and drive as much top-line revenue as possible to the bottom line.


Of cattle and buffalo

My earlier question about whether you are a cow or a buffalo speaks to your odds of surviving the inevitable thinning of the herd and being one of the winners.

Clearly, benefit agencies are facing a tremendous storm and survival will require every agency to make radical changes in their business model. The question is, how will agency principals react to the storm?

Interestingly, cows and buffalo respond very differently to a storm and the difference is very instructive.

On the great plains of the Midwest, buffalo roam the fields with the cattle. Each lives on these plains and grazes from the same fields. There is, however, a big difference between the two.

When storms come to the plains with thunder, lightning and tremendous winds, the cattle turn away from the storm in a panic and run in the same direction the storm is going. Buffalo, however, turn to face the storm and, with all their energy, run straight into the storm.

You have a choice with all the storms that are coming: You can be like the cattle, spending your time and energy running from the unavoidable changes you must undertake for survival - and prolonging your misery.

Or you can be like the buffalo, facing the necessary changes head on, embracing the changes and getting quickly through them. Either way, changing your business model is essential for survival; how we face the changes makes us who we are.

After the thinning of the herd, there might be a few cows left standing among the winners. But the vast majority of the winners will be buffalo, who also will have had a much easier and shorter run to long-term success. As you survey the changes necessary to become a 21st century agency, be the damn buffalo. Charge!

Griswold is a former senior executive with a national enrollment firm. His firm, Bottom Line Solutions, consults with agencies across the country. Reach him at (615) 656-5974 or

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