Yes, this is a scary time in our industry, but let's face it: Fear is just a natural part of doing business. Whether you're building a business or a book of business, there's nothing easy about it. There are always threats, and if we let our fears get in the way, we'll never achieve anything.

Fear itself shouldn't automatically be seen as negative. A healthy level of fear can keep you sharp and focused and may actually help ensure your survival. To paraphrase the old saying, courage isn't the absence of fear, it's willingness to face the fear. Fear is a problem when it becomes irrational or comes from a source over which we have no control.

In working with producers and agencies, recently I have seen more fear in eyes and heard more fear in voices than at any time in the past.

Understandably, many of you are saying: "Of course we're scared! Do you have any idea what health care reform is going to do to our business?"

Let me ask a question in return: Just exactly what business are you in?

Before you answer that question, consider the message in an article I read recently in Inc. magazine. Back in 2000, the author was the CEO of a startup entertainment company. As part of a promotional activity, he found himself standing in the Times Square location of a national record store chain with the owners of the chain. He asked the owners why they thought so many people came into their store.

The CEO of the record store chain replied to what he obviously thought was a ridiculous question: "Well, to buy CDs."

To which the startup CEO responded: "I don't think so. I don't think anybody wants to buy a CD."

Record store CEO: "Do you have any idea how many millions of CDs we sell each year?"

Startup CEO: "Oh, I get that. But nobody wakes up in the morning wanting to go out and buy a round piece of plastic with a hole in it. They wake up wanting to hear that new song they heard yesterday, and they want to hear it now. They have to buy the CD, but what they want is to hear the song."

Record store CEO: "What's the difference?"

The difference, as pointed out by the startup CEO, is that if the record store owners had understood what their customers really wanted, they might have invented the iPod and iTunes. Instead, they are now in bankruptcy liquidation.

Fear of the business model

Now answer the question: Just exactly what business are you in?

Are you selling pieces of round plastic, or are you putting music into the ears of your clients? Are you selling a health insurance policy, or are you helping your clients become the employer of choice?

These are critical questions. Your answer will either legitimize your fear or reduce it to a manageable, healthy level. Your clients have to buy the health policy, but what they really want is to be sure they have the strongest value proposition to offer their employees. In other words, they want to be the employer of choice.

If you identify your business as selling traditional employee benefits (i.e., insurance policies), there are basically two ways you can help your clients and get paid: (1) Sell them an insurance policy, and (2) fix the problems that result from the policy you just sold them. I see this as the epicenter of the fear I have been seeing and hearing:

The fear arises from the inadequacy of the typical agency's business model.

Even in the best of times, this seems legitimately scary to me. At a moment's notice, the foundation of your business can be taken away or altered almost beyond recognition. If your carriers, or the government, decide your services are no longer required, you're out of business. (This is a clear example of fear emanating from a source over which you have no control.)

Now, imagine having a business model based on "putting music in people's ears."

Let's say that you are in the business of helping your clients become the employer of choice. Start by listing how many ways you can help your clients (and how many ways you can get paid):

  • Help your clients communicate more effectively with their employees
  • Educate the employer and employees on how best to use their benefits
  • Help design a new employee orientation package
  • Develop an employee handbook
  • Help with compliance issues
  • Implement a successful wellness program
  • Provide HR training
  • Provide outsourced HR assistance
  • Create a template for an exit interview to help the employer gather important information from soon-to-be ex-employees

Oh, and don't forget:

  • Help choose the right benefits package. (They still need help with this.)

This list could go on almost indefinitely.

I can hear you saying, "We already do all those things." Exactly! (Well, sort of.)

In all likelihood, your primary focus is on selling insurance, and, in an attempt to "differentiate" yourself, you give away many of the services listed above. Unfortunately, anything given away for free is worth exactly what is paid for it: nothing. It's worth nothing not because it doesn't have potential value, but because it isn't a primary focus of the business model/value proposition, and, as a result, it isn't used effectively, if at all.

The answer to most of our fears is right in front of us. It starts with redefining your role with your client. Here's how:

Take responsibility for creating "employer of choice" clients; look at all of your resources (including insurance) as possible solutions to help achieve that outcome; and assume the responsibility for helping your clients use what you provide.

Now you've begun to build a relationship that will be music in the ears of your clients. This is a business model that can't be taken away from you. This is how you face the fear that's associated with the typical agency's business model.

Unfortunately, the impact of business model fear doesn't stop here. I believe this fear creates other fears that have been an ingrained part of our industry for a long time: producers' fear of their clients and agencies' fear of their producers.

Fear of clients

Sad to say, I often find that producers are actually afraid of their clients. I believe this fear exists because many producers have ceded control of the relationship to the client. Most producers realize that they get more out of the relationship than they give. In their hearts, they know they are being paid too much for what they actually do (assuming the model of placing coverage and fixing problems). And because what they do is largely transactional, they also know they can be replaced in a heartbeat.

Now let's look at the producer-client relationship in an "employer of choice" model. In this relationship, insurance coverage and problem solving are just two promises among many made by the producer. Fulfilling the other promises (see the list above) moves the relationship beyond the transactional. When producers deliver on these promises, they are delivering real value; they are contributing to the success of their clients. When the value you deliver increases, so does your confidence. When your confidence increases, so does your standing in the relationship.

Although the employer of choice model may have an element of fear, I believe it's a healthy fear. If we are selling based on a promise of delivering results, we'll always have some fear about not delivering on our promises. Unlike with the "place insurance and fix problems" model, however, the ability to deliver is now within our control. In this model, fear is a positive, driving force toward enhancing client value, not a negative, suffocating force that causes us to dread every renewal meeting. We now have complete control over our standing in each client relationship.

Fear of producers

This may sound crazy, but I believe that some agency principals are actually afraid of their producers. Good news and bad news both come from the same misguided "place insurance/fix problems" model.

In the transactional model described above, the agency adds only one element: the relationship. And that relationship is almost always tied to the producer. In many agencies, principals avoid upsetting the producer-agency relationship at all costs. As a result, these principals end up behaving as if they work for the producer.

Don't believe me? In the typical agency, who has the lowest level of accountability? Producers. No other position has fewer defined expectations or less accountability than a producer. Why? Because the agency has ceded control of the relationship to the producer.

The good news is that by redefining the business model, by becoming an agency that creates "employer of choice" clients, the principals can expand their value proposition well beyond the producer relationship. The responsibility for meeting client expectations is now spread throughout the agency, restoring a balance that makes for healthier relationships and a stronger business model. Nobody wants good producers to leave; but, if they do, a majority of what drives client value is still intact.

So let's face our fears. I'm convinced that both producers and agencies will have much greater confidence in the value they bring to the client relationship if they contribute measurably to helping each client become that "employer of choice." That is a relationship that any business owner will value.

The alternative is to quote the insurance once a year and fix the problems that arise. That's a business model whose time has passed. That's a relationship that can be replaced in a heartbeat. That's a relationship that would scare me too. Is this a fear you are capable of facing and overcoming? Absolutely, but you have to ask yourself, "How badly do I really want to?"

Originally published in Rough Notes Magazine December 2012.


Photo by blasbike.