Technology, people, and the insurance agency of the future with Tim Davis | Ep. 16

Many commercial insurance agencies struggled to survive 2020, but Powers Insurance grew its commercial insurance book of business by 40% during one of the hardest years we have seen. How did they do it?

Being web-forward and ahead of the curve with technology was a major factor, hiring wisely and coaching producers strategically was another. The balance between growth and profit is always a delicate negotiation, but our guest has many good tips and actionable advice for growing a commercial insurance agency even during a crisis.

Join me as I discuss Technology, people, and the insurance agency of the future with Tim Davis, Director of Operations for Valley Insurance Agents Alliance and Director of Operations for Powers Insurance.

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Tony Caldwell:

Hi everybody. It's Tony Caldwell, and welcome to another episode of Uncaptive Agency and we're talking about the future of insurance and specifically the future of insurance distribution. It's early 2021 and we're looking at the period of time now until 2025.

And today I have a real excitement to have as my guest an old friend, Tim Davis, who's the Director of Operations for Valley Insurance Agents Alliance, a networking organization affiliated with SIAA located in St. Louis, but also the director of operations for Powers Insurance, which is a large commercially focused insurance agency located in St. Louis as well. Tim, welcome, and glad to have you with me today.

Tim Davis:

Hey Tony, thanks for having me on, appreciate it.

Tony Caldwell:

Yeah, you bet. It's really good to see you. And you know, you are one of the people I've been looking forward to talking to because you're on the very cutting edge of the digital revolution in the insurance agency business. In fact, I noted that you were named a top leader because of your work in the digital arena in the agency’s future I believe. Did I get that right?

Tim Davis:

Yeah. Yeah. Safeco recognized me there in the Safeco Liberty Agent of the Future Players to Watch I think.

Tony Caldwell:

I saw that when that came out and that's because you're doing some really amazing things. In fact, I was visiting with you earlier and learned that your agency has grown its commercial book of business by 40% in 2020. That's amazing and congratulations.

Tim Davis:

Well, thank you. Yeah, it certainly was a good year. I kind of shared, and it really kind of was a perfect storm for us this year. We were poised for growth, to begin with, but really everything with COVID tapping actually accelerated our production time rather than stunting. So it was a fun year for us in that way.

Tony Caldwell:

Well, that's great. How many folks work at Powers by the way?

Tim Davis:

So we've got about 17 roughly - it’s tough to keep track. We keep growing on staff on the Powers side.

Tony Caldwell:

Okay. And then on the VIAA side, how many folks are there?

Tim Davis:

15 employees.

Tony Caldwell:

All right. So you're leading a team of a little over 30 people. I want to dig into this 40% growth because I know that every agent listening to us is either, is really excited about maybe the fact that they could do that or wanting to know what the secrets were. You mentioned being ready for COVID from a digital perspective. And obviously, you knew how to use Zoom, but what other things had you put in place in the agency that led to that growth?

Tim Davis:

Thanks, Tony. A lot of it really is everything that I've heard you talk about in the past. We've heard Matt Masiello speak about it, we're just preparing for the agent for the future. And when I came and joined Valley and Powers in 2017, that really was my goal, to help bring the technology up to today's era within the agency and within our organization.

One of the things we started with was just upgrading our computers. We started by upgrading to laptops instead of PCs for all employees. When we started that project in 2017, we decided to do that in a more structured way than a lot of people typically do. So we actually create a budget every six months for our computer and technology, that we set aside a certain chunk of money from our revenue that we would use then to upgrade our staff and their technology, and then our systems and technology internally.

So it was a five-year plan that we rolled out in early 2017 with the ownership group. We're year three of that plan with the computer and the technology themselves. But we fortunately already had all of the laptops in place by the time COVID struck. So all of our employees were able to work remotely, really from day one in early March when we moved to that work from home capability.

We're still working remotely for our staff except for a couple of key personnel that come in a few days a week just because we haven't had the need to return to the office. We have a VoIP phone system in place, we have a CRM system that helps me keep track of our sales performance, and we're able to communicate almost as effectively through Skype and teams as we could, sitting in a cubicle away from each other.

Tony Caldwell:

So the first thing I heard you say, Tim, was that you've been making an investment in technology and you had a five-year plan. So the average agency, I would say, a medium-sized agency in the U.S spends about 2% a year of its revenue on technology. What would you all say that you're budgeting every year for that purpose?

Tim Davis:

Currently, we're budgeting 3%. I would like to see in general around 1 to 2%, I think is a reasonable budget. One of the things that we constantly try and talk with our members about and keep in mind for our retail agency, is trying to adjust your budget internally based on what your growth goals are as an organization. So we will intentionally increase our expense on our payroll or technology, knowing that's going to reduce our year-end profit margin for that year. But it's a full dialogue and an active conversation that we try to have going in. So that we know whether we're pushing the gas pedal together, or whether we need to hit the brake and focus on profitability.

Tony Caldwell:

3% doesn't sound like... I mean, that's not one of those numbers that just makes you fall out of your chair, 3%, 2%. We're not talking about big numbers and percentage-based, but it is 50% more than average. And then something else you said just now is really interesting. I mean, you have a lot of people in your organization. I know a lot of them, but you come together and you work as a team to figure out where that money needs to be invested. But you're investing it in a CRM program, I heard you say, which is distinct and separate from your agency management system. Did that have... I mean, I have to believe that that probably had a big role in the big increase in business that you experienced this year.

Tim Davis:

I would like to give it credit, but really no, the CRM was something that we have implemented during the pandemic-

Tony Caldwell:

Okay.

Tim Davis:

... Here in 2020, and certainly has helped and will help us position further down the road. I would say what helped us position as much as anything for the success we had this year. Number one, I'll start with our employees, our personnel. We have young producers on staff that we've been grooming and training and growing. The age of our producers on staff is 42, 38, 31, 29 and 24. So we're a young sales organization especially for this industry's standards currently.

And so we've been coaching and mentoring those producers, all of them are niche-focused. They have a niche or two that they specialize in and the agency helps reinforce that niche specialty through our website, through marketing, and through helping position them in front of the right referral partners or the right networking groups to help them be successful in those spaces. So it really is a collaborative effort, but it starts with the producer and what their interest is and where they can be successful.

Tony Caldwell:

All right. So, this is a people business, and you've got good people, a great program for training and developing them and certainly, that's always a key to success in our business. As you think about the next three to five years and where the industry's headed, do you see that... What do you see in that regard? Are we going to be able to solve the people problem that we have? A lot of folks are getting older, in fact, I think 60 to 70% of the employees in the business are scheduled to retire in the next five to 10 years. So, what are you doing to attract, recruit and develop young, fresh talent?

Tim Davis:

You know what the best recruiter for us has been, is Google. Our Google reviews that we get for our agency, have really helped us attract talent almost as much as it's helped from the SEO standpoint, which was the whole reason I started that initiative. Anyways, I want to say we're up to around 140 to 150 Google reviews on the website, we had zero in 2018. All of those reviews, or at least a good chunk of those will individually name an associate on our team and we'll list the line of business that they ride.

They're not just regular reviews, they're very strong reviews. A lot of those reviews will actually talk about our organization or our culture. And I get resumes through our website all the time. They'll mention their interest is because of our culture in our organization. So, it's made it very easy for us to find the right talent to fit our team.

Tony Caldwell:

Well, that's interesting from zero to 150 in two years. How did you do that? I mean, what's the process you put in place to make sure you're harvesting those and you're getting the people to say what you want them to say and so forth? What's the process?

Tim Davis:

Measure, always be measured with it. Don't ever do that. Let's send out a blanket link to everybody and ask everybody to fill out that review. We started with our CSR and our internal team, and we offered a promotion for $10 for every Google review that they got that mentioned them by name in the Google review, and that was quite a long push. If they accomplished a number as a team - I think it was 40 was the goal we had - then we did a big team-building party. They hit the goal, had enormous success right out of the gates, which was fantastic. We didn't keep that momentum.

I'd love to say that it's been all sunshine and roses ever since, but after that, it certainly slowed down, but we've been able to continue to get a handful to 10 Google reviews just through our natural process now at this time. Our CRM Agency Zoom is the CRM we're using. And I very strongly recommend it to all of our members. It's been sending out Google reviews every time we sell a new customer and they have email automation sequences that can customize for yourself and for your agency within it. So those have been really helpful on us just continuing to trickle those reviews in as well.

Tony Caldwell:

So you've mentioned members a couple of different times, Tim and I know exactly what you mean by that term, but I want to explore that for our audience who may not. Powers insurance agency is a commercial insurance agency primarily there in Missouri, but you're also operating a Strategic Insurance Agency Alliance affiliated called VIAA, Valley Insurance Agents Alliance. And you have member agencies that are affiliated with you to share markets, marketing expertise, and other things. How many members now are in your organization?

Tim Davis:

We have 135 across the two States that we manage.

Tony Caldwell:

135 members. And what would you say that the volume that that group of people is producing today?

Tim Davis:

Just under 300 million, we should clear that number at the end of this month.

Tony Caldwell:

Okay. So about $300 million in business. And I'm assuming that the things that you're doing at Powers, that you are sharing that with all those members. In other words, as you mentioned CRM, you've mentioned some other technologies. So are you finding that these agents which are obviously a little bit smaller than your agency are getting the same kind of return on investment and return on effort that you're getting?

Tim Davis:

It all comes back to the effort that you're putting in as well as an agency. But I would say definitely we're seeing are digitally board members are being very successful. I think we're seeing industry-wide commercial lines has been a really tough nut to crack here in 2020. In our group, we were down 1% in commercial lines, overall production. Personal lines production we were up pretty considerably from 2019, which I think is pretty in line with what we've seen industry-wide as well.

Tony Caldwell:

Okay.

Tim Davis:

But I would say of our digital agencies and I would love to run the numbers and have some data behind this, but most of our digital agencies that have been web forward have seen a positive lift here in 2020 in spite of everything happening.

Tony Caldwell:

You've mentioned two terms. I want to just flush those out for a second: digital agencies, and then web forward. So, let's take the second one first. What does web forward mean in your opinion?

Tim Davis:

So, somebody that's thinking about their website and really... My opinion is your website is your front door, especially nowadays in COVID. So what does it look like when you get to the main page of your website and what is your first impression? The agencies that put that good first foot forward, I think are in a strong position to succeed in today's environment there.

And then when I talk about digital agencies, I think I'm going a little bit deeper than just web forward agencies. A digital agency is one that is using tools within the agency to help promote themselves both externally to the public and to help be more efficient internally as an organization to capture that data internally, in my opinion.

Tony Caldwell:

Okay. All right. So let's take that then. And give me... You've mentioned a CRM agency management system, superior website. What are the other pieces that someone has got to put into place if they want to be a cutting edge digital agency today, from your perspective?

Tim Davis:

I think a VoIP system is really paramount-

Tony Caldwell:

That’s] voice over IP. So that's a... It's an internet-enabled telephone system. Why does that matter?

Tim Davis:

There's a couple of things. Number one, I think the most paramount capability is to have text functionality with your customer.

Tony Caldwell:

Okay.

Tim Davis:

Nowadays, most people want to engage via text or in some sort of passive way. So having that capability, I think it's absolutely paramount within your agency. To have that capability tied in with your phone system helps give you that capability of being very efficient with that interaction and exchange. So for instance, within our retail agency, currently, if we get an online lead from our website, the moment that they submit that form, the customer submits that form on the website, they'll immediately get an email back from our CRM that says, Hey, thank you for the submission, so-and-so is the producer and we'll be reaching out to you pretty soon.

We then also automate out of our CRM through our VoIP system, a text to them, that'll say, Hey, if you want to schedule a call, shoot me a text or if you want to send me a photo of your policy deck pages just upload it right here. And we get so many deck pages and snapshots of policy coverages just texted to us almost immediately with that little text automation.

That capability also gives me the ability to have my work phone number on my cell phone at all times, but to not have to give out my personal cell phone number to any client or customer. So when I'm sitting here or if I'm on the beach in Florida in a week, and I still want to take that call from my customer on my cell phone, I can because it rings there, but I can also change my settings and pass that call if I don't want to.

Tony Caldwell:

Okay. All right. So what other technology then is imperative today?

Tim Davis:

Certainly a personal lines Rider system, I think is critical for most agencies they're playing in that space. We talked about CRM, I think an Epay software can do any sort of agency bill or take any payments online. Having that Epay capability is a nicety, maybe not a necessity. To have a website obviously very important. I think the ability to... One of the things that we use that I think really helps differentiate ourselves, is video quote proposals that we send to our customers.

Tony Caldwell:

Okay.

Tim Davis:

And there are several different ways that you can accomplish that. Loom is a free website, there's a lot of free video places where you can do that. And really those experiences are not very different from what we're doing here in a meeting, but it's a screen share where you pull up the quote proposal to the customer and record yourself as the agent talking through those coverages.

We then email that video over to our client and let them watch the video on their own time so that they can gather the information. Oftentimes in the space we're dealing with on personal lines, the husband and wife or significant others aren't together to make that decision. Purchasing insurance is just a checklist item that you want to knock off the list anyways.

So we found by sending these videos out, we're able to control the client experience a little bit better because we can say, I know you're busy, I don't want to try and sell to you right now, three o'clock on a Tuesday while you're busy, I'd rather you and your significant other, watch this video and think through the coverages and the decisions on your own time.

 

We also get an email notification as the producer whenever that video is being watched. So I can know when my customers are watching the video and absorbing that information, which then gives me the capability of calling that prospect and helping them, guide them, and counsel them through the risk management review that we've provided.

Tony Caldwell:

And so, all that notification happens through your customer relationship management system, your CRM system?

Tim Davis:

Mm-hmm (affirmative).

Tony Caldwell:

That's great.

Tim Davis:

Yep. The videos go through our website vendor-

Tony Caldwell:

Okay.

Tim Davis:

Powers evolved, as the website platform.

Tony Caldwell:

All right. So how many of the 135 agencies that are in your organization, would you say or take, are using similar strategies to grow their business?

Tim Davis:

Roughly 40 to 50 of the 135. I'd like the number to be higher, but I think that's where we're at roughly.

Tony Caldwell:

There's a lot of conversation. In fact, I had one earlier today with someone who makes the argument that the personal insurance agent that is reliant on one on one or one at a time interactions with people is probably going to be a pretty tough business to be in the next... By the time three to four years go by. And that technology really is going to allow people to deal with many more folks at a time, but that much of personal insurance is going to be either done by direct to consumer sellers or through some form of technology. How do you see that? I mean, as somebody who's really focused on using technology to market and sell insurance, how do you think the salesperson fits into that ecosystem three years from now, five years from now?

Tim Davis:

It's a great question because it's a really fine line. We're walking here as the independent agent in the ecosystem. There obviously will be buyers that don't see the value and the risk management advice that we can provide those agents. And I think you'll see those price-sensitive shoppers looking in the online shopping experience space and that's okay. We don't play a part in that space.

I don't think that's the role that we need to play as independent agents. I think the real key is to carve out your value as a risk advisor and really carve out that niche and expertise that you have. The biggest crap that we can fall into as agents right now is being transactional. I think if you're not providing a real value and exchange of information to your customer, you're really at a big risk over the next five years. So I think that's the real key to focus on is, how do you have that customer experience the way that your customers want in today's era environment?

Tony Caldwell:

So how do you... So if you are going to have your customers’ experience be the way the customer wants it, and the customer is not necessarily available during banker's hours, is I'd like to say nine to five or Monday through Friday.

Tony Caldwell:

It seems to me that ship has already sailed - agents that aren't available 24-7-365 are probably getting abandoned. They don't even understand, but how are you using technology? You mentioned being on the beach and choosing to answer your cell phone or not. But if the customer's calling your cell phone, they want to talk to you whether you want to talk to them or not. So how are you setting up technology solutions to allow customer interaction all the time?

Tim Davis:

Sure. Well, having all those systems tying together is a big part of that key. With RingCentral and my VoIP system being available to me at all times, I can always choose to have that interchange. I can also set the system up in advance if I know I'm going to be off, to set those out of offices, or to have somebody on my team help answer the situation or handle the problem.

But I think more than anything for all of us, we want to be there to help our customers anyway. So most of the time, if I'm sitting on the beach, I don't necessarily view it as a big pain in the keister to have to take that call. Having that, everything I need in my pocket with, my policy management system, which I don't call it an agency management system. I call it a policy management system.

Having our customer management system or CRM there on my phone, I can do whatever I need to wherever I'm at for my customer. And I think that's the most important and valuable thing that we can do as an agent today.

Tony Caldwell:

Okay. So you mentioned using teams earlier to keep in touch with all of the 30, some odd people that work for you, but I'm curious, are your team members, your producers, and CSRs, are they using Zoom? Are you all communicating face to face with clients and customers regularly using Zoom? How's that going?

Tim Davis:

We are. So for commercial lines, most of our reviews, most of our renewals are being done via Zoom with the producer and the account manager together on them. We have a Zoom account that we have, and then we have a couple of individual Zoom accounts that we can pair out as we need to with our staff. Let's see here. What else or-

Tony Caldwell:

Well, I'm so curious, I mean, as you think about the future, Tim, next few years, do you think agents are going to be selling insurance across state boundaries, regional boundaries more frequently than they are today? Is that the future of agents because you no longer have to be face-to-face in the flesh? How do you feel about that? Have you given any thought to that and how that's going to work out?

Tim Davis:

A little bit. I think that really will come down to a lot of the industry and what your industry focus is on the commercial line space at least. I still think there is a lot of value in the Brick and Mortar Agency and being face-to-face, especially in those local communities, and being a pillar of support in your community.

I still think there'll be value in that 30 years from now, not just five years from now.

Tony Caldwell:

Okay.

Tim Davis:

So while I think we will see some agencies that cross state lines and really specialize like that, I think that'll be probably a niche that somebody focuses on and specializes in just as much as any other niche that we do in today's world.

Tony Caldwell:

Okay. Well, as we kind of wrap up, I'm curious as you think about the next three or four years, looking into the future with all that you've done at Powers and VIAA to prepare, as you said, to be ready for, this virtual reality world that we're living in today, what are the challenges that you think you've got to come to grips with? What are the things you're going to have to do to move from here in the next three years in the future to stay as relevant as you are?

Tim Davis:

Well, I think the biggest challenge is right now it's held together with a bunch of back tape and glue. We honestly have around 10 or 12 different systems that are all integrated or working together through Zapier or API connections, which works, but honestly, it's a mess on the backend. So if you don't know what you're doing, it's easy to mess up.

 

I do think there is a pathway. We'll see some technology here in the next five years that helps really streamline that process for agencies. I'll be curious to see who those leaders are and who comes away in that space. But I think the real challenge is to keep fresh, keep focusing on your industry expertise, and how to develop that as an agent and as an agency over the next five years.

Tony Caldwell:

Just to follow up on the first thing you said in the answer was that there are going to be new software, new technologies that come out that make this easier. And we began our conversation really with your investment of 3% of revenue on technology. Do you see that annual investment in technology needing to increase for the average agent, or is that going to get the job done for most people in your opinion?

Tim Davis:

Hmm. Well, let me ask you this, Tony, I guess, what would you define in your technology investment bucket? Do you consider social media marketing part of that, or does that stay separate in your marketing platform?

Tony Caldwell:

Well, let's take marketing out of it. I mean, whether you're marketing online or in the newspaper, everybody does marketing, right? And you do it a different way. So let's set that aside, that's a whole philosophical conversation we could have, do you put 5%, 10%, 20%? Here's what I'd say is whatever you pay to acquire a customer, as long as it's not more than a couple of hundred percent of what they earn you every year, you're going to make money in the long-term if you do the math. So that's a whole another conversation. But just in terms of technology and into that you've got a voiceover IP system, you have software, you've got web, all kinds of things that we don't even... Maybe, you're going to be buying. And I think you will-

Tim Davis:

Yep.

Tony Caldwell:

... Be buying virtual reality headsets and engaging with people on virtual reality. I don't know, but you're spending outside of your advertising budget as I understand at about 3%.

Tim Davis:

Sure.

Tony Caldwell:

Is that going to be stable, do you think? Is that an adequate number for most agencies going forward or do we need to plug in more money for that?

Tim Davis:

It depends on where you're at. You know, if you're starting from ground zero today, I would try and budget more healthily towards that. Especially if you're at ground zero today, you're behind and you need to catch up. So I would go as heavy as you can 5, 7, 8% to help get caught up on your technology.

Tony Caldwell:

Right.

Tim Davis:

I think here at Powers, we hope that we'll stabilize around the three to 4% mark. Again, you're hoping that your revenue and other things increase enough to help that 3% expense stay in line with everything else. But we want to see double-digit growth numbers to be able to maintain that aggressive technology investment. And that's been made very clear from day one. And we will continue to focus on that too.

Tony Caldwell:

Okay. All right. Well, Tim, I really appreciate you being with me today. I think what I take away from our conversation is that the independent agency has a big future, but the future is what it's always been, which is relationships with people, having people accessing you, and trusting you to help them with the risk needs. But that it's going to be enabled increasingly by technology. And that, that makes it easier and cheaper to service more folks. And that's the secret for success for you today. And as you see it going forward.

 

That's really helpful and I hope the agents out there, that aren't doing all the things that Powers and VIAA are doing. We'll take a look at your success and follow your lead a little bit.

Tim Davis:

And as much as anything I thank you, Tony. I really appreciate all of that. Stay patient with it all. It's taken us three years and a lot of hard work, and we've had to dust ourselves off a lot with this technology is not easy. It doesn't get implemented into your agency smoothly. It's really being patient to work through all those bumps in the road that you'll have to see those results on the backend.

Tony Caldwell:

Well, great. Hey Tim, thanks again for being with me. It's good to see you again.

Tim Davis:

Tony. Thanks for having me, I appreciate it.

Tony Caldwell:

You bet. I'm talking to independent agency owners about this all the time. If you'd like to have a more personalized conversation, click on that button or the link in the description, and we'll make that happen. You can also reach out to me at Tony caldwell.net/contact. 

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