It’s the law of the jungle—Mother Nature will ultimately win. As the BGA food supply dwindles, so will the BGA population. Will you be one of the survivors?
This should not be news to anyone—the supply of traditional life agents is aging, retiring and dying. We see new life agents entering the business at a rate slower than those exiting. If you are planning on being a BGA five years from now, who are you looking to? Who are you recruiting to distribute your life products? Will you compete for the few traditional life brokers that remain at the evaporating pond, or are you looking for a new watering hole that is surrounded by candidates who are thirsty for what you offer?
The economic case is really pretty simple—BGAs who survive will make more money than ever. You will have the same consumer demand (perhaps more) and fewer competitors—the strong survive and they eat well. Sounds pretty exciting if you are one of the “lucky” ones.
This isn’t a new idea. For the past two decades there has been a push for BGAs to establish relationships with producers in alternate distribution channels. What has changed is that the new distribution markets are awakening to this significant, potential revenue stream—money that they sorely need for their own growth and survival. The scent of these opportunities has reached most BGAs and other distributors ready to feast on them. Yet the proximity of an apocalypse for many struggling BGAs still exists.
A number of the BGAs who have courted these new distribution opportunities appropriately over the last decade or so have had success and are expanding their reach. Is it too late?
Not at all—I don’t think they have scratched the surface. There is still plenty of opportunity for those with the knowledge, resources and talent to participate in the new distribution gold rush.
So what’s the problem? Shouldn’t we just raise our hands and invite them to our table?
That’s the problem. That is what many have done, and they have failed. Those experiencing success have done much more. They have found out what is important to these new partners—how they think, how they conduct business, and what they don’t like. They have invested in relationships and proved that they can perform as the customer wants them to perform.
So what do you need to know before diving in? The first step is to think about the alternate distribution channel you want to bring on as if you were starting a new business. As an entrepreneur ready to launch a new business, you need to know if you have enough time, capital, knowledge and talent. There are organizations out there who can assist you with the answers to those questions.
Once you’ve verified that you have the time, capital, knowledge and talent, the next step is to ask yourself the following questions:
• Why do I want to expand?
• Which distribution channel is best suited for me and offers the best opportunity?
• What are the main issues, concerns and obstacles for producers in the distribution channel?
• Do I know what motivates these producers? Have I dedicated the time to understand what motivates them?
• Is my office already set up to support their business, or do I need to make changes and additions?
• What needs to be done every day to eliminate distractions so producers can focus on their clients and prospects?
• What are the expectations of the new producers? How will I best manage their expectations?
Managing expectations of the new distribution will probably be your biggest and most important challenge. They are looking to you to provide the support they need to eliminate the distractions so they can focus on selling. Each alternate distribution channel brings with it a unique mindset so you need to fully understand the differences in how they are motivated. They might appear to be only nuances, but you need to understand them.
When thinking about adding an alternate distribution channel, keep the following points in mind:
• Understand all elements of the producer’s value proposition. You must know the differences, even if they seem small, among producers in alternate distribution channels. A property and casualty agent will approach a life sale differently than a health insurance agent or a life agent employed by a bank. Simply pushing one sales model for all the different channels is a recipe for failure. Treat each opportunity as unique, because it is. You have to help define the organization’s and the producer’s new value proposition to prospective clients.
• Help agencies and their producers add value. Many health agencies are losing producers because they can no longer afford to sell health insurance alone. They are looking for additional products and services to sell to their existing client base.
• Build scalable operations. There is no point recruiting producers from alternate distribution channels if your operations cannot support them. Even if you elect to take a wait-and-see approach on new channels, it’s a good idea to get your operations ready now so you can act quickly when the time is right for immediate sales.
By expanding into an alternate distribution channel, you are launching a new business. Your success will be dependent on a number of factors, but the key is to understand what motivates your new sales force and manage their expectations accordingly. This is an exceptionally good time to expand your life insurance distribution business. Preparation, focus and resources are the keys.
