Posted on 04 Jan 08
Future Change for 2008
“Success is Never Final and Failure is Rarely Fatal” (Winston Churchill)
In 1978 I represented the GM sponsored FAMEX Insurance Program for GM dealers. At that time the major concern of GM and her dealers was that if they reached 65% market share the Federal Government might break up the corporation as they later did to AT & T. GM’s market share is now in the low 20%.
During this same time GM, Sears, and IBM were the “giants” in their respective industries / markets. Today all are much more humble in their position and candidly GM may ultimately fail. “Success is never final.” Most of us are familiar with individual entrepreneurs who “failed” once or even over and over again only to eventually rally and enjoy great success. “Failure is rarely fatal.”
Today most independent agents are enjoying the end of their best year or greatest success ever. Soon they will step into 2008 and face what may be their most challenging year ever. The good news is that with great challenges come great opportunities. Below is a snapshot of the marketplace - the future.
The P & C market is softening. This is good for customers and bad for agents. There is limited organic growth now and that will be “shrinking” because of the housing / credit crisis. The direct writers have “cherry picked” the market and independent agency companies are fighting for what’s left. State Farm is beginning to write again. The auto market is very soft and will collapse soon leading customers to seek alternatives to what they have now or as a bare minimum to shop around. Most agents are not techno-savvy but the marketplace demands efficiencies that can only be produced through maximum use of technology. Our industry is becoming older and grayer while the rest of the world becomes more colorful and younger. We’re in a business dependent on sales and most of us are order takers.
Will you end up like GM or Toyota? It’s your choice. You are “independent” and that spirit is all important in the future. The question is do you still have the entrepreneurial fire? You have a customer base and are positioned to be a community distribution system for other products / services. The question is -“Will you?” Innovation will be the key - innovation of people, products, and processes.
People - yours and theirs will be most important. Yours are volunteers and you have to tailor a compensation package to keep the best. Theirs voluntarily buy from you and you must offer a tailored value proposition to keep them buying.
Process - your marketing initiatives must create scope and efficacy - more products to more people over a longer period of time. Your operations must create scale and the accompanying efficiencies. You have to be profitable with lower commissions.
Your products must be tailored to the customers not from the shelf. Success will be in customer / market intimacy - being an expert in your customers and facilitating their buying. You must anticipate needs and be first to market. Don’t fail!
Mike Manes is the founder of Square One Consulting. Today he works with agents and agencies to facilitate mergers and acquisitions (issues of cultural compatibility), design and coordinate ventures between banks and agencies, develop niche market programs, build marketing networks, etc.
You can reach Mike by phone at (337) 577-3885, via e-mail at email@example.com, or on the web at www.squareoneconsulting.com.
Visit www.mikemanes.com to learn about Mike's book, Gumbo - Cooking Up the Organization of the Future.
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