by Bobby Reagan, May 2004

National Underwriter

People are looking for quick answers, and not only because life is very busy.  It may also be because we consultants frequently charge by the hour.  A quick answer is a cheaper answer.  This is probably true on several levels.

The "quick answer" question that we hear with some frequency is: "If you could narrow it down to one thing, what would guarantee my success as an agent or broker in the insurance business?"  This is actually an excellent question that we have attempted to answer many times over the years. 

One of the most insightful answers to this question would be "competitive advantage."  The firm (or the individual producer) that can consistently have a competitive advantage will be in a position to win most frequently.  Unfortunately, however, although this is a good answer,  it does lead to the follow-up question of how you gain such a competitive advantage. 

Within the agency/brokerage ranks, it can be done a number of ways, including having the best price, better coverage, greater financial stability of your insurance carrier, better service, more knowledge or being more efficient.  All of these things are well and good, but as we consider the business world at the start of the 21st century, most all of your customers (the good ones, anyway) will require quality products and services, as well as a competitive price.  Your inability to deliver these will certainly cost you competitive advantage, but in my opinion, the most important competitive advantage is much more important than any of these.  The key to the success of an insurance professional is the trust and confidence of clients. 

The importance of trust cannot be overstated.  For many years, Reagan Consulting has used as a tagline for our organization, "The Trusted Advisor."  In our relationship with the firms that we have the privilege of working with, it is the most important characteristic and quality that we can have. 

For an insurance agent or broker, it is equally as important.  You are selling financial security.  You are protecting your clients' assets, businesses and livelihood.  You are offering peace of mind to your clients.  Without question, this can best be done by someone who is deservedly earned their clients' trust. 

This has always been the case, but it is of even greater relevance today in light of the rash of corporate scandals and public breaches of trust.  Trustworthiness is not necessarily going to be assumed in today's marketplace.  It is going to have to be earned.

Well, all of this is well and good, but saying that the answer is trust, is a bit like saying the key to life is happiness.  Happiness is not achieved by being happy; it is achieved as a by-product of other actions that lead to happiness.  In the same respect, trust is not achieved by saying, "trust me," it is achieved as a by-product of other specific actions.

One of the best treatments of this topic is a book written several years ago by Maister, Green and Galford, called The Trusted Advisor.  (I am not sure whether Reagan Consulting's use of this tagline came first, or whether their title came first.  Either way, the three words are clearly in the public domain.)

If you want to have a better understanding of the whole concept of trust, I would highly recommend that you purchase this book.  It includes some outstanding thoughts and concepts; as well as presenting what they term the "trust equation," which sheds some specific light on the factors that can create trust. 

As outlined in the "trust equation," they state that trust is equal to credibility; plus reliability; plus intimacy; all divided by self-orientation.  This is not presented as a scientific conclusion as much as it is a mathematical model to show how different trust elements inter-relate.  It shows how you can create and earn trust.

The first element, credibility, includes our technical expertise, but it also refers to how we look, act, react and talk about our business.  We achieve credibility by hanging diplomas and certificates on the wall, or achieving professional designations.  We also achieve credibility by providing solutions and answers, and repeatedly being successful with our clients.  It can also be reinforced by the quality of the other people we are doing business with and by their testimonies.

The second element is reliability, which is the question of your dependability and your consistency.  It is the most tangible of the elements and directly links words and deeds.  It is achieved by consistently and repeatedly allowing your clients to experience the link between your promises and your actions. 

The third element is intimacy.  This speaks to your ability to connect with your client.  It requires vulnerability, honesty and openness on your part to let them see you.  It also requires your empathy, investment of time and effort, and respect in order to let you see them.  You have to create an environment where you can connect with your clients. 

The final factor, which is on the denominator of our equation, is self-orientation, or selfishness.  Whose interest are going to be put first, your clients or your own?  The higher that your client perceives your self-orientation, the less your client is going to trust you. 

As a way to pull this together, take a typical new client relationship and run it through this "trust equation."  Evaluate each of the four elements and give yourself a rating of zero-to10, with 10 being the highest.  If, for instance, credibility is a 5, reliability a 3, intimacy a 2, and self-orientation an 8, the calculation would be 5 plus 3 plus 2, divided by 8, which produces a trust factor of 1.25. 

Let's make this same calculation with a long-term stable client.  Perhaps in this case, credibility would be a 7, reliability an 8, intimacy a 5, and self-orientation would be a 4.  This would add up to 20, and divided by 4, would produce a trust factor of 5. 

Although I would discount the mathematical relationship between a trust factor of 1.25 and 5, I would not discount the implications of such a difference.  High trust relationships increase account retention.  They are generally more profitable relationships.  They are eminently more enjoyable and rewarding relationships.  They more frequently lead to positive testimonials and referrals to other business opportunities. 

Well, what's the take-away from all of this?  I would recommend that you make certain that you offer quality products and services and competitive prices.  This is just the starting point, though.  It's the entry fee to get into the race.  If you truly want to be successful; if you want to maximize your profitability and growth rate; if you want to be great instead of just good; I would recommend that you focus your attention on being better positioned to earn the trust and confidence of your clients than any of your peers and competitors.  If you can do this, you will be successful.  Trust me.

Bobby Reagan (bobby@reaganconsulting.com) is the Chairman and CEO of Reagan Consulting, an Atlanta-based financial and management consulting firm serving as The Trusted Advisor to hundreds of the leading insurance agents and brokers and financial institutions in the United States.  Visit Reagan Consulting at www.reaganconsulting.com.