As if the world of social media hasn’t added enough confusion and complexity to the world of multi-channel interaction management. Now we have added a new twist to this conundrum, as presented by the Multi-Level business model.
We are working with a local financial planner who happens to own a group of insurance agencies (actually 12 of them). Actually his wife is the real power but he is the front-man, let’s call him George. As you probably know much of the insurance market in the USA is managed by local agents who are independent small businesses. In most cases they align themselves a single major insurance products provider and may supplement that with several other products.
Our friend George has a problem he is trying to work through. We don’t have the answers, just the questions some of which are listed at the bottom of this article, it is worth you thinking about these since the concepts apply in lots of situations, and we are all open to bright suggestions.
In reality there are lots of these business models out there, where the customer relationship is not owned by an actual employee of your company.
- Insurance companies and investment brokers have operated under these models for years,
- Car sales are generally through independent local dealers,
- Travel agents may or may not carry a major company brand (that was of course before Expedia.com, Travelocity.com, Orbitz.com, Hotels.com and the airlines and hotel online websites decimated the industry),
- Hotels are often locally owned and operated under a major brand like Holiday Inn or Hilton
- Cosmetics retailers such as Mary Kay have independent sales people promoting their products
- Fitness parlors / gyms
- Real estate professionals may operate under a well known brand like Remax or Coldwell Banker but are usual local small business
- Most consumer products which are sold through retailers (online or brick-and-mortar) actually fit this model.
- And Dunkin Donuts and any other franchise based restaurant or retailer works this way which includes a variety of car maintenance, home and office cleaning and a zillion other franchise businesses.
I seem to remember reading in some government report that of the 27m firms registered in the USA, 15m are pass-through shell companies, 6m are owner operator, sole proprietors and 6m employ more than 1 person with 4m employing less than 10 people. Of the 10m sole proprietors and small businesses (less than 10 people), 900,000 are franchise operations employing 9.5m people and generating $850b in annual revenues and 4m are owner operators like real estate agents carrying a major or regional brand (2.3m are realtors and 600k real estate brokers). Even the systems integration industry, where we live, has the customer relationship owned by companies like us and not by the technology manufacturers (yes Accenture and Deloitte often act like large Value Added Resellers – VARS – if you don’t believe Accenture owns a relationship you have never worked with them).
I have no idea what the official statistic is but I suspect that significantly more than 50% of customer relationships are not owned by the actual “product manufacturer”.
George’s situation
For 10 years George has been sending group emails to all his customers from each of his agencies. In the past year he has been thinking about building a social network community for each of his agencies (he has a daughter who has been bugging him something rotten about creating Facebook). As a starting point he asked each of his agents to launch a weekly blog which he then “syndicates” to their website and to the weekly summary email sent to their customers in order to increase traffic to the websites. His next step is to launch a social network so that he can increase the stickiness of his communities.
In the process of thinking this through we had a conference call with the primary Insurance companies that his agents represent and they raised some interesting challenges they are working through that I felt merit repeating.
- The insurance company recognizes that there is a high margin generation of customer emerging who will not work with them unless they operate a multi channel customer interaction strategy including social media (younger people in their 20’s who buy life insurance for example don’t generally use it much, they are high return customers).
- The insurance company is trying to develop guidelines about agent blogs and social media sites and is concerned that there is little “case law” at the federal or state level in the USA to guide them in terms of who can discuss what and what the liabilities are.
- One key issue is what happens when someone posts an opinion on an insurance product on a social media site that turns out to be incorrect. Is the insurance broker responsible for what random people say on an officially branded social media platform. How much monitoring do they have to do? How much time do they have to interject in the discussion? What is the liability of the insurance company whose “branded products” they sell and actually own the policies?
- In lieu of some official policy the insurance company is discouraging agents from developing blogs and social media sites that discuss insurance products
- The insurance company has commissioned a strategy document which tells them that failure to discuss real insurance issues and products on a social media community will render that community worthless to their customers. This places them in a tough situation. Even the internet always provided them the ability to screen product.
- The insurance company is considering monitoring products to provide audit of blogs and social media sites as they emerge and making this part of the conditions of agency for their front line agents.
- Ultimately it is pretty clear the insurance company is very nervous about what their business partners might be up to who are also their primary sales and service channel and own more than 90% of their customer relationships
Recent Comments