From the August 1996 issue of Entrepreneur

The Entrepreneur

Robert Koester

The Expert

Mary J. Cronin

A large insurance brokerage representing 70 insurers, Owen, Koester & Ederer Inc. (OK&E) in Bellevue, Washington, last year boasted revenues of $18 million. Though the business was started just seven years ago, those at the helm have deep roots in the insurance industry-both as sales agents and as brokerage owners-so the leadership is well-seasoned. Yet Robert Koester, OK&E's senior vice president, is deeply worried about the future.

The Problem

"The computer is revolutionizing the insurance industry, and the role of the agency is diminishing," explains Koester. He envisions a time-not far from now-when consumers will be able to access Internet sites and quickly do comparison shopping for insurance policies. "A lot of agents don't have a clue about what's coming-they are still out playing golf. But if we don't find a way to deal with the new realities, we'll be another buggy whip maker," says Koester. "How can an insurance agent survive in the next century?"

The Solution

Is Koester jumping the gun in his worries about an established brokerage vanishing because of the Internet? We put this case to Mary J. Cronin, author of Doing Business on the Internet (Van Nostrand Reinhold) and one of the nation's top experts on the marketing and sales potential of the exploding World Wide Web. "Koester is absolutely correct to be concerned. Many middle persons-such as agents and brokers-will be eliminated by the Internet," says Cronin. Her prescription: "Some businesses will die, but for the businesses that develop good strategies now, there will be as many opportunities [due to the Internet] as there are threats. The businesses that will be eliminated are the ones that don't demonstrate new values in an online environment.

"Every middle-person business needs to look at how it can create new value in tomorrow's environment," adds Cronin, who applauds Koester's awareness of the profound changes looming in his industry. "It's still relatively early, so this is a good time for him to be asking how the Internet will impact his business," she says.

Should Koester rush to set up a retail operation on the World Wide Web? Although many businesses are doing just that, Cronin waves a yellow caution flag. "Not so fast," she says. "Retailing on the Web is already occurring, but I don't see a critical mass of customers who are ready to buy this way yet."

So what should Koester do? "Research what others in the same industry are doing on the World Wide Web," Cronin suggests. "Already there are interesting insurance businesses on the Web. The [search engine] Yahoo is a good tool for this search because it categorizes businesses by industry. You don't want to plan your Web strategy in isolation. A few minutes' use of Yahoo will let you see what others are doing, and that will lead to ideas you can incorporate into your own strategy."

The next step, Cronin says, is for Koester to begin developing a Web site that is rich in information. "Selling won't happen in a large way on the 'Net for a year or two, but consumers very much want information now," says Cronin. "First use the Web to build the loyalty of existing customers, then think about using it to find new customers."

How to build loyalty via the Web? Cronin urges Koester to create a Web site that's filled with useful information-fact sheets on types of insurance, for instance-and features a mechanism that allows customers to ask questions and get answers as quickly as possible.

"An online newsletter is another possibility," says Cronin. "This can be produced very cheaply and distributed at no cost through e-mail."

Keep your eyes firmly communicating with customers, and you won't go wrong. "The Internet is tailor-made for smaller businesses that want to cost-effectively provide customer services," says Cronin. "Yes, large insurance providers potentially could use the Internet to reach out to customers directly, but there will still be a very strong role for small businesses that use the Web to give interactions with customers a personal touch."

Top Tip

Most companies should be looking at the Internet as a sales and marketing tool, but few should expect to generate significant revenues via the 'Net-not today. Using the Internet to sell products online will take a few years to mature. But companies can still use the 'Net to great advantage, and the starting point should be servicing existing customers.

One of the best things a company can do is to ask customers what information would be most valuable to them, then use that information to design their World Wide Web site. This can be done for very little money, but so many businesses overlook it.

When customers are happy, they are loyal, so once companies have a successful strategy for serving existing customers over the Internet, they will have a tremendous competitive advantage in reaching out to new markets on the Web. -Mary J. Cronin

The One That Almost Got Away

Recently, I was invited by the senior management of a large corporation to give a presentation about the Internet and what it could do for their business. Feedback was very positive; it seemed likely I would be asked to work with them.

However, there was no follow-up invitation to get involved as a consultant. When I checked with the executive who had arranged for me to speak, he explained the company had decided to retain a well-known consulting firm instead. Since I had spent quite a bit of time researching the company for the presentation, this news was a disappointment.

Instead of trying to change his mind, I offered to prepare some materials to help the managers clarify their objectives for the project and to provide a list of questions and issues any consultant should address. He was surprised but agreed this would be helpful.

A week after sending him the materials, he called to say the management group had been so impressed by the materials, they wanted me to continue working with them as a consultant!

It was a great reminder that there are times when the quality of your work-and persistence-speak for themselves.-M.J.C.

Toolbox

CAUGHT IN THE ACT

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ROLE MODEL

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Contact Sources

Canon, 2995 Redhill Ave., Costa Mesa, CA 92626, (800) 848-4123;

Mary J. Cronin, cronin@bc.edu;

The Glass Protectors, P.O. Box 455, Antioch, IL 60002, (847) 395-9115;

Mark Victor Hansen, c/o Mark Victor Hansen & Associates, P.O. Box 7665, Newport Beach, CA 92658, (800) 433-2314;

Tom Hopkins, c/o Tom Hopkins International Inc., 7531 E. Second St., Scottsdale, AZ 85251, (800) 528-0446;

Danielle Kennedy Productions, (800) 848-8070;

Lightware, 10035 S.W. Arctic Dr., Beaverton, OR 97005, (800) 445-9396;

ManaVision Inc., (513) 299-9982, (http://www.manavision.com);

Microtek Lab Inc., (800) 654-4160, (http://www.mteklab.com);

Model Office Inc., 4815 W. Braker Ln., #502-332, Austin, TX 78759, (800) 801-3880;

Motorola, (800) 548-9954;

Owen, Koester & Ederer Inc., P.O. Box 6129, Bellevue, WA 98008, (800) 552-3112;

Seraphic Springs Health Care Agency, 28 Emerson Ave., Gloucester, MA 01930, (800) 777-3595;

Simon & Co., 8659 Holloway Plaza Dr., W. Hollywood, CA 90069, (310) 659-3882;

Symantec, 10201 Torre Ave., Cupertino, CA 95014, (800) 441-7234;

Brian Tracy, c/o Brian Tracy International, 462 Stevens Ave., #202, Folana Beach, CA 92075, (800) 542-4252, (619) 481-2977.