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 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?"
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."