Rewarding Performance.

Every year, J.D. Power and Associates issues a syndicated study that most property/casualty carriers use to gauge customer satisfaction with their companies. The study, based on an eight-page questionnaire filled out by consumers, reports on their satisfaction with 70 different criteria including price, billing, policy offering, claims handling and, most importantly, agent interaction. J.D. Power takes the results and turns them into a benchmarking system to identify carriers' performance, relative to one another on all of the various dimensions.

But a year ago, American Family Mutual Insurance Co. took this analysis further and developed a new strategy to help their more than 4,000 exclusive agents grow their books of business and enhance service to policyholders. With the help of J.D. Power, American Family established an agent certification program that relies on a tracking study of all of the carrier's insureds. The study asks them a battery of questions to identify those agents who rank in the top 20% in terms of customer satisfaction against all agents throughout the country.

"Those agents who score in the top 20% are qualified to have J.D. Power and Associates do an on-site evaluation" as an independent, third party, said Kevin Keegan, executive director of the West Lake Village, Calif., firm. One of his evaluators will go to the agency and evaluate its compliance with customer-centric performance criteria." This time, rather than the voice of the consumer reporting to us, we observe and look for evidence for certain practices and processes that are key to customer satisfaction, such as annual insurance reviews--do they conduct these with their customer base and how often do they do these? How do they handle claims--their responsiveness? Is the office environment clean and comfortable for their customers? It includes several different areas of performance."

Those agents who pass the on-site evaluation--American Family's highest--scoring agents actually amounted to 38% of its agent force--receive the Distinguished Insurance Agency designation.

"The objective of the program was to create something that American Family customers could trust, to help our company build on the strong customer satisfaction that we've had and attract new customers by having the distinguished agent award," said Jack Salzwedel, executive vice president.

This program "benefits American Family by knowing how satisfied our customers actually are, and why they are or are not satisfied," said Jeff Burke, vice president of marketing. "We believe that part of our future growth is in retaining our current customers, by improving their satisfaction with our customer service. We can in, pact our growth that way."

Bringing Everyone Up to Par

The numbers of American Family's agents who didn't qualify for the program represent "the iceberg under the tip" Keegan said. "What do you do for them?" For starters, they and all the other American Family agents can view the collected data on the company's Web site and see how their performances measured up.

"We have the data down to the agency and to the district, so a district manager can now go in and look at each agent in his or her district and say, 'My top performer for personal insurance reviews are these five agents and the other ones have a ways to go,' " Salzwedel said. "We can then use the best practices of the agents in each of these categories to help cross over to the other agents."

The carrier currently is slicing and dicing through the huge amount of data that these analyses have generated, trying to look at peer buckets and seeing if there are common themes across the different areas. "Where that will end up taking us is looking at training needs," Salzwedel said. "It goes beyond just the agent and their best practices. It goes to a district manager and how he or she is training in their district."

American Family can support training efforts through its in-house Education Division, he added. All of the company's agents took at least one course in 2004 and many of them took multiple courses. They enrolled in more than 300 different classroom or online courses in 2004, ranging from the new agent training program with 16 courses, to instruction on how to grow their overall and specific lines of business, protect customer information and increase customer loyalty, a scven-part series.

The 75-year-old company, which is based in Madison, Wis., and operates in 17 Western and Midwestern states, offers vehicle, property, life, health, business and farm/ranch insurance, as well as annuities and consumer loans.

As a mutual insurer, American Family is not under the pressure of issuing a quarterly dividend or earnings statement, and can take the longer view, Salzwedel noted. "We can invest a little bit differently in different areas to try and see the gains we want to see," he said. "Being a mutual insurer really lends itself to doing something like the J.D. Power program, which we think over the long run is really going to pay off."

Research has indicated that American Family's agents represent a big value to its customers, he noted. "Our data shows that if we have good agent performance, we're going to have very high customer satisfaction and retention," Salzwedel said. That finding is borne out in the company's advertisements. In one ad, for example, a customer cites agent service as a prime reason why he has remained with American Family for more than 25 years.