Ties that bind: strong field representatives drive customer satisfaction and retention by nurturing good relationships. (Industry Strategies: Selling).

Too often, insurers tend to focus on the product, rather than the relationships. In the war between products and price, unfortunately, the customer loses. Better client service and education are what's actually needed. The good news may be a trend toward developing relationship managers. Although some insurers have always had these in one form or another, it is encouraging that more of the financial industry may finally be recognizing that service differentiates companies.

At the center of the shift toward relationship managers are clients' needs. Today, people demand topnotch service from a knowledgeable expert who can guide them through complex financial issues. New distribution channels, such as banks, have also heightened awareness about the importance of creating managers to sustain key relationships.

While consumers want better service, their skepticism about the financial-services industry threatens to impede the relationship-building process. According to a 2001 Yankelovich Monitor survey, only 13% of Americans feel the insurance industry makes business decisions with their best interests in mind. More than half also believe financial companies are not interested in getting and keeping their business. The Yankelovich Monitor is a social research report.

The field force structure can pose another challenge. The company's brand is in the hands of hundreds to thousands of financial representatives nationwide who manage its customer relationships on a daily and annual basis. Different personalities, skill levels and geographic regions can create difficulties.

Good Relationships=Good Returns

Companies providing financial security should be filling client needs and building customer affinity. Client loyalty drives future growth and creates long-term, intergenerational relationships, rather than one-time sales. Retention and repeat sales are dramatically affected by good relationships, and it stands to reason that long-term clients are the most profitable. Clients also benefit most from working with a representative and company that know their financial goals, because they receive world-class service.

Strong relationships also incite clients to change their behavior patterns and implement their personal plans. Until they are implemented, plans are just plans. The client's relationship with his or her representative is the differentiator. Many clients are thankful for the diligent financial representative who reminded them about drafting a will or took steps to protect their income.

How to Build Good Relationships

The following five insights are gleaned from Northwestern Mutual's experience in building customer relationships and may help others build successful customer affinity:

* Build relationships through the field force. Affinity cannot be formed with out representatives working closely with customers. Field representatives help clients understand their financial behavior and offer innovative financial solutions. Buying life insurance, for instance, cannot be reduced to a simple either/or situation. It is a mistake to expect technology to replace representative relationships. Life insurance and other financial security products should not be reduced to commodities like books purchased online or French fries picked up at a drive-thru window.

It is also important for representatives to provide ongoing service, rather than a regional office or toll-free service line. Easy access to a trusted representative builds solid relationships and forms customer loyalty.

* Choose an exclusive career system. An exclusive career system fosters loyalty at all fronts and projects a consistent image. More than 5,000 Northwestern Mutual representatives pay their own way to attend the company's annual convention to learn and build camaraderie with peers. This system reduces turnover, and as the representatives are dedicated to the company, clients are loyal to both the company and their representative.

* Appoint financial specialists. Sometimes providing representatives on the front lines with the necessary customer-relationship support requires building new alliances or expanding service capabilities. Representatives cannot be all things to all people, especially as clients' financial needs grow Northwestern developed a network of financial specialists, trained in particular areas of expertise, to enhance representatives' relationships with clients. They can--and often do--collaborate to deliver the best financial solutions for a client.

Specialists provide assistance with estate planning and trust services, long-term-care insurance planning, retirement planning or other advanced services. This allows financial representatives to provide superior service, while focusing on their strengths. The network concept may be counter to how many consumers view financial representatives, but it instills confidence in clients that they will receive expert guidance to meet complex needs.

* Develop policyowner/customerdriven products and services. Companies need to ask customers what products would make their lives easier or more enjoyable. Often the best services are the result of determining what existing customers need to feel financially secure.

Needs-based selling drives good customer service, not pushing a particular product or cookie-cutter solutions. The mind-set for representatives should be to put customers first and do what is right for them. Providing solid service year after year and letting clients know how their plans are performing compared to objectives help develop long-term relationships.

Good customer service should bridge all of the channels available, based on client needs. For example, it does not make sense for clients to meet with their representative to make an address change. Therefore, it is critical that all other service channels, such as a customer-service center or Web site, provide added value and allow for convenient transactions.

If a company does offer online customer service, it should be sure less Net-savvy users have other options, such as an interactive voice response system or call center. Multiple service avenues demonstrate that the company has listened to and thought about customers' needs.

* Drive success with success. Think of a thriving business as a "circle of success," a business model that is grounded in the simple idea that loyalty fosters market leadership. An admired company with the finest products and highest financial strength ratings attracts the best financial representatives. They, in turn, attract top clients. Loyal clients produce great persistency and help the company keep a steady cash flow. Persistency is one of the factors that allows the company to pursue a long-term investment strategy, which drives superior investment results over time. Strong results lead back to the highest financial strength ratings.

Providing the Necessary Tools

Many companies with sound intentions inadvertently sabotage their service efforts by failing to arm their field force with the education, communication toe Is and decision-making power to respond to customers. One critical consideration is staffing a home-office service center with knowledgeable people to assist customers and the field. As everyone has experienced, nothing is more frustrating than dealing with an untrained or ineffective home-office employee who can do little to resolve a problem.

Several tools can aid representatives in fostering relationship growth. Providing the field with powerful client-communications tools, such as quarterly magazines and collateral materials, gives representatives an opportunity to educate their clients and keep their names in front of prospects. Communications surrounding annual-report mailings can also serve as a timely reminder for clients to re-evaluate their finances. More personal service, such as sending cards from the chief executive officer to commemorate milestones or follow-up customer-service letters, are other great ways to show genuine customer care.

Corporate Web sites can include valuable information on financial services and assist with the customer-service process. Online support, in particular, has changed how customers interact with insurance companies and speeds up service and information exchanged with the field. The Internet is still just a tool--one that will not alter human nature or make it easier to confront mortality. Convenience is key, but never underestimate the power of personal attention, particularly because insurance products and service demand a high level of trust.

Another area of growing importance for financial representatives is the role of the Internet to market their business and services to existing and potential clients. Individual Web sites allow representatives to communicate directly with clients and share information about themselves and their business specialties. This can add credibility and showcases the representative as a professional. Agency and field Web sites linked to a corporate or consumer marketing site are the future of online branding.

Measuring Relationship Success

Customer retention rates and persistency are the best measures of business success. A reward for being customer driven is a roster of policyowners who span several generations--60% of new Northwestern Mutual sales come from existing clients. The number of referrals, as well as repeat clients, can be good indicators of successful relationships. Customer satisfaction should also be evaluated.

Companies often overlook the strategic benefits of benchmarking customer-care centers and other customer-service tools. Beyond measuring call volume, benchmarking can be used to measure problem resolution, identify potential organizational problems and determine improvement opportunities. It is also an effective way to check performance against competitors.

It is exciting to consider what the future will bring as insurers learn more about consumer behavior and use new technologies to leverage customer relationships. Technology now makes it possible for all financial representatives and customer-service staff to have detailed client data at their fingertips with the use of desktop data-management tools. Additionally, some companies will invest in wireless or mobile agent communications to ensure that the field has fast remote access to forms and other home-office resources.

Results Oriented 

These new tools will help representatives gain a powerful advantage, but companies will be challenged with ensuring that the technology employed aligns with their overall business strategy, rather than simply doing it because the technology is available.

Today's successful businesses thrive on relationships, and relationships require nurturing. Insurers should consider how they are allocating their service resources and assess their commitment to service. They must ask themselves if they are truly customer driven, and take the necessary steps to secure and manage their most valued relationships.

Linda Schaefer is director, Policyowner Services, for Northwestern Mutual.