SOUND INTERNET SOLUTIONS

MAYBE NOT

Are agency Web sites worth the time it takes
to properly create and maintain them?

By John Ashenhurst

Since the mid-'90s, producer groups, carriers, and vendors have exhorted independent agents to provide Web sites. A substantial inventory of arguments and facts has been marshaled to support the Web site recommendation. And agency Web sites aren't difficult to come by; site building tools can be had for free and hosting can cost as little as $10 per month--less than a pack of golf balls. Yet a significant number of agencies still do not have Web sites. Do they know something their well-intended advisors don't? Are agency Web sites really not worth the bother--even if they're free?

Consumers, insurance, and the Internet

How popular is the Internet? How many people use it? Nielsen/NetRatings reports that during August, there were 105 million active Internet users in the United States. Slightly more than half were female. During that month, Internet users conducted, on average, 22 Internet sessions and spent more than 11 hours online, visiting on average 22 sites. Microsoft had the most visits, with 68 million. Gannett, 25th in popularity, received more than seven million.

What about insurance Internet activity specifically? I talked recently with Toby Alfred, Internet site manager for Progressive, about that company's experience with the Internet. He reports that Progressive.com sees about 1.3 million visits per month. Gomez Internet Quality Management regularly names Progressive.com the best insurance Web site, and Nielsen's NetRatings ranks it the most visited insurance site. Adding in GEICO, USAA, State Farm, Allstate, InsWeb, and other popular insurance Internet sites, it appears that insurance Web activity is significant. The top 10 sites alone account for at least five million visits per month; that's 60 million per year.

Phil Moeller, developer of Insure.com, now part of QuoteSmith, is certain that insurance-related activity on the Internet is much higher than the five million visits projected above. InsWeb's third quarter report lists better than 1.2 million quotes per month. NetRatings puts InsWeb toward the bottom of the top 10 insurance sites. If true, that would suggest at least 12 million quotes per month for the industry as a whole. Whatever the true number, consumers use the Internet heavily as an element of their insurance shopping process.

According to the IIABA's Future One 2001 Technology Study: "Independent agents and their carriers may be in danger of losing Internet marketing opportunities. As more insurance shoppers rely on the Internet for information gathering, agents and carriers who don't effectively offer themselves online increasingly will be overlooked by consumers."

The study goes on to point out that for consumers and small businesses that use the Internet, about half look for insurance information and get quotes. In other words, large numbers of people are using the Internet to shop for insurance. And having online self-service available is increasingly important to consumers--who have come to enjoy quality online services in travel, banking, and other areas.

Not long ago, the conventional wisdom was that agents should worry about being disintermediated by the Internet. Then initial attempts at selling insurance over the Internet didn't pan out, and along the way the Internet bubble burst. Conventional wisdom changed its mind, saying that the Internet wouldn't amount to much and that independent agents needn't worry. Consumers would always want the personal touch. With the Internet apparently losing steam, agent interest in Web sites lost out to more pressing problems--finding markets, for instance. But likely, the latest conventional wisdom--namely that the Internet doesn't represent either much opportunity or much risk for independent agents--may prove to be wrong, with agents who believe it eventually becoming marginalized.

The facts about agency Web sites

So what's the story about agency Web sites? Do agents take the Web seriously? Are they generally using the Internet to extend their marketing, sales, and service reach? The short answer is no.

Our group (Sound Internet Strategy) has spent the last two years looking at agency Web sites, insurance on the Internet generally, and then reporting our findings through Rough Notes, Sounding Line, and other venues. This last summer we launched an intensive study to learn which agents have Web sites, which don't, and what the extant Web sites do.

As of October 2002, we've identified about 29,000 independent agencies--out of the mythical 45,000 sometimes mentioned by the IIABA. As far as we can tell, fewer than 9,000 of the 29,000 have active Web sites, that is, just a bit over 30%. We're reasonably confident in these numbers, though it's possible agents may have sites we can't find via search engines, even when we know a good deal about them. Of course if we can't find the agent's sites, consumers probably aren't going to be able to either.

In general, what can we say about agency sites? We've attempted to look at 6,056 agency sites in some detail. More than 16% were defective in some important way, for instance, by not responding or having serious errors. Of the 5,000 or so we really could examine, nearly 40% made no changes this year and a significant minority had seen no changes since 2000 or before. So while many agents don't have sites, many others with sites aren't paying any attention to them.

How many agency sites provide sales assistance or online self-service? One reasonably objective way to measure this is to look for sites that collect information through forms. About 40% of the sites have at least one form though only 3% have more than one. The conclusion: Many agency sites have a contact form but few go any further. Quote request forms, service forms, and the like are rare on agency sites. Probably fewer than 3% have any meaningful sales or service capability.

One measure of Web site sophistication and real usefulness is the inclusion of meta tags, HTML coding that search engines use to classify and then deliver relevant hits back to users. Only half of the agency sites we looked at had any meta tag coding at all. Those sites without meta tags are likely to be entirely ignored or have very low placement from popular search engines. That means consumers will never find those agency sites.

We also found that more than 80% of agency sites violate some important principle of Web site usability. That means that any consumer unlucky enough to stumble on to such a site isn't likely to stay long--and in any case will come away with a general lack of confidence in the business behind the site.

You get the picture. It's a sad state of affairs. Consumers say and demonstrate that they want to use the Internet to shop for, and then buy and get service on their policies. But for the most part, the insurance agency sites disappoint compared with banking, finance, travel, and many other industries.

The counter argument

One could conclude that a significant number of agents don't have sites, and for those with sites, a considerable number significantly underachieve. The crux of the argument is that consumers cannot find agency sites and thus having no site or a lousy one is irrelevant. Only a few insurance entities can ever show up at or near the top of search engine hit lists and they get there by paying big bucks--only the likes of Progressive, GEICO, Allstate and others with huge budgets can manage. The reality is that independent agents are locked out of the Internet.

Of course the situation isn't quite that simple. There are agencies that actively promote their Web sites and achieve good results. And agents are increasingly, though fitfully, aware that they could use those sites to provide their customers with self-service functionality (out-facing services). But, of course, those are the exceptions. Agents don't have Web sites or don't pay attention to the sites they have because agents are practical business people. They've done the analysis, consciously or unconsciously, and have come to realize that agency Web sites really aren't worth the bother. After all, who ever heard of an agency that went out of business because it didn't have a Web site? Case closed.

The future

Or is it? A number of things get in the way of independent agents needing and succeeding with Web sites. Some factors are related to the objective world and others to perceptions. Were consumers actually able to find relevant agents' sites easily and then profit from what they found there, it would be rational, not chauvinistic, to have a site.

Paths to agency sites could be improved by clever search engine registration as well as a meaningful, inclusive national agency locator. And agents could field great commercial grade sites if insurance agency-specific site building and site management services were generally available. Today, agency site building services tend to be amateurish and/or expect the agency to do too much of the technical Internet and content creation work--tasks for which most agencies are ill-prepared.

Perceptions and attitudes are another matter. Whether risk averse, unimaginative, or just conservative, many insurance institutions (or the people in them) are resistant to change. Producer association "boosterism" isn't enough to make a real difference. What's needed isn't simply exhortations to get with it but real education that aids an understanding of the marketing, sales, and service strategies in this increasingly Internet-dominated world.

So far, probably, no agency has gone out of business because it didn't have a Web site. That might not always be true. It wasn't long ago that other agency automation management systems were considered optional. At the time management systems began to take hold, many agents wanted to see rigorous return on investment analysis before they were willing to buy. It's fair to say that such ROI analysis never materialized. It simply wasn't possible. When they arrived on the scene, management systems represented not an improvement over the existing manual system in an agency but a new way of doing business. So it is with agency Web sites. Their potential can't be measured against conventional marketing, sales, and service alternatives. They do--or at least can--represent a new way of doing business and, like management systems, don't make much sense if they're intended to perpetuate the status quo.

The insurance Internet game is underway. Some agents are playing and winning. Others are on the sidelines watching and biding their time. But perhaps most don't even know play is underway. At one time, management systems were optional. Now they're mandatory. Agency Web sites will follow the same curve--mark my words. *

The author

John Ashenhurst and his company, Sound Internet Strategy, provide information, and analysis (through his Web site, www.soundingline.com), consulting, Web site evaluation, and seminar services to independent agents and their trading partners. He can be reached at johnashenhurst@soundingline.com or (360) 376-1090.