February 21, 2012 Tom Dunham
You may have heard the news recently, that SelectQuote still is attempting to complete the expansion that they began last year. They’ve planned to hire 45 new term life insurance agents for the Jacksonville office. This does not hurt our position, however. There are multiple reasons why this is the case:
- The last time SelectQuote expanded into new offices was followed shortly thereafter with a pay cut for all support staff. Expansion does not come without risk.
- There is a very long lag time between bringing on new agents, and actually seeing a return from them. Many never make it through the training class. Many more don’t last more than a year. They also aren’t licensed in all states before then, as the company doesn’t know whether or not the agent is going to make SelectQuote money before then. So while expansion in the Jacksonville office may eventually increase capacity, it is still a long way out under the rosiest scenarios. Costs for the expansion will start to mount well before then.
- There is a long lag time with the life insurance product itself, pressuring SelectQuote doesn’t affect today’s leads alone. The typical policy takes about three months to go inforce and larger policies longer than that. In non-exceptional cases, agent involvement is minimal after their initial sale (usually within days of initial contact). The grunt work is mainly being handled by lower paid non sales personnel, who have less incentive to chase a customer who suddenly loses interest in filing out all the application requirements. So bringing pressure on SelectQuote for their stance on harming children still has the potential to change current customer’s minds before SelectQuote gets paid.
- Recent changes in IT may have impacted IT alignment with business. I’ve heard that the manager I reported to (Darlene Beck) left a couple months ago. She was development’s main liaison with business, and provided a buffer between developers and the many varied requests. The remaining conduits are sure to be burdened with getting everything passed on to developers, and making sure the work is actually being done. I used to speak to sales agents informally about what they needed or got in their way, not every developer did. Combined with some rumored dissatisfaction, and you have to wonder about the perception on the sale floor. Their is no way to make every agent happy with the technology, but if front-line producers have no sense that engineering helps them make money, you have a problem. Technology is not about preventing old systems from falling apart, it is about the improvements that increase productivity tomorrow.
- There are technical risks involved with this expansion. Telephony switching is done in the bay area regardless of which call center agent actually works from. For technical reasons, the load on the Cisco call center applications is much higher than the number of call center agents might suggest. SelectQuote routes call based on agent licensing, status messages for agent availability have to be sent to Cisco’s call router for every single state in which an agent is licensed. In the past expansions these factors caused some pain when the company expanded into satellite offices. The applications were made more efficient, but now the plan is to have the main call center all the way across the country from the telephony switching equipment. All aging calls are recorded, and again this is done on the peripheral gateways in the bay area. SelectQuote does have fat pipes between the offices, but there are are many very time sensitive operations in a typical call’s life-cycle. Database look-ups, queuing to IVR, transfers from the fast response group based on real-time agent availability, if any of these operations completes incorrectly or there is a timing issue you may have a dropped call.
It does help that they now have a dedicated telephony administrator as well as developer where before both roles were handled by myself. The telephony manager and the general network admin are technically capable of handling typical call routing changes and phone administration. So the increase in manpower gives people more of an opportunity to step up and come up with a solution. SelectQuote IT is a dangerous place to do too much, however. No one wants a target on their back, so people may feel that it’s just safer to go along with whatever the Cisco approved vendor suggests. These solutions typically involve spending mega-bucks on new networking equipment and servers. I’m sure those solutions would work great, but there’s only so much money a midsize company can spend on an already very complex telephony solution.
- Efficiency of support staff might be affected when most agents are across the country from them. Of course, the problems with harming children come from support staff, maybe the owner wants to start fresh in Jacksonville.
- While labor cost go down in Jacksonville, the marginal cost of each additional lead still rises with each additional lead generated. So while SelectQuote will save some money, it still remains to be seen if SelectQuote can afford to keep the additional agents fed with fresh leads.
So then there is no reason to look at this news of SelectQuote expansion as a sign that we can’t make a positive change. If anything, they are more vulnerable than ever.