Call Michael: Why there will always be room for profitable, high-touch service models

Michael is my insurance broker.  He insures my life, my critical illness and disability (both of which I hope to avoid), my business liability, property and group health, my homes, my cars and some random property I have.  He does the same for Gilbert, who my readers now all know, all of our cousins, my business partners and frankly everyone I can possibly refer to him.   Several times a year a question arises to which the answer is: call Michael. 

There are alternatives to Michael.   I can divide my brokerage into life and health vs property and casualty and be sure to get the best quote everywhere.  I can shop online for the cheapest quote for my cars and homes, etc.   But I always call Michael.   I don’t actually call him, I email him. My questions are not usually time sensitive and I don’t want to disturb him.   But invariably, unless I email him during the hours he is actually asleep, Michael emails or calls me within 11 minutes.  I have heard from him when he is in Florida with his wife and kids, in Israel about to get on a camel ride (I swear) or on a random Saturday afternoon.  In addition to answering my question, Michael always has a few minutes to ask me how life is, how Gilbert is doing, etc.   He also has the answers to my question: yes you should requote out your group health, no don’t bother with Cyber (they all reinsure with one of three providers who adjudicate similarly), put through your flood claim, not your fender bender, etc.   I can ask ChatGPT those questions too; the answers would often be vague and wrong but sometimes close enough. If I want to know the cash surrender value of my whole life policy that I bought in 1996 I can log into Manulife and figure it out.  Forgot password, two factor authentication, wrong username, confusing menu, chat for immediate service, useless bot, ‘sorry we can’t find that, please call customer service,’ wait time is 44 minutes.  Fuck you, honestly. 

You may wonder how Michael has the time to give me such great service.  I am a loyal client who refers him a lot, but he has clients with WAY bigger business and assets than i to worry about.   I am a nice guy and he loves Gilbert, which always helps, but still.   It isn’t that he mistakenly prioritizes smaller clients he likes over bigger, higher-potential ones; Michael is a gigantic financial producer.   You see Michael loves people, loves serving people, and does it extremely well.  You have to be that way to be successful in the service industry because fakers can only fool so many people and can only last so long.  And Michael knows that you need every customer you serve to have the same thing to say about you, because reputation is everything. 

My firm has done dozens of projects on the likely degree and pace of disintermediation in service industries.  I have spoken publicly to dispel the exaggerations that lesser pundits put out: Insurance aggregators will completely replace brokers, and if they don’t DTC models from carriers will.  Robo will make wealth advisors irrelevant.  Who needs a therapist when AI can understand your thoughts and determine just the right thing to say? Why do you want a real estate agent when a tool can sort properties, give you the data on price and help you book the appointment?  Of course, technology is revolutionizing most service interactions.  It can make information available so quickly and ubiquitously and do what it used to take hordes of humans to do.   It takes cost out, and in an efficient market players will pass that on to consumers.  But even efficient consumer markets segment by consumer and occasion.  And some segments of consumers and occasions will always ‘overpay’ for high service.  Robo advisers are cute if you have 180k and no businesses, trusts or other tax issues. Online real estate brokerage is great if you are buying a townhouse that is almost the same as the last 23 that sold in that complex.  Travel agents are completely useless when booking flights and hotels in regularly traveled places, as it is much quicker and easier to book online.  But if you want to go trekking in Nepal best to call my friend Chris Clark to get a safe and reliable guide, inn and teahouse.  You’re welcome, Chris.  If you are a PE fund buying a small simple business in an industry you know well and you believe what the CIM says unreservedly, you can have your team buy some online reports, or have an AI expert-interview tool provide some relevant transcripts.  But if you are writing a real cheque for a deal with hair on it, best to call SATOV and get a team of relentless marines who will die to get you the right answer.   It will cost~$400K - $600K, but reduce your risk of wasting $100MM.  Sorry, I am running a business here.   

The point is that the willingness to pay for high-touch service models does not move up in a linear fashion with the quality of the good or service you are providing, because the people buying it and/or the time they are buying it are different.  The time, or occasion, point is really relevant and often overlooked.  Some people only shop at Costco or other discount grocers.  I buy some at Costco and some stuff at a local butcher, depending on the quality I need and the time I have that day.  My clients sometimes do commercial diligence themselves, sometimes think KPMG is good enough and call me when it is worth it to pay for SATOV quality and service.  I stay at basic hotels when travelling for my clients on business and swanky-ass palaces when I am on vacation. I deserve it.  You get the point. For insurance, though, I always call Michael.  You should too.