Will Social Media Change the Referral Dynamic for Insurance Agents?

11thJul. × ’11

I recently attended a series of insurance company events during which one of the vendor presenters repeated this statistic:   85% of insurance consumers start their research with the search engines.  That sounds plausible; the problem is, it’s not true.  A 2010 study by AIS Media found that only 32% of consumers begin their insurance quest with the search engines (not that that’s insignificant, it’s just not 85% – by any method or rounding up).  The number one place where consumers start their purchase research?  By asking family, friends and other acquaintances where they have their insurance.  As noted in Confluency’s June newsletter, this behavior is the reason referrals are the number one source of new business for most agencies at 69%.  But there’s even more.

An article posted by eMarketer today cites data from surveys performed by Knowledge Networks and MediaPost Communications who find that 37% of social media users trust what friends and family say in social media about a product or service.  That percentage is strikingly similar to the AIS Media survey results:  the percentage of consumers who begin their insurance research by checking with friends and family is 37.5%.  And there’s more.

Mobile search is on the rise, but is still less than 10% of all search (that’s projected to change rapidly in the coming two or three years); however, 40% of social media users access social media via mobile devices on a regular basis.  Think about the typical scenario…I’m out shopping, maybe for a car, and the topic of insurance comes up.  Or I’m about to close on that home or refinance and the realtor or mortgage broker brings up insurance.  Or I’m at work, grousing about that that insurance premium rate increase I got in the mail yesterday.  Who am I going to turn to?  If I’m like 37% of the population (or 37.5%) I’m going to check with my friends and family – my social network – and there’s a pretty good chance I’m going to do it on my smart phone by accessing social media.

Emarketer Graph:  Who Do People Trust for Referrals?

So the question most insurance agents should be asking is this:  Will my customers’ friends and family see my agency when they engage with my customers through social media? For those agents who have established profiles on Facebook and other social media, and have been engaging their customers there, the answer is probably yes.  For the agents who have not, the answer is less clear.  But I’m willing to bet that the level of referral business will drop for agents who do not engage  in social media.

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