As a follow on to the post on The Future of Independent Insurance Agent in Personal Lines, though this post is applicable to all lines of insurance and insurance agency customers..

I recently was contacted by one of Confluency’s client agencies who was concerned that their satisfaction ratings were lower than average.  A prospect/client survey report card is included as part of our website admin so some data is provided to all agents after a website service or quote request.  In this case, the ratings were low across the board:  timeliness of response, satisfaction with explanations and information, etc.  But the real vote of confidence is in this question:  Would you be comfortable referring a friend or family member to us for their insurance needs?  Clients who provide referrals, as well as those that don’t, are voting with their feet, so to speak.  Most of the rest of the questions have to do with why clients are happy or unhappy  - learning about that gives you an opportunity to influence future survey results (and ultimately, retention, account sales and referrals).

So if you ask your clients if they are satisfied that you have explained insurance coverage and options adequately and a disproportionate number answer ‘no’, then you obviously need to spend a little more time with each client.  Spending time with clients is a real key to happiness.  Let me digress a little and share information from the medical world.  A few years ago, a medical malpractice insurer correlated malpractice lawsuits with the amount of time doctors spent with each patient.  Some doctors that spent, on average, just a couple more minutes with each patient.  And those doctors were sued a lot less often than doctors who hurried on to the next patient.  It’s harder to sue someone you like and you are more prone to ‘like’ a doctor who actually spends a minute or two talking and listening to you.  In the same way, clients who feel ‘loved’ by your insurance agency are far more disposed to ‘like’ you and are less inclined to shop their insurance elsewhere every time they experience a minor bump in the road.

In this context, love is synonymous with communication.  You can’t do a better job explaining insurance coverage and options to clients unless you spend just a little more time with them.  You can do that by being more efficient and taking advantage of every low-cost communication medium you possible can (i.e., your website, email and Facebook).  But even if you do that, insurance agency management will need to spend a little more time by taking a moment or two each month to communicate with all clients (newsletter, social media) and your CSRs and producers are going to have to spend just a bit more time with each client and prospect on the back end of every transaction.  Time is money, so at the end of the day, that means that the pot of gold used to pay salaries and bonuses will be a little smaller, at least at first.

Most insurance agencies are working at capacity – maybe your staff isn’t necessarily spending time as efficiently as you would like or maybe they aren’t choosing the tasks they spend time on wisely – but there is no doubt everyone is busy.  Something has to give.

What Kind of Communication Makes Insurance Consumers Happy?

Writer’s block is the bane of all authors, and that includes insurance agents who want to pen newsletters or post to Facebook or start a blog.  The first hurdle, coming up with a topic to write about, is often insurmountable.  Here’s a clue for insurance agencies, courtesy of a recent survey conducted by Siegle+Gale:  consumers find every single touch point in the insurance relationship to be complex.  And they are willing to pay more if the insurance experience can be simplified – the study suggests 5% – 6.5% more.

Survey Data from Siegle+Gale Global Brand Simplicity Index 2011

So take advantage of all the inexpensive and easy-to-use communication channels that are available to your agency and start to develop strategies to simplify insurance for your customers.  They will love you for it.  Just as important, they will be willing to pay a bit more for their insurance.

Your Agency and the Independent Agency Distribution System

For thirty-years now, pundits have been predicting the demise of the independent agency in personal lines.  It still  hasn’t happened.  Oh sure, there have been losses in market share over the last several decades, mostly to captive agency companies, but also some to the direct marketing companies.   But there are still plenty of insurance agencies making a good living producing personal lines.  Can it last?  I think so, but I’m betting that over the next 10 years there will be a far smaller number of agencies with the majority of their revenue coming from car and home insurance and those agencies that are 60% commercial today will be 75% – 80% commercial.  That means less income stability year-to-year for most agencies; personal lines, while not sexy, does’t exhibit the rate and underwriting capacity volatility that commercial insurance does.

But some agencies will continue to thrive in personal lines and I have a good idea which ones.  Here’s how to tell if your insurance agency is likely to be one of the personal lines survivors – just answer this question:  How many policies does your agency have per personal lines account?  Here are your possible answers:

1. I have no idea
2. about 1.5 policies
3. 3 or more policies

If you chose answer 1 or 2, and you don’t make some changes to your customer development programs (i.e., actually implement some customer development programs) then your agency has no future in personal lines.  If you chose answer 3 then you probably will continue to produce personal insurance business profitably.

What has really changed in 20 years?  A lot, yet in some respects, nothing.

I was at an industry conference in the fall of 2011, the keynote speaker was Risk Information’s Brian Sullivan.  As always, he delivered some thought provoking information in an engaging way.  During the Q and A, someone asked him what he thought about the future of personal lines for independent agents.  His answer, more-or-less, went like this:  Independent agents can continue to grow in personal lines but they have to do something to justify the extra cost of doing business (within the independent agency system).  The only way to do that profitably is to do more business with fewer clients.  Today, most agents don’t do anything extra and the average number of policies per personal lines account is 1.4.

Over 20 years ago, I spent time in a lot of insurance agencies, helping them analyze their marketing opportunities and one of the things I measured was the number of policies per personal lines account.  Guess what that number was.  If you guessed 1.4, you would be absolutely right.  The number hasn’t changed in over 20 years; the conclusion I would have to draw is that most agents, despite all the rich and inexpensive communication mediums available today, still don’t communicate regularly with their customers.  That is, there is no systematic communication process to capture more account sales, improve retention, and earn more referrals.  However, the agencies that have 3 or more policies per account are on their way, and for the most part, these agencies are using their website blog, Facebook, and email newsletters to build relationships with customers and reinforce their value proposition.

I have seen estimates of seven as the average number of ‘personal’ insurance polices held by the average person.  I can’t cite the source however, so instead, let’s think about policies a person should have in three groups:  Must Have, Should Have, Might Need…

Must Have (Bought Products)

• Car Insurance
• Home, Condo or Renters Insurance

So there’s two.  They are in the Must Have group because (with the exception of renters insurance) the state or the bank require most of us to have this kind of insurance.  These insurance policies are what I call ‘bought’ products, meaning you don’t have to create demand for them – people will shop for them and buy them because they have to.  Because of that, most insurance agents start their personal insurance relationships with one of these products.  Unfortunately, most agents also end their customer relationships with these products as well.

Should Have (Sold Products)

• Life Insurance
• Health Insurance
• Disability or Accident Insurance
• Critical Care Insurance
• Inland Marine (Valuable Articles)

I’m counting Inland Marine as a separate policy because it is often written on as a separate line from homeowner insurance.  Most people, even renters, have some personal property that is not adequately covered by unendorsed home, condo or renters insurance.  Yet how many property policies in your book-of -business include some inland marine policies?  Individuals may get basic life insurance through their employer as well as health and disability, but we all know that employee benefits have been slashed over the last several years and far fewer people have employer-provided coverage today.  Maybe your agency doesn’t write life, health or disability.  That’s a business decision and is certainly your call – but if that’s the case, instead of 5 more potential product relationships you are limited to one.  These policies are different than the Must Haves in that there is generally no government agency or financial institution telling people they have to buy one of these policies.  For that reason, I call these products ‘sold’ products; you have to create a demand through education and that requires customer communications.

Might Need (could be Must Have or Should Have)

• Boat Insurance
• Home Business
• ATV, RV
• Motorcycle
• Pet Insurance

There are more of these, of course, but these insurance policies are the most commonly needed.  Sometimes, as in the case of motorcycle insurance, the products are actually ‘bought’ products courtesy of the DMV licensing process; other times, individuals will finance a boat or RV and the bank will create demand for you.  Home business insurance and pet insurance are most always ‘sold’ products – you’ll have to do a little work.

So in short order we have a list of 12 fairly common personal insurance policies.  The average of 7 per person is starting to look very plausible.

Developing deep customer relationships in personal lines requires systematic communication.  That communication can be scheduled in advance – a newsletter, for instance.  That communication can be planned in advanced but developed ad hoc, as information becomes available – Facebook or blog posts, e.g.  But systematic communications should also be situational.  For instance, I recently filed two auto insurance claims.  In both cases, I contacted the insurance company claims department directly, because that’s what I was instructed to do.  The insurance company did a good job for me in both cases (of course, I haven’t seen my renewal premium yet).  I knew what to expect, was kept apprised of the process and settlement was speedy.  And the number of times my insurance agent checked in with me during either claim?  Zero.  If I were a cynical person, I might start to ask myself why I have an agent at all.  And when my renewal does come, and most likely with a premium increase, do you think I will hear from my insurance agent then?  Probably not.  It’s scenarios like this that predispose consumers to shop their insurance – and never tell their agent.  If I were to move my car insurance I would become a one policy account instead of two…and I’ll bet my agent’s policy per account ratio is 1.4.  Does he have a future in personal lines?  I’m dealing with anecdotal evidence here, but it doesn’t look like to me.

How about your insurance agency – do you have a future in personal lines?

The short answer is yes, of course your insurance agency has friends.  And now, there is a way to count your friends through the number of likes your agency gets on Facebook or the number of Twitter followers you may have.  Confluency Solutions tracks about 6,000 insurance agency Facebook pages and the average number of friends is…(drum roll)…96.*  But whether an agency has 50 friends or 250 friends, there seems to be a limit to social network growth once a certain number of fans has been reached.  Here is a graph snapshot of Facebook friend activity for an agency with 153 fans:

What you notice is the sawtooth up-down activity of gaining a friend, losing a friend.  We see this pattern with most agencies.  Some agencies will pick up five or six new likes in a day, but inevitably, they also lose a commensurate number over the next 30 days or so.  It is a rare thing when we see an agency move beyond a core of their personal social network.  When they do, their graph looks more like this one:

This agency loses a fan once in awhile.  But for every one they lose, they pick up 5 to 10 new likes.  So the question is, what is the difference between what the two agencies are doing?  The goal of social media is to gain new prospects and sales over time through increased awareness of your insurance agency and your value proposition.  So simply having a Facebook page is not enough; you need to build a network and get that network to engage with your Facebook (or other social media) page.  Here are some lessons learned from observing the first kind of agency – the typical graph – vs. the second kind of agency – the exception.

1. Make sure your agency page can be viewed without requiring someone to first be logged into Facebook.  You can make sure your page is public by not restricting any access in your page permission settings.  Right now, the only restriction option are for country and age.  A number of agents have restricted their page to U.S. viewers only; Facebook doesn’t necessarily know anything about where you are from or how old you are unless you are logged into Facebook.  Using these restrictions will keep a lot of people out of your Facebook page and will also make it invisible to the search engines, which is bad for SEO.
2. Make sure you post often enough, but not too often.  Three to five times a week is plenty; three to five times a day is too frequent.  Automatic Twitter feeds can really get you into trouble here, especially if you are tweeting with some frequency.  Celebrities and news organizations might be able to get away with multiple short posts every day, but most of us don’t have anything interesting enough to say that often that people will allow you to stay in their news feed (see graph #1 to support this).
3. Mix up your posts by adding a myth-buster or some interesting factoid once in awhile.  Photos and video get a lot more interest than text posts so try to include this kind of content.  And be careful of sounding too much like a salesman.  People who peruse their news feed aren’t generally looking to buy insurance.  Facebook, and social media in general, is a branding space, not a sales space.
4. Try some basic contests from time to time and restrict participation to your Facebook network.  This will help you get and keep fans.  Contests can and should be promoted within your Facebook page  - with photos and video if possible.

*The average is calculated by first excluding the small number of agency Facebook pages with fewer than 2 or more than 1,000 likes.

What Kind of Internet Marketing Should Your Insurance Agency Be Doing Right Now?

I’m going to vastly oversimplify the exercise of choosing internet marketing components by making these assumptions:

• You know your insurance agency’s target customers, your key products, and your geographic marketing area;
• You have decided upon which traditional marketing programs you will use -direct mail, print advertising and the like;
• You have a budget for marketing and you know how much of that budget is available to you;
• You also know which programs will be implemented in-house and which ones will be outsourced.

So it’s August already…and your insurance agency is coming up a little short on some sales commitments that could cost you some contingency income and maybe some other preferential treatment from one or more of your insurance companies.  Your problem is short term in nature and you need a short term fix.

For most agencies, the main internet marketing options are these:

• Email marketing (in the short term, this would be confined to your current list)
• Local Search Optimization
• Organic Search Optimization
• Social Media Marketing
• Pay-Per-Click (or PPC)

On a relative basis, the costs for reach line up something like this:

Since we assumed you know your insurance agency’s available marketing budget, you may be able to rule out an option or two at the outset.  But budget aside, each program has different lag-time to sales and each program has a different sales production curve as you move to and through program maturation.   The next illustration shows the different lag times as you move through implementation phases:

This should make your choices fairly easy.  In the short term, Local Search Optimization and Email Marketing are probably your best bet.*  If you don’t have a good email list, one that has been updated, then your option may winnow down to just Local search optimization.  But September is right around the corner and your insurance companies, if they haven’t already done so, are going to start talking to you about marketing plans and commitments for next year.  So it’s a good idea to also consider the longer term sales potential of some of these programs.  Relative to each other, that potential over time looks like this:

When you have the luxury of time, return on investment (ROI) should enter into your decision criteria.  The chart below shows ROI ranges for both social media marketing and SEO.  There is some risk associated with each tactic for multiple reasons (I may blog about that later, if someone asks me to).  But the range of risk is something like good-to-great as opposed to horrible-to-good.  Risks associated with SEO and social media marketing are something most of us can accept and still sleep at night.  PPC would appear to be another matter.   PPC can produce acceptable ROI, but because insurance keywords are so expensive, pay-per-click ROI is unacceptably low for many insurance products.

*although as your short term gets shorter your only option may be to purchase leads

PPC, through Google AdWords or Bing, seems like an easy way to gain visibility and acquire insurance leads on the web.  Those of us who have managed pay-per-click campaigns have long known just how expensive insurance related keywords can be.  Google lives and dies (and least right now) on the health of their paid search services (AdWords, AdSense).  And apparently, a significant amount of Google’s second quarter revenues resulted from insurance agencies and companies bidding for insurance related terms.

Most Expensive PPC Keywords

Of course, cost-per-click is only part of the cost-per-lead story.  Well crafted (i.e., tested) ad copy coupled with effective ad landing pages might generate one lead for every 4 or 5 click-throughs.  But just because someone clicks on your PPC ad doesn’t necessarily mean they fill out your form.  Those that do become leads.  At the top end CPC of $54.91 for insurance terms, the best case scenario for cost-per-lead would be in the $200 to $250 range.  If your insurance agency’s quote to conversion rate is 25% then actual customer acquisition costs for PPC would be up around $1,000.  If your ad and landing page are not well crafted and lead quality or inconsistent sales management result in lower ultimate conversion costs, then customer acquisition costs could easily be $2,000 or more.

So, does PPC make sense for your insurance agency?  It certainly makes sense for Google.  It might make sense for your insurance agency as well, considering that most agency customers stay on board over several renewals.  If annual average commission is high enough, the lifetime customer value might justify the lead cost through PPC.  But cash flow would take years to balance out – not every agency can take a hit to cash flow that won’t be recovered for several years.

Infographic:  WordStream

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.

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.

A lot of insurance agents are reticent about establishing social media profiles, let alone engaging in social media marketing.  But as the slide show below illustrates, you can suffer a social media disaster – even though you aren’t actively participating in social media.  There is some language used in the slide show that I might not normally use here, so if you are squeamish about that sort of thing, skip viewing.  But I hope you will take a look and take some of the lessons to heart.  In particular, look at the insurance promotion hoax starting on slide 29 – an update on George Orwell’s War of the Worlds…

Here’s what Wikipedia has to say about ecommerce, ‘… (it) consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks’.  They say a little more of course, and concede there is often a physical deliver component, but for the most part, the classic definition of ecommerce involves little more than circuits and networks.

The Seduction of Insurance Ecommerce

And the idea of ecom is alluring, how can it not be?  You set up a website, humans find it and enter information, get coverage and pricing information, and then enter payment information.  On the other end,  money comes out, straight into the pocket of the insurance provider.  And there’s flaw number one with insurance as ecommerce from an insurance agent’s perspective:  There is no role for the insurance agent in the foregoing scenario.  If insurance consultation and purchase could be conducted this way, why would anyone need an agent.  This view of insurance and ecommerce was pretty much the thinking in 1995 and it hasn’t come to pass yet.

Life Insurance and Auto Insurance for Basic Needs Consumers

That isn’t to say that some insurance sales have gone mostly online, term life and personal auto are two examples.  But even there, many consumers would be better served by involving a trusted adviser.  I sometimes ask agents how often coverage options on an original car insurance quote submission end up the issued policy limits.  The answer is almost never.  That’s because, even for basic auto insurance, consumers don’t understand how to determine coverage needs or the interplay between deductibles and other credits.  And while term life quote requests are easy to complete, not every company offers advantageous rates to consumers with health concerns or  a little long in the tooth.  A little experienced guidance would come in handy for many term life prospects.

A Shot in the Foot?

Advertising by term life insurance companies, and particularly advertising by the likes of direct marketing giant GEICO, lead people to believe they don’t need an agent.  And that mentality extends beyond just those two products.  Insurance agents have lots of opportunities now to participate in ecommerce through auto and home rating portals for comparative rateers, like EZLynx and Silver Plume, and company provided website widgets that allow website visitors to quote and buy online.  But if we just throw these on our websites indiscriminately aren’t we just reinforcing the message being pounded out by GEICO?  Are we shooting ourselves in the foot?

Internet Communication with a Sprinkle of Ecommerce

Most agents are local businesses and are no where close to fitting a traditional ecommerce model.  Most insurance agents can deliver benefits that can’t be matched by ecommerce alternatives but they need to make the case for agency value proposition and that’s where internet communication comes in.  Using email, the agency website, and social media agents have multiple low cost channels through which they can reach out to customers and prospects and communicate differentiate value propositions; but we need to actively communicate and those communications need to include a clear and advantageous alternative to quoting and buying online.

There is evidence that consumers want, and maybe even expect, to be able to get comparison pricing online.  So let them do it, but also let them know that going lone wolf may not yield the best combination of price, protection, claim paying ability and service, and convenience.  And let them know you have a good alternative – your insurance agency.

There is a relatively new twist on squeeze pages courtesy of the evolution of Facebook as a business marketing tool.  Squeeze pages, for those of us who may not be familiar with the term, are those web pages that require you to give up your email address, and sometimes other contact information, in exchange for something of value.

Where insurance is concerned, that something of value is generally content – a ‘free’ download’ or access to something on otherwise protected web pages – white papers, top ten tips, and so forth.  I’m not a big fan of squeeze pages, though they do have their place.  But before I go into that, let me address the variation on squeeze pages, as seen on Facebook – so called, Reveal Pages.

Reveal Pages

Instead of ‘squeezing’ an email address out of you, the reveal page spin usually requires you to ‘like’ a business Facebook page before ‘revealing’ the content on the other side.  Revealed content is typically the same as found on squeeze landing pages – free PDF downloads or access to other web content.  Often, on Facebook reveal pages, the new ‘liker’ is entered into a contest of some type.  The visitor is also in more control when it comes to reveal pages, since their Facebook ‘like’ can be revoked with a one click ‘unlike’.

The Key to Making Squeeze Pages Work

The point of both squeeze and reveal pages is to capture contact information – leads, basically, with the traditional squeeze page, a new member of your social media community with reveal pages.  These approaches are used to gather names, phone numbers, and email addresses for further follow up.  Step one in the reveal page scenario is simply the requirement of a ‘like’.  But the reveal page can still require the visitor give up their contact info, just like on a traditional squeeze page, and reveal pages often do just that.  But often the quality of these leads gained through squeeze and reveal pages are poor – bogus phone numbers and special email addresses used just for squeeze pages, abound.

And in some cases, the perceived value of the ‘valuable information’ just isn’t there.  Insurance agency squeeze pages usually come in the form of the ‘seven secrets for saving money on your auto policy’ or some such.  The problem with these ploys is that the information used extract contact information is readily available other places on the web.  The majority of consumers, if  the ‘seven secrets’ are really of interest, will just ask Google to take them to some other website.

But my biggest issue with squeeze and reveal pages aren’t in the pages themselves, my biggest objection has to do with sometimes misplaced priorities.  Most agents don’t get enough visitors to their websites or fans for their Facebook pages.  Quality content is fundamental to solving both challenges, but that content has to be free if traffic is to be active.  So often, unless your insurance agency is in a position to produce a lot of quality content for the web, or have some really exclusive information, content is probably better off published on the web with free and with open access.

Putting the Role of Your Agency Information, Website, Blog, and Local Search in Perspective

A picture is worth a thousand words, as the old saying goes.  In my case, a picture is worth about 10 webinars, 2 guides, 8 blog posts, 3 newsletter articles and more emails and conversations than I could possibly recount.  For years, I have tried to impress the importance of consistency in your basic agency information across the vast internet – and it is possible, in fact very manageable, to control the appearance of your insurance agency name, address and phone number in web directories and local search engines.  Through numerous blog posts, guides and  webinars I have tried to put the relationship and synergy between local and organic search results, your insurance agency website and blog, and now social media, into a comprehensible context.

And now, courtesy of Mike Blumental’s blog on Google Maps and local search, comes this infographic.  Kaboom!  All the many years of trying to communicate how all these work is captured in one tidy graphic.  It does a nice job laying out how the various manifestations of your insurance agency’s web presence fit together and it does a nice job integrating the concepts of search and social.

You can skip on over to full post on Blumental’s blog for a full explanation of the diagram, and I recommend it, but here are a few essential points captured so cleverly in this one image:

• The rings closest to the center of the ‘web equity wheel’ are most within your control – so control them
• Make sure your business name, phone number and website domain name don’t change  – that’s at the very center
• In the second ring, keep track of user names and passwords that access your directory listings and accounts where your business information appears.  I cannot tell you how many insurance agents had a (former) employee set up their Google Places account, later to find they cannot access their information to correct or update it.
• Insurance agency owners and managers should have complete control of your website and blog, so no excuses for not getting your basic business information right here, and no excuse for not promoting the kind of information about your products and services, the way you want.
• N.A.P., as it appears in the third and fourth rings out, refers to your agency name address and phone number, which also appears in the very center of the diagram.  This information shows up again to highlight the importance of controlling this information at the headwaters – those data providers that populate (hundreds and hundreds of) directories and local search listings downstream.  Again I say, to those insurance agents who represent Progressive, take advantage of their List Agent program and will make quality controlling your N.A.P. information a *lot* easier

I’m going to stop there since there is already a thorough explanation of the diagram at Mike Blumenthal’s blog.  But you get the picture (heh, heh, no pun intended).  A few questions I’d like to leave you with:  1.  What kind of progress have you made building your agency’s web equity?  Are you stuck in the middle?  2.  If you are working on your social media presence in rings four and five (Facebook, Twitter, LinkedIn, etc.), have you skipped over some of the details in the inner rings?