Insurance is harder.  There are two times when the emotional attachment to insurance is strong: 1)  When someone’s premium increases or coverage gets canceled, or: 2) After receiving fast and complete indemnification after a claim*.  Those attachments are at opposite ends of the spectrum – so what’s in the middle?  What is the fodder for those daily Facebook posts  – the song lyrics of insurance, if you like?

I was going to use this blog post to offer up some suggestions, but PC World beat me to it.  Here’s an excerpt from their July article, Secrets to Using Facebook to Market Your Business:

Customers want to be informed and engaged, not pitched and harassed. It’s OK to tie in your products and services where they’re relevant, but don’t simply use the Facebook page as a platform for marketing soundbites.

You can post news or stories related to your business and provide unique commentary or insight. You can also use the Facebook page to provide tips, tricks, or information content. Rather than just talking at the audience, though, try to incite comments and feedback from the members to foster a sense of community with the customers.

*OK, so there are lots of other negative emotional attachments to insurance:  I don’t understand my policy paperwork, or bill; I can’t get anyone to respond to my questions, etc.  In the Yin-Yang philosophy of life and business, each of the negative emotional attachments can also be turned to positive experiences.

I talk to a lot of insurance agents.  Some are happy with their sales and profit growth, most aren’t.  That’s one thing most agencies have in common.  Some have little free cash to invest in marketing programs, some have literally invested over $100,000 in what they believe to be state-of-the-art marketing systems.  Even these agencies have something in common.  Almost none of them are engaging in the four basic tactics that cost almost nothing and deliver demonstrable sales results.  Two of the tactics are as old as dirt and two of them wouldn’t exist without the internet.  As much as anything, I think that shows that the insurance agent who achieves top quartile growth combines a little of the old with the new.

The New

Local Search

Almost all insurance shoppers turn to the internet at some point during their research and purchase process.  And increasingly they are presented with a short list of local businesses next to a map.  Informal research conducted by Confluency Solutions indicates that 80% of all insurance agents have not claimed their local listing with Google Places, Bing Local, or Yahoo Local.  Claiming and enhancing your agency’s business listing is free and takes little time.  That’s why every agent who cares about sales growth needs to manage their visibility in local search.

Email Marketing

Email marketing has been with us for so long that it hardly seems new but it was not possible without the internet.  Spam abuse has brought us tightened regulations (CAN-SPAM) and tightened email filters to keep out unwanted email.  Many agencies use email abuses as a rationale for not collecting and using email addresses.  But, as the Marketing Sherpa chart below shows, those businesses that use email marketing, have *not* seen diminishing returns over the last three years.

There are lots of techniques for gathering email addresses and obtaining permission to send out emails but the best place to start is with your customers and current prospects.  Intelligent email communications to the first group improves retention, account sales, and referrals.  Emails to the second group can introduce additional product (sales), expand your insurance agency value proposition, and maximize sales conversions.  And emailing to either group will have almost no impact on your marketing budget.  You can get money for nothing.

The Old

Lost Business Reclamation

Customers leave for a variety of reasons but always a variation on the ‘grass is greener on the other side’.  Often it isn’t.  Customers are frequently gone before you know you’ve lost them.  In those cases where an agency can learn about a potential customer defection before it happens, the customer is retained 86% of the time.  They just want to know you care.  And if you show them that you care, even after customers have left your insurance agency, you can win back that lost business.  You can pick and choose who you want back, and a process employing a few well placed phone calls, surveys, and emails can bring ex-customers back into the fold once you’ve helped them realize the grass really isn’t greener on the other side.

Managed Referrals

Most agencies get nearly 70% of their new business from referrals.  Nothing wrong with that, except that in most cases those referrals happen fortuitously.  A simple program, wherein you reward customers for referrals with small gifts and constantly promote – with your email, website, on-hold message, and conversation – the existence of your referral program, you can increase the number of referrals your insurance agency receives dramatically.  Of course, if you are employing the first three tactics discussed in this post, your percentage of new business from referrals will decline.  But there is nothing wrong with that – it’s all low acquisition cost.

Who was #1 on the enjoyable list?  USAA.  USAA is a unique animal, to be sure, but there is something to be learned from their Facebook page.  I just scanned their currently displayed wall, top to bottom.  Nowhere did I see a we-can-save-you-money sales pitch or read a dreadful claims scenario wherein someone found out they didn’t have the right insurance.  USAA understands that Facebook isn’t a medium for the hard sell…it’s for fun.

1.  Oh, you guys do web stuff?  I’ll give your information to my technology guy to review.

2.  I’m in the insurance business, not the technology business.

I felt the need to post my take on those comments, but I didn’t feel like typing.  So here’s what you get:

You catch more fish when the seas are roiling...

And that brings me back around to our new agency customer.  I worry about new agencies, it’s always tough starting a new business.  But over the last few weeks I’ve decided that this may be a better time than most to start a new agency.  New insurance agencies have a distinct advantage over established agencies in this economy – they don’t have to defend against defection of current customers.  The fish caught by new agents were dislocated from their former habitat by by the turbulent waves of this economy.

So good for new agents.  The moral of this story for established insurance agents is, that now more than ever, you need to be in contact with your customers.  That’s the only way to know if you are at risk of losing an account.  If you have been putting off sending e-newsletters, or implementing a legitimate annual review program, now is the time to end your procrastination.  And, if your customer development has applicability for developing prospects, then use it for that dual purpose.  After all, there are plenty of fish swimming outside your agency that belong to somebody else today and could be your customers tomorrow.

The blog post I read was from Jason Falls’ Social Media Explorer blog and it is worth reading in its entirety. Here is the readers digest version of the post, points that should be considered by any insurance agent on the precipice of jumping into Facebook or some other social media venture.

Social media is about relationships and social media works for businesses when people have something they can be passionate about.  In the case at hand, passion takes the form of amusement over a video (more on that in a minute).  It’s hard to get anyone to be passionate about insurance as a product, but let me reproduce a quote from Jason’s blog post here that is instructive:

I polled folks on Twitter Saturday, asking what compels them to talk about brands. Almost to a person, the answer was something along the lines of, “When I have an exceptionally good or exceptionally bad experience.”

So customer experiences, as well as humor are candidates for Facebook content.  But for heaven’s sake, leave the insurance products out.

Social media campaigns are generally about branding, and the bottom line results are going to be hard to measure, just as with any other brand building initiative.  What that means is that you better have some patience with your campaign, and you will need to find some other way to measure success besides new insurance policies written.

Everyone has jumped on the social media bandwagon by now, so standing out is going to take more time and effort than the early days when only a few businesses were using YouTube or keeping a Facebook group or page.  Success, however you measure it, might require more of your money or time.  To get a feel for the level of competition, take a look at the craft that went into Xerox’s Information Overload Syndrom video.

I’m not suggesting you throw in the towel, just that as a a small local insurance agency, you have to be realistic about social media competition , how you need to use social media, and the kind of results you can expect.

As a final note, let me point out that social media campaigns do work.  If that weren’t the case, you wouldn’t be reading this post.  Because you have, the brand awareness meter for Xerox, and for that matter Jason Falls, have been nudged a couple of notches.

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I picked up a new guide to writing web page sales copy about a month ago, and finally, due to a power outage the other day*, I had time to really think about it.  One common ‘hook’ in sales copy – the thing that grabs your attention sufficiently that you scan a little further – is the problem-solution formula.    That’s the most pervasive one, both on and off the web, in insurance sales copy:  ‘Your insurance costs too much and we can save you money.”  It is a hook that works, of course, or else GEICO wouldn’t continue to beat it to death.  I think that is also the easiest one for an insurance agent to latch on to, even though it leaves some of us with the queasy feeling that we are demagoging and commoditizing a service that shouldn’t be a commodity at all.

There is another variation on the problem-solutions recipe that shows up in insurance sales messages.  I’m going to call that the Allstate angle after their recent TV advertising campaign:  “If you don’t have the right insurance, you could find yourself leaving a courtroom bare-chested, the shirt having just been sued off your back.  We won’t let that happen.”  That’s a message that seems to work for Allstate, and many independent agents have adopted that same sales hook.

But as I read the copywriting guide, I was struck  by the effectiveness of using scarcity as the sales hook – you know, “this offer expires at midnight tonight”, or “we only have five widgets left” (a la QVC).  The scarcity message is problematic on a web page – “Look! I just refreshed the page after 2 hours, and there are still ‘only 5 widgets left!”  It also requires a little more thought in an insurance context; I mean, is there a limit to the number of insurance policies that can be printed?

But scarcity does fortuitously present itself from time-to-time.  A recent example here in Florida followed in the wake of State Farm’s announcement to pull out of the homeowner market.  A few of Confluency’s insurance agency customers seized that occasion to let customers and prospects know that their agencies had a number of financially solid markets that could accept State Farm homeowner customers at competitive rates.  They also warned (accurately and honestly), that due to market volatility, they might not have the capacity to place homeowner policies indefinitely.  The message:  procrastinate and increase your risk of not finding quality coverage at competitive rates.  And it worked.  All three agencies that I know of that used this approach more than doubled their new customers over about a two month period.  And then the tumult sibsided, scarcity moved off stage, and new business reverted to normal levels.  But what if your agency could manufacture scarcity and make a compelling case to a prospect for why they should act now?  I think it can be done, and I think it will improve agency bottom line results.  But first, some more background.

Doctors and dentists use a scarcity sales hook when they say they are not taking new patients or they are accepting only referrals (and some agencies work on a referral only basis).  These health care providers may not think about positioning their exclusivity as a sales hook.  A doctor may have a patient maximum imposed by their malpractice insurer.  Or a dentist may simply want to preserve free time and quality of life instead of piling in even more income.  But most always, professional service providers recognize the reality imposed  by time constraints and the necessary trade off:  if I take new patients, I’ll have less time to spend with my existing patients.  Insurance agents face the same trade off.

Suppose your agency were to set a monthly new business quota and then let potential customers know that if they wait too long into the month, they may not be able to become a customer.  OK, I get it.  Who among us is going to say no to a new customer.  But hear me out.  And by the way, this is something we wrestle with at Confluency Solutions; I firmly believe that within the next 6 – 12 months we will limit the number of new customers we take on for the very reasons I am about to explain.

The fact is, new customers cost money; we all know that.  For every quote that converts, somebody had to produce quotes for 3, 4, or 5 prospects that didn’t convert.  And  every quote opportunity was earned through multiple phone calls, emails, and other lead nurturing activities.  All that takes time.  How much?  Four hours per each new customer?  Five?  I don’t know, and it will vary from agency to agency.  The point is, every minute spent acquiring new customers could be spent nurturing incumbent clients.  There are things you do for your customers (or would like to do, if you had the time):  personal annual reviews, claims monitoring, educational safety or risk management seminars, etc.  And we all know that multiple, high-touch, value-added customer contacts result in better retention, more policies per account, and more referrals.**  In short, spending more time with your customers means more income.

All agencies need new customer growth and I’m not arguing against that.  But every agency eventually bumps up against a dilemma, wittingly or otherwise.  That dilemma is encapsulated in this question:  Is my insurance agency producing income from new customers at the expense of income (and better profit) we could produce by developing current customers?  To answer that question, you need to have specific customer development activities and results you can measure.  Maybe your agency does, maybe not.  But for the sake of illustration,  and my only hope of wrapping up this post, I’m going to assume a hypothetical agency does have a customer development program in place and can measure the results.

This hypothetical agency has determined the optimal number of new customers is 20 a month.  Further, the agency recognizes that half those new customers come from referrals.  So the agency decides to set a quota of 10 new customers a month, aside from referrals.  Then they craft a sales hook for their website sales pages and other sales collateral that goes like this:

We want to make sure you are never on your own when you have an insurance claim; our agency wants to be available to answer every question you have, in as much depth as you want; we want to recognize when a change in your lifestyle or business situation requires different insurance.  Because of that, we may not be able to accept you as a customer.  We have to protect the time we need to provide for all our customers’ needs, so we can only accept 10 new customers a month, exclusive of customer referrals.  We hope you understand.  And we hope you contact us as soon as possible, because we really would like to have you as a customer.

Think about the implications of a sales hook like that.  It creates a sense of urgency.  It articulates a value (actually value-added) proposition instead of just doling out the usual ‘we’re all about service’ platitudes.  It communicates to agency staff the commitment behind the kind of service you expect them to provide customers.  It also probably boosts office morale because the sales hook implies that you care about stress and overtime – you want to manage and protect staff time and sanity.

So there it is, scarcity vs. ‘you could save 15% or more’.  The anti-GEICO.  The question is, would you ever seriously consider implementing an approach like this in your agency.  I’d love to know.

*In his book, The Age of Unreason, Charles Handy wrote about the benefits of unstructured time – protecting time for creative development and ideas; in particular he made not of several top performing companies that allow employees 15% of paid time for tinkering on their own projects.  I must confess, that except for sitting around in the dark without electricity for several hours, I can’t remember the last time I enjoyed any unstructured time.

**Of course, not all customer contacts need to consume a lot of time or cost money.  For a short video discussion about how to use a gift card program to improve agency results, check out Agency Resources website.

• 83% consumers want an annual review – NAIC Survey
• 90% want all their insurance in one place – Progressive Survey
• 6.8 is the average number of insurance policies per household; most agencies average less than 2 (this includes life, health, disability, an agency should have an interest in these other products that are out there –

Selling other insurance products, such as life insurance, can actually improve the retention rate of other products the agency sells. A 1998 report… showed that the retention rate of automobile policies improved when the customer purchased more than insurance from the agency.

The retention level improved from 61 percent to 83 percent in policy year five when a customer purchased three or four products from the same agency. The rate improves from 44 percent to 75 percent in year 10 and from 35 percent to 71 percent in year 15.

Yet, the percentage of American households who own multiple lines of insurance from the same agency remains small. Only 6.9 percent of all households have purchased p-c and life insurance products from the same agency, LIMRA reported in that study.  National Underwriter, 2003, Issue #2)

Of course, there are reviews and then there are reviews. The content and positioning of a review questionnaire should follow the objectives the agency has for the activity. I recall visiting a large agency service center a few years ago when they were sending out renewal questionnaires. At the time, the response rate was about 30% – respondents overwhelmingly asked to be re-quoted to see if the agency could get them a reduced premium.   I’m sure someone around there has a bad taste about that still.   There was a problem with the questions the agency used on the questionnaire.  Customers seemed to think there were one of two outcomes:  either the agency was going to sell them more stuff thereby increasing my costs, or they were going to make the agency re-quote my policy to reduce my costs.

Effective review formats consist of questions to turn up potential gaps that may not be addressed in standard policies.  An online format can be sampled in an Annual Review Wizard from Confluency Solutions (request a review if you want to try it out).  The Wizard asks what has changed and puts the agent in a position to follow up with suggestions to adjust insurance protection for those changes. This format is focused on creating opportunities to discuss other products and capture more policy relationships – a follow up is necessary in a process like this, and an agency needs to know it has capacity for the activity that will be generated.  But a review can be an effective account development and retention tactic.  You just have to have a little faith in my extrapolation…or maybe you have some results of your own you wouldn’t mind sharing?

If you don’t know what an RSS feed is*, you owe it to yourself to check it out. RSS feeds can be quickly and easily set up to ‘push’ content from most news, blog (and other websites) to a RSS reader of your choice (Google Reader, My Yahoo!, etc.).

One feed you should definitely set up is to the Insurance Information Institute’s blog. They post regularly, and often include statistics and study related information that can be effective in your agency blog.

By the way, you can set up an RSS feed to this blog, and if you take the plunge and set up an agency blog, you should definitely encourage others to set up feeds to your insurance agency…

RSS in Plain English*

(note: at the time of the press release, I could not find anything on the allstate website about the service. oops!)