When I stumbled into this industry, I heard a common proclamation: “You’re going to love the insurance industry. It’s a relationship business!”
If that’s true, why are we losing so many “relationships”?
At a restaurant recently, I overheard a conversation at the next table. “My insurance agent must have the greatest job ever. I hear from him once a year, when it’s time for me to renew. Otherwise, I don’t know what he does. Really, it’s time for me to look somewhere else.”
A couple of years ago, the “McKinsey Report” declared there was a “…gradual shift in the value that carriers and consumers…place on…local agents, which is increasingly calling into question what role they will play in the future.” There was a lot of industry clamor and criticism of the report, but numbers are numbers, and these numbers demand solutions:
In 2003, 80% of private passenger auto (PPA) was placed by a local agent. Seven years later, the number plummeted to 63%.
The percentage of customers who placed their PPA policy online five years ago or more was a scant 7%. If they had their current policy one year or less, the number skyrocketed to 26%.
In 2007, the local agent was the single highest factor in customer satisfaction. By 2012, only 14% of the population ranked their agent as the number one driver of satisfaction, dropping our ranking to number four.
Lest we get complacent about commercial lines, 84% of small business owners claim they would toss their agent overboard and buy online if they could save money.
We know enough about human psychology to know – unequivocally – that relationships matter. Again, why then, are we losing so many?
Perhaps we’ve simply outgrown our ability to be in a relationship with our own customer base. Is it possible that the surviving agency of today is too big to deliver on the promise of relationship? After all, if you have 3,000 or 5,000 or 20,000 or more customers, can you really be in relationship with them? Can you make them feel relationship?
Our own field research indicates that, yes, you can. But not the way the industry did it in the “old days” – whether that’s the 1950s or seven years ago.
Modern technology permits us to communicate genuine value – in multiples. And through those communications, we can enhance and enrich relationships. We can deliver value. And we can reestablish the unique and worthy role of the agent.
Sophisticated marketing automation can deliver emails, drive readers to landing pages and websites, present video and audio, engage customers and prospects in surveys and much more. All the while, the content of the message can fulfill the promise of the independent system: to deliver value through relationship.
Lest we fear – from misinformation – that “email doesn’t work” or “people don’t read email,” recent research demonstrates:
70% of people say they always open email from their favorite companies
95% of those who opt into email from brands find those emails “somewhat to very useful”
91% of consumers check their email at least once per day.
And marketers report:
Email marketing yields an average of 4,300% ROI for business in the U.S.
For every dollar invested in email marketing, the average ROI is $44.25
Companies using email to nurture leads generate 50% more sales-ready leads at 33% lower cost.
Specifically, in our own industry, J.D. Powers reports that customers who interact with the insurance industry through agents who use “emerging technology” have the highest satisfaction rating. Further, they report that the resulting satisfaction rating leads to higher retention, more referrals and greater price tolerance.
Of course, the mere “blasting” of email – or any other communication – does not necessarily deliver value. While some marketing gurus may preach the need to “touch your clients 17 times a year” (or some other magic number), meaningless, vapid or self-centered sales messages will only serve to irritate the recipient and diminish the relationship.
The power of marketing automation, of course, is that it multiplies, and naturally, you can “multiply smart” or “multiply stupid.” To “multiply smart,” we must return to our primary value proposition: that the agent delivers value through relationship.
The agent touches and handles the insurance product as it travels through the value chain and does so at some considerable expense. From the customer’s perspective, value must be added during that part of the process. If not, the customer will wisely seek another channel – and the agent deserves the loss.
Marketing automation can reestablish and enhance the value of the agent relationship by aptly executing on three critical aspects of relationship management:
Deliver value at every point of contact. We are often asked, “How many times should you contact your customers?” If you don’t add value, never. If you add value, a lot.
Deliver the right message to the right person at the right time. “Blasting” the same email to everyone is often among the least meaningful of communications – a 15-year-old use of marketing technology.
Enhance the “real people” asset of the agency channel by integrating the technology with agency team activities.
Integrating Marketing and Communications
Sophisticated marketing automation integrates with an agency’s marketing automation system, “reads” critical changes in the customer’s life cycle, and delivers an appropriate and relevant message at critical points when the customer both wants and appreciates the message.
In other words, you can automatically communicate with one person at a time, not just through “broadcast” messages. Messages can be delivered when a person:
Of course, sophisticated marketing automation allows you to sub-segment your customer base, opening unlimited opportunities for cross-selling and nurturing specific market segments with specialized messages. But make sure the right hand knows what the left hand is doing. Few things diminish the customer experience more than responding to an automated marketing campaign by calling the business, only to discover that the customer service staff is unaware of the campaign.
Sophisticated marketing automation doesn’t just integrate with the agency management system. It integrates with the appropriate staff. For example, if a prospect completes a quote request form, the appropriate CSR or producer should receive a “shoulder tap” notification. Or if a customer completes an account renewal landing page, the staff assigned to that customer should receive a notification, and so forth. Then, outbound calls can be made, by real people, to real people, with real needs.
The agency system has been under siege for more than a decade, ceding market share to alternative distribution systems. In the process, many agents have chosen precisely the wrong strategy: competing on price, further commoditizing the industry and diminishing our channel’s inherent asset of value through relationship.
Sound strategy must be built upon inherent strengths, and the presence of real people in real communities or real niches is the distinguishing feature of this channel. Modern technology can amplify this strength.
Recent research by Bain & Company reveals that the loyal customer delivers seven times the lifetime value of the non-loyal customer. Loyalty is earned, over time, through careful relationship management, and that value can now be captured, strategically, by the agency channel.
The effective use of well crafted communication tools can reestablish the fundamental promise of the agency channel: that we are real people caring about and caring for real people. We will, otherwise, continue to cede market share to the opposition – a loss to the agency force and the customer alike.
Michael Jans is CEO at Agency Revolution. michael@agencyrevolution.com