Future-Proof Your Business Through Growth Marketing

Most agency principals are aware of their agency’s persistency — that is, the percentage of customers they retain each year. However, it is a business reality that customer retention is often beyond the agency’s control: Customers can move, be acquired or even go out of business.

This means that if an agency loses 10% of its revenue base, then it needs to grow by that amount just to get back to even.

Focus on PIF, Not Just Revenue

Sure, higher premiums in a hard market drive higher agency commission. But the pitfall in a hard market is to be satisfied if revenues are increasing. To ensure the future health of your firm, pay attention to the number of policies in force (PIF).

Is your PIF steadily increasing? Or has it atrophied—or even declined?

For an independent agency, PIF growth is important in so many ways. It allows for investing in new capabilities to enhance the firm’s competitiveness. It creates opportunities for advancement for staff. Further, it fosters a culture of both competitiveness and teamwork among associates as everyone contributes to success.

Look at Growth Marketing as an Investment, Not an Expense

When it comes to mission statements, most independent agencies have a similar theme: “Provide customers with great service and a choice of companies.”

Of course, those are the hallmarks of a successful agency.

However, you and your team should keep top of mind that every insurance agency is a marketing and sales organization. Commissions are paid on the sale of a policy. Agency profits depend on the sale of a policy. Everything the firm does must support the sale of a policy.

Investing in the agency’s marketing capabilities is analogous to a pharmaceutical company investing in research and development (R&D) to bring new drugs to market. Drug companies realize that even their most successful drugs have a limited life span before they become generic, greatly lowering profit margins. A failure to invest in R&D guarantees the eventual decline of the business.

As a principal, you should view your business through the same lens: A failure to invest in growth marketing ensures the eventual decline of the firm. Networking and referrals have their place, but cohort groups and industries age out and need to be replaced.

How Is Growth Marketing Different from Traditional Marketing?

Growth marketing encompasses more than lead generation.

The real difference is a systematic commitment to try different techniques to arrive at an efficient approach to reach target audience groups.

Historically, successful agencies have had advertising and promotional budgets that took one or both of the following approaches:

1. Broad marketing to consumers, which could encompass specific product lines such as auto, home and business.
2. Targeted marketing to specific commercial niches, such as professional liability for doctors, lawyers, architects, etc.

In the decades before the advent of the internet, insurance agencies’ consumer marketing tactics involved general advertising—in Yellow Pages, newspapers, television and radio. Direct mail and telemarketing were the only targeted marketing approaches, using mailing lists of various types or reverse directories of desired neighborhoods.

Agencies focusing on a commercial insurance niche were able to quasi-target their advertising. They may have purchased mailing lists for direct mail. They were able to target niche prospects through trade publications: They could list a toll-free phone number in an ad. Or they could insert a business reply card (BRC), which allowed the recipient to indicate their topic of interest and mail it back to the agency, postage paid.  

The actual response yield to these approaches was usually low. Why? Their relationship-building ability was limited.

Tech, the Great Enabler

Enter the internet, digital marketing and customer relationship management (CRM) systems. Those new capabilities allowed an independent agency to refine its tactics to develop an overall relationship-building strategy and, thus, its growth marketing strategy.

Today’s agency leaders recognize data is the new oil, with enormous value in customers’ information. At first, agencies used the data primarily in an operational manner—to hold policyholder information and facilitate renewals. Integrating agency management systems with CRM allowed agencies to cross-sell other insurance coverages to existing customers.

Indeed, one key growth marketing strategy is diving into your existing customer base. Spend some time on this. What do customers buy now? What else can you offer them? The more policies a business or family buys from your firm, the more likely they are to stay on your books. Strong retention rates impact your long-term revenue growth. So be sure your staff doesn’t leave the sale of multiple policies to chance; your team should proactively ask how else it might serve a customer.

Growth Marketing Is Evolutionary

Compare growth marketing to playing chess against a computer. At first, the human generally wins but eventually, the computer learns the patterns and then continually wins.

In the same vein, growth marketing starts with gathering data both from customers and externally purchased sources. Then, the agency can use that data in integrated marketing initiatives across multiple channels, including social media. Next, you can experiment to gauge the effectiveness of a particular approach in building and nurturing the customer relationship.

Supporting charitable causes or other initiatives allows the agency to highlight its values and culture. The key objective is to drive engagement, which can be as simple as a “like” on a social media post or as desirable as someone responding to the firm’s blog post to set up an appointment.

Getting Started With Growth Marketing

To begin, you must answer what may be the two most difficult questions for any agency leader:

1. How much is the agency willing to invest?
2. Who will lead growth marketing (on a consistent basis)?

If they’re honest, principals typically will confess to not answering these two questions before beginning their firm’s growth marketing journey. The inevitable consequence is that other, short-term agency matters take precedence, and the marketing effort loses steam.

For a simple illustration, try visiting the websites of a few agencies—you’ll often find blog posts that begin on an every-other-week cadence, only to decrease to one, two or even none over the following year.

Experiment Like Thomas Edison

Perhaps the most prolific American inventor, Thomas Edison, employed a trial-and-error approach to discovery. It required patience and persistence.

Likewise, effective growth marketing requires a trial-and-error approach. The agency must be willing to disrupt the status quo. It must be patient and persistent in testing different messages and media to see what is most successful.

But that doesn’t mean you need to reinvent the wheel. A marketing firm or industry association can help create campaigns with a variety of options, so agency leaders can decide which approach to try first.

It is important to stress patience and persistence. Beware of expecting immediate results. Growth marketing campaigns must be of adequate duration and frequency. The firm must set a realistic timeframe for judging which approaches resonate best with their target audiences.

Let’s say you’ve decided to work on growth marketing via cross-selling existing accounts. For example, at renewal time you may find that a certain—probably low—percentage of your homeowners’ accounts will add the umbrella policy upon your staff’s recommendation. Keep asking! In year two of your campaign, you’ll likely find the percentage goes up, and again in year three. In any case, policyholders will appreciate you asking about the coverage, understanding that your agency is looking out for them. Consistency is key, especially for important coverages such as umbrellas.

Stay on Track

Never lose sight of your overarching goal, which is establishing and nurturing relationships with current and prospective customers by engaging them with your agency’s brand.

Designate a staff member to coordinate the overall effort and review the content that is being posted. Leverage your staff’s expertise and creativity to maximize reach and effectiveness. Design your growth marketing strategy to be scalable, allowing it to evolve with the firm’s strategic goals.

Your strategy will be multi-channel, employing some ratio of digital marketing with search engine optimization (SEO), social media, email campaigns and paid advertising, to name a few. The content to support that strategy may include blog posts, research, infographics, podcasts, videos and testimonials.

Using these foundational concepts, you and your team can develop a sustainable growth marketing effort to ensure your agency’s continued viability.

One caveat: Dispensing technical knowledge and advice always should be viewed through the lens of potential professional liability exposure for the agency.   Top of Form