RELATIONSHIP MARKETING
Jumping through a hoop 20 feet above the water isn't considered normal activity for a killer whale. So when Shamu was captured and hauled to its new home at Sea World, trainers didn't raise a hoop and say 'Jump, Shamu, jump.' Instead, they began with a rope held underwater by divers. When Shamu swam over it, the mammal was rewarded with a fishy snack. Gradually, the rope was raised until it was above the water. And little by little, the whale was taught to perform the dramatic leaps that have delighted crowds.
What's that got to do with selling insurance? By analogy, plenty. You need to train prospects to pay attention and be receptive to the rewards of doing business with you. Once in a while, you get lucky and succeed in coaxing the client to jump through the hoop and buy on the first try. But success often comes after small, incremental wins. First comes getting your name before the prospect and winning enough trust to get an expiration date. From there, establish dialog through correspondence, phone calls, and personal meetings before getting the commitment to buy. If all goes well, at some point in the future, you may gain not just a customer, but an advocate who sings your praises to friends and colleagues.
Training the prospect to pay attention is particularly challenging in the insurance business. The lowest price surely grabs attention. But basing everything on price is a dangerous strategy for an independent agent who doesn't control company pricing decisions. Most independent agents try to sell service, coverage, and professionalism, along with competitive pricing.
What is the best way to market intangibles like service and knowledge? How can you best cut through the noise in the marketplace and reach prospects? To win new customers, you have to pry them loose from their current agent or carrier. Get them to listen to your claim that you offer something better than what they have.
Some sales-training courses recommend an aggressive 'up-front close' as the best way to make the sale. However, all too often this tactic leads to the up-front, 'No!' Then what?
Often, it works better to concentrate on building the relationship, rather than just making the sale. The process is something like a courtship. Being too forward and aggressive at the start can ruin the whole venture.
The first step is to build awareness through advertising, seminars, referrals, and personal contact. The percentage that will be interested depends on the strength and competitiveness of the product. But agents don't have control over the percentage of prospects that are ready to buy. That largely depends on the expiration date. If it doesn't come up for several months or more, stay in touch to keep the relationship going.
Enter 'relationship marketing.' Its foundation is computer-generated direct mail, but it is not 'junk mail.' Instead, it is personalized letters produced in quantity. You could call it turbo-charged correspondence.
Consider the differences between direct mail and correspondence. Direct mail is one-way communication asking for a response to an offer that stands 'for a limited time only.' Direct mail can sell huge amounts of inexpensive consumer goods such as magazine subscriptions. Direct mail works only when there are a huge number of prospects because response rates are so low: 1% to 2% is considered fantastic. In contrast, correspondence is a two-way communication. It implies a long-term relationship, creating a dialog between you and your prospect.
Correspondence works well, even when there are a limited number of prospects, because it generated higher response rates. If you're targeting lumber yards, for example, and there are only a few dozen in your market area, you can hardly expect to achieve success by doing one direct mailing that gets a 2% response, then scratching out everyone who didn't respond. You need a way to achieve a higher initial response rate and build from there. Direct mail can't do that, but correspondence can.
Correspondence is best suited for selling a professional relationship, or complex, expensive products, as opposed to inexpensive consumer goods. You might buy a subscription to Newsweek by direct mail, but it's unlikely that you'd choose a CPA or an automobile the same way.
Until the advent of personal computers, it was impossible to create personalized mass mailers. Now, it is possible to drum up mass mailings that look as if each letter was individually composed and typed. But it's not enough just to do mailings. A well-planned attack is essential.
Picture the marketing process as a pipeline. The idea is to move prospects smoothly down the pipeline from initial contact to the final sale.
Let's look at an example of a well-coordinated relationship-based campaign that targets nursing homes. The nursing home industry is growing rapidly as ages. Total expenditures in the industry are expected to have reached $75 billion a year by 1999.
Here is how a relationship-based campaign for nursing homes can work:
Step 1: Send letters to 'centers of influence,' such as attorneys and CPAs. The letters explain that the agency has a special insurance program for nursing homes, and asks if the recipients are willing to share the names of nursing-home clients, and perhaps let their names be used in the solicitation. This is followed up by a phone call.
Step 2: Send a pre-approach letter introducing the agency and offering a free evaluation of the current insurance program in exchange for the expiration date. Enclose a copy of the agency's brochure.
Step 3: Telephone to request the expiration date.
Step 4: Now comes the most challenging part of the pipeline-staying in touch until the expiration date without becoming a pest. One of our clients calls this process 'prospect pampering.'
Here are examples of some mailing contents that can be used to continue to build the relationship.
- Introduce members of the agency team and provide a Rolodex card with their phone numbers.
- Re-introduce the agency as an expert in the nursing home business, enclosing another copy of your brochure.
- Sent a seasonal greeting.
- Provide the prospect with specific information. Point out, for example, that back injuries account for 60% of nursing home insurance claims. Enclose a pamphlet about back safety and offer the opportunity to request additional free copies for the staff.
- Offer to hold a free seminar on fire safety for employees and enclose a reply card. (Turnkey programs, including videocassettes, are available from nursing home trade associations.)
If all goes well, the odds are more than even that you'll get an opportunity to conduct a detailed interview with the prospect, prepare a quote, and close the sale. In this process, you are not simply selling insurance. You are building a relationship that makes your prospect want to do business with you.
We've used an example of a Personal Lines campaign, but the relationship-building process works just as well in Commercial Lines and in Life insurance, employee benefits, and financial products.
Building a relationship with a prospect takes time and money to train your prospects to listen when you say you can offer a better product or service. But the rewards are potentially huge.
Remember the story of Shamu the whale-patiently trained, it was eventually performing acrobatic flips. Patiently trained, your prospects could be jumping through hoops for you.