MARKETING: NICHES TO RICHES
by Michael Jans
The advantages of niche marketing are obvious to most agents. It's far easier to create compelling messages to a niche market than it is to “consumers in general.” In this article, Michael Jans examines a rapid-fire way to dominate your marketplace and get higher profit margins.
Imagine this. You're pushing your way through a noisy, crowded marketplace. People are talking and shouting. Vendors are hollering. Someone calls out your name. Over the confusion of all the other sounds, your brain picks out the sound of your name. Without thinking, you turn around.
That's why marketing works. Because in the midst of noise and confusion, someone calls out specifically to someone else. Someone in the marketplace hears their “name” — and responds.
‘TARGET' MARKETING OR ‘GENERAL' MARKETING?
I'm often asked if “niche” or “target” marketing works better than other kinds of marketing. Direct marketing experts agree: There is no other kind of marketing.
There's only a matter of degree. Are you clearly calling out to people through the confusion of the marketplace — or are you “fuzzy”? Are you fuzzy about whom you want to reach? Fuzzy about what you want to say to them? Fuzzy about how to reach them?
Target market requires three simple business decisions:
- Clearly identify whom you want to communicate with;
- Clearly identify what you must say to get and keep their attention; and
- Clearly determine how you're going to deliver that message.
The advantages of niche marketing are obvious to most agents: It's far easier to create compelling messages to a niche market than it is to address “consumers in general.” And that can fuel very rapid market domination.
For example, when Tammy Lesueur discovered that her Central Oregon agency insured 100 contractors, she focused her marketing to that niche and quickly exploded to more than 600 contractors.
But we often overlook the internal business advantages of target marketing. Not only did Tammy's direct mail and publicity campaign generate a steady flood of leads, but she was also able to train and delegate her staff to write virtually all the business without her or her producers getting involved.
Repeating the same sequence of tasks to members of the same niche creates tremendous internal efficiencies that show up quickly on the bottom line. Producers and staff alike soon become expert in their roles as niche players. Revenue per employee, for example, frequently “busts” through normal industry benchmarks. Consider these two examples:
- Don Dalhmeier's large Workers Comp niche in Chico, CA operates with $187,000 revenue per employee.
- John Baccarella's statewide contractors niche operates with $178,000 revenue per employee.
WHERE DO YOU FIND TARGET MARKETS?
Choosing your target markets is one of your most important business decisions. Don't rush through it, because you'll live with your decision for a long time. We suggest these six steps to help you identify potential targets:
1. Examine your existing book. Identify niches where you have four or more clients. Four or more is enough to give you some expertise. It's enough for you to be able to identify problems you either want or don't want. It's enough to make it possible to grab a few testimonials — an important part of your marketing message.
2. Ask your carriers about “program business.” Don't forget MGAs and program managers. Many of our clients grab “distressed” markets — when they observe other agents fleeing a marketplace, they see opportunity.
3. Ask your carriers what's “hot.” Don't worry if they don't see it as a “program.” Ultimately, all that matters is if the marketplace wants it.
4. Identify your existing niches. See if they can be segmented into “mini- niches.” This permits you to target your message even more precisely.
5. Identify your existing niches. Can you expand your marketing campaign? Go to a larger geographic area or a broader definition of the group.
6. Identify your existing niches. See if they have affiliated or related groups (carpenters affiliate with electricians, florists affiliate with growers and so forth).
HOW DO YOU DECIDE WHICH MARKETS TO TARGET?
Use these factors to help you determine which target or targets to choose:
The Access Factor. If you can't reach them, you can't market to them. This is a threshold issue. Examine available lists for quantity and quality.
- How many lists can you rent or buy for this market?
- How accurate are they? “Compiled lists” are notoriously loaded with old or bad names — and you still pay to market to those names — at least, the first time. Lists developed by state regulatory agencies can be gold mines. They're very accurate, and usually very inexpensive.
- How recently were they compiled? The quality of lists deteriorates quickly.
- How completely do they cover the marketplace?
- How much do they cost?
- Are they rented for one-time use or purchased for perpetual use? Do they have any other usage restrictions?
- How many fields are available? Every field can be used in your marketing. Look for:
a. Snail mail
b. E-mail
c. Phone
d. Fax
e. Contact name
f. Sub-segmentation within niche
g. Company info (size, number of employees, revenue, and so forth.)
h. Insurance info (experience mods, ex-dates, current carrier, and so forth.)
- What other media are available? (Newsletters, magazines, and so forth.)
- What organizations does the niche have? (Societies, trade associations, community groups, etc.) You can use these to market through.
- What possible joint ventures do you have access to?
The Passion Factor. If you don't like someone, it's tough to market to them. Long-term marketing means long-term relationships. Do you have an affinity with the group? Share common interests? Speak their language? Conversely, will they be able to relate to you?
The Money Factor. Do your math. Make sure that there's enough premium out there: Many prospects with smaller premiums, fewer prospects with larger premiums — or many prospects with larger prospects. Small niches can be easy to “own.” Just make sure that they're worth your effort.
The Product Factor. If you have average access to a product, give yourself a 3 on a scale of 1 to 5. If product access is equal and marketing skill is unequal, you win. But if you've got a unique offering to your marketplace, give yourself a 4 or 5.
The X Factor. Other miscellaneous elements come into play, either for or against you.
- Is there unusually strong competition? An association with high member loyalty, for example?
- Are there “hidden” problems in marketing to this group? For example, nonprofits are notoriously challenging because they purchase insurance through so many different channels: CEO, CFO, treasurer, insurance committee, finance committee, and so forth. How do you know whom to market to?
- Is it a distressed market with unique marketing “pain” that other agents are fleeing but you can exploit?
- Is there a high service factor? Or on the plus side, a low service/high income ratio?
MARKET SELECTION IS ONLY THE BEGINNING
Market selection is the first step in your marketing process. Starting here is vital. Most agents don't give this step nearly enough strategic attention.
But you can't stop there. Now you have to craft a message that will get the attention of your prospects and earn their trust. Then you must select the various media you'll use to deliver your message.
Take heart. If you truly take your agency through this strategic market selection process, you'll be far ahead of your competition and well positioned for growth.
Michael Jans, CAE is president and founder of Insurance Profit Systems, Vancouver, WA, and creator of the Quantum Club Coaching Program. He can be reached at (800) 332-1697 or e-mail [email protected]. Reproduced, with permission, from Rough Notes magazine.