'Target marketing' became the buzz phrase of the '90s, yet successful agents were targeting markets for years before. Why? Because it works!
Target marketing involves a number of steps to help you develop a steady flow of business. Execute these steps-fully and in this order-to penetrate your market of choice:
MARKET SELECTION
The keys to market selection involves three things: the strengths of your carriers, your producers' experience and strengths, and your marketplace.
- Carrier Strength: Every carrier has specialties, but most can't name them. Specialties aren't necessarily programs that the company solicits (although many programs are certainly target markets a la CNA programs). Too often, a company will solicit a program that it can't manage at a profit because it lacks the rating or underwriting skill. The outcome is embarrassment for having solicited a target group with rates or guidelines that are too severe for the marketplace. The strength of each carrier resides in its underwriting appetite and the underwriter's skills and experience. An underwriter with a strong background in construction is more capable of accepting construction accounts than one with no construction background (as long as the company has an appetite for construction accounts).
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The gist: Match your customers with carriers offering the proper lines and local underwriting skills and experience working in your areas of insurance.
- Producer Force Strengths and Experience: Suppose that your primary carrier Fly-By-Night Casualty Co. wants farm business and employs an underwriting staff that was born and bred on farms. If none of your producers have ever been on a farm, don't bother pursuing that market. Each of your producers has a unique history, talents, and background. Your best target market will come by matching producers with carriers who understand your markets.
- The Marketplace: The final arbiter of target markets is your marketplace of residence. A demographic study will help, but don't hire an advertising agency to conduct it. You can use software (for example, Q-Mod or Imarket) to search your geographic territory by SIC codes. These technologies will enable you to identify types of businesses in your marketing area and the number of prospects occupying each niche.
MARKET PLANNING
Saying you have a target market is a far cry from properly penetrating it through a direct, prolonged effort. Writing a letter and enclosing a brochure identifying your agency isn't an adequate marketing program. Yet this is exactly the effort that many agents expend, expecting the producer to make the sale after the agency has 'laid the groundwork.'
Your reaction to a common sales pitch from a vendor illustrates this problem. Let's say a new office supply house wants your business. It identified you as a steady buyer of office supplies, according to your SIC category. On average, its office supplies are generally the same as those of every other office store. It touts great service, as do its competitors. They send you a letter, slick brochure, and catalog with the promise that a salesperson will call. What you do when its sales representative calls mirrors what your target market prospects do to your producers: They tell them that they already have insurance and that (unless you can promise price savings) they don't need your services. Does this attitude make them a smaller target market? No, these prospects are still attractive-but a relationship, the key to any sales opportunity, hasn't had time to develop among the prospect, the producer, and the agency.
Program for Building Relationships: The market plan's goal is to write many target-market accounts through a disciplined program building relationships with prospects.
Write your market plan down before you execute it. 'Ready, fire, aim' is no way to run a business. Yet many agents begin a marketing plan before they've planned it. If you write your marketing plan, you exercise your most innovative talent-creativity. Determine how many steps you'll take to educate and motivate your customers to do business with your agency. Remember that familiarity doesn't breed contempt-it breeds business! Your goal is to make your producer and agency more familiar to your prospects than their current agents. This is usually easy, since most agents don't see their clients more than once or twice a year. The most successful marketing plan involves contacting prospects (by mail, by phone, and in person) no less than five times each year, three consecutive years. A three-year cycle gives an agency maximum penetration into a target market. If you haven't won the account in three years, the effort is probably futile. Document every step, so that you can proceed through the marketing procedures for each prospect in the database.
Too many agents rely on a single target market. What if the company wasn't as competitive as it thought? What if the company reneges on the entire program after a year? What if your target market decides to create an association-sponsored program-with someone else? Every agency should have at least three target markets in progress at any given time. Some of our agency clients are pursuing six to nine targets at all times.
Commit yourself to target marketing, but don't forget that your agency owes its success to writing insurance for many types of business and individuals. Target marketing permits you to focus on specific prospect groups. The most successful insurance agencies build Commercial, Personal, and financial-service accounts by targeting these markets. They're not satisfied with just the Commercial account. They have a marketing plan to penetrate every officer's Personal Lines, Health, and Life programs, and then add each satisfied customer's friends and suppliers to their client list. Gradually, they're expanding their presence in the marketplace as a generalist with specific targets.
Follow these steps in a disciplined and diligent manner and you will become both the target-market specialist and general insurance giant in your marketplace.