Do Advertising And Marketing Work?

AlDiamond1

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It never ceases to amaze me. Even though the Independent Agency System is totally sales driven, too many agents do an abysmal job in marketing and advertising our products and ourselves. In this document, Al Diamond answers the question, “What's the difference between advertising and marketing?”

Many agents think that sending a letter (sometimes even without a follow-up call) is a valid marketing/advertising method that should work; and they're upset when it doesn't. Advertising and Marketing do work — and they're quite different. Let me provide a few examples.

EXAMPLE #1

When do you know that you need a product? For me, I absolutely knew that I needed new gutters on the weekend when our most recent 2-1/2 foot snowfall started melting. The gutters overflowed (they were still frozen) and the lowest level of our office building began taking on water. As I tried to clear away some of the snow and ice to let the water flow away from the building, ice-cold water was constantly pouring on my head from the gutters. I had a product need.

A firm called GutterGuard, one of the top 15 home improvement companies named by Remodeling magazine, realizing that heavy snow and ice meant an opportunity, placed a full-page ad in our regional newspaper on the Sunday after the heavy snow.

I called. They answered very courteously and had a salesman at my door the next afternoon. During my conversation with him, I asked if the ad prompted more than just my response; he told me that this particular ad placed one time at the most opportune moment had yielded 96 responses in one day, with new calls continuing to arrive later. Each potential sale means thousands of dollars of both revenue and profits for the company. Did advertising work? You bet it did!

EXAMPLE #2

One of our agency clients operates a series of non-standard offices. One of their heavy costs is Yellow Page (YP) advertising. Although they felt that the YP accounted for a high majority of their traffic, they never measured to find out. We implemented a Call Accounting system to find that YP accounted for 70% to 80% of their contacts. We're evolving a Management Information System to determine the “hit rate” of YP responses compared with other responses. We'll then apply average income per policy against the cost of the YP ads to determine the rate of return and whether the volume created justifies the cost (including average renewal rates). A cost analysis will either support the YP costs or it won't. This isn't an emotional or reactionary approach. It's simple mathematics, whose results could cause the agency to dramatically increase (or not) its YP advertising based on projected returns.

Another non-standard agency we encountered that did this exercise was happy to spend more than $15,000 a month for the back of the telephone book. They make so much money on their ad budget that they consider it an investment, not a cost.

But don't assume that because ads worked for this agency that they'll work for you. Every agency has its unique marketing areas, products, and competition. You need to test your own advertising.

ADVERTISING AND MARKETING — WHAT'S THE DIFFERENCE?

Most insurance agents haven't been good advertisers or marketers. What's the difference? The Merriam-Webster Dictionary defines “advertising” as “the action of calling something to the attention of the public especially by paid announcements.” Advertising is meant to drive business in the door directly from the exposure delivered. It might be a one-time or repeated campaign.

“Marketing” is defined as “the process or technique of promoting, selling, and distributing a product or service.” Marketing insurance means promoting the product or agency through image familiarization to influence prospects to do business with you. Although advertising can be used as a part of a marketing campaign, marketing is larger, more encompassing, and less focused on the direct and immediate sale than is advertising. You should expect a faster return on your advertising dollar than on your marketing dollar. But it takes marketing to make subsequent advertising work.

For instance, what sort of response do you think you would get by placing this ad in a newspaper of a town that you haven't penetrated: “Buy Auto Insurance from XYZ Agency (888) 888-8888”? I'm sure you'd agree that a single ad in an area in which you're unknown might not result in many sales. However, if you spent a year on a campaign, with an ad every few months stressing the benefits of your agency or your products over those of the competition, that simple advertisement would probably yield far better results. The marketing campaign provided your prospects with image-building reasons that they should do business with you. The advertisement at the end was the “punch line” asking them for their business.

POINTS TO REMEMBER

1. Pick opportune times to advertise. The impact of an advertisement for Flood insurance is greatest if it's done right after a flood. Windstorms become opportunities for Homeowners insurance and for marketing efforts showing how well you or your carriers respond to claims and emergencies. But you must place these advertisements quickly in order to gain an advantage.

2. Test new advertising media or methods before committing serious dollars to them. The test will either prove that the advertising works (the returns support the cost) or it won't. If it doesn't work, don't throw good money after bad by repeating the test. However, fine-tuning or changing the media makes sense.

3. Run “cost vs. return” studies on every advertisement that you do. It's futile to run an ad and not know whether your influx of business resulted from it or from something else.

4. Don't run simultaneous ads when testing an advertising campaign. Focus on one revenue-generating activity at a time and you'll know whether it's working or not.

5. If an advertising program or campaign works to your satisfaction or beyond, by all means, expand it! Believe it or not, we've encountered literally hundreds of agents who tested a successful advertising campaign, reaped benefits from it, then determined that it was too costly and dropped it. Imagine if someone told you that he would guarantee you $1,200 in a week for every $1,000 you gave him, and then proved to you that it was legitimate. Would you decide that, while it was great to get that first $1,200, increasing the commitment to $10,000 was just too expensive? A good advertising campaign will return substantially more than this make-believe scenario. It's unbelievable that agents will back away from a successful advertising campaign after they've proven that it works.

6. Don't confuse advertising with marketing, and use both to achieve your goals. “Spend” marketing money over extended periods of time to familiarize prospects with you and your products before you “invest” in advertising to achieve direct sales.

THE PROCESS OF THE SALE

Earlier I told you about how an advertisement directly influenced me to seek out a product because the timing of the ad coincided with my need for it.

Now I'd like to tell you about the process of the sales call and how it worked out — it was fascinating!

The company, GutterGuard, is one of the top 15 home improvement companies in the nation. I quickly found out that they've only been in my area for two weeks. So, based on what I do for a living, I became very interested in the process that this young salesman was following.
First, even before I met a salesman, came a shocking statement when I called to arrange a sales call. The person on the other end of the line was very courteous and took all my information, but wouldn't confirm the sales call until she made this statement. “Mr. Diamond, are you aware that while our product is far and away the best and most unique in the industry, that it's also more expensive than those of all of our competitors? Would you still want our sales agent to visit and show it to you?” Well, I had a real need for gutters. And, as with a medical emergency, you don't just ask for the cheapest doctor — you ask for the best. I asked that the sales call be confirmed.
Soon after the salesman arrived, I found that before the new territory opened, they hired young local people and sent them to Georgia for training done by professionals and by the owners of the company. The company has a rigid customer philosophy that they needed to impart to their producers or their message would never get to the consumers. They weren't going to risk their message to local training or have producers “selling” customers their own way.

So the sales presentation that I received, while scripted and sounding somewhat canned, was done with enthusiasm and genuine pride in both the company and product. Another surprise: A producer who believes can transmit this belief and attitude directly to the customer. Producers who can't believe don't end up working for GutterGuard.

While the salesman was going on about each of the benefits of the product, I tried to get him past the general topics to the specifics. He agreed, but said that I was missing some “really good reasons that this is the best product in the market” — another show of pride. It was almost as if he was looking forward to telling me about how debris avoided collecting in the gutter and about their guarantee that if a gutter ever clogged they would come out and clean it themselves.

He answered every question that I had; if he didn't know the answer, he called his boss and asked. He went through his demonstration and actually “beamed” when his product far surpassed the examples of the competitors that he had brought along. Finally, he priced the product, at full retail price, and then offered several discounts as incentives. The price was, as expected, far beyond that of the competition — but so was the quality of the product and the salesman.

Next surprise: He asked for the close without sounding high pressure. When I rejected the close, he simply asked for the objection and responded to it. Then he asked for the close again. A second objection brought him to the phone with his superior asking if he could be flexible to my need. With that objection resolved, he asked for the close a third time. Basically, he had brought down all of my roadblocks. There was no reason for me to refuse to buy unless I objected to the price (to which the original call screener had alerted me before permitting the sales call).

How different is this process from the one we use every day to sell insurance? Although we sell a general commodity with subtle differences in product and some not-so-subtle differences in price, an Auto policy is an Auto policy and a Package policy is a Package policy. Perhaps our product doesn't differ as significantly from those of our competitors than do those of GutterGuard from its competitors'; but at least half of the benefits that the salesman stressed were benefits of their services and guarantees. And the guarantees were not against normal perils — which the warrantees of the product covered. Examples of these guarantees included, “We'll do it right and to both our and your satisfaction or we'll fix it or do it over,” and “You don't pay us a red cent until the job is done.” These kinds of guarantees add credibility to even the best sales pitch. How much does it cost these folks to offer these types of guarantees if they only use their own trained and managed employees (no contract labor) to install? Can't we think of similar intangible guarantees that would make prospects feel better about dealing with a new agent?

How many of our producers are taught to ask for the close, quietly and courteously, and if objections arise, to solve them and ask for the close again? Unless an insurmountable objection arises, this method will work if they step through the sales process in the same order that my salesman did. First, he talked about the company. Then he described the product and the differences between it and those of the competitors. He interspersed both product and service benefits and guarantees throughout the conversation. When I ran out of questions, he closed. When I ran out of objections, he did his final close. He was well trained, exercised, and prepared. He was enthusiastic and believed in his company and his product. I'm sure he gets rejected, as do we all. But he, like most other talented salespeople, is truly surprised when someone doesn't buy because he assumes that he did something wrong. If he did everything right, there's no reason that the prospect wouldn't buy this product. We need to raise our producers to this level of expectation. We need to train them to sell our way, not theirs, and to exercise and rehearse them until they have the presentation right and can answer all common objections. And we need to teach them to ask for the close!

Did I buy a set of gutters? No. I bought two: One for my office and one for my home. Why? It's worth just about anything to me to never have to worry again about something so mundane. Spending the extra money now is well worth the lack of hassle for the rest of my life (the duration of the warrantee). Shouldn't our customers say the same thing about our products and services?

E. Al Diamond is president of Agency Consulting Group, Inc., 507 North Kings Hwy., C., Cherry Hill, NJ 08034. You can reach him at (856) 779-2430, (800) 779-2430, toll free, fax (856) 779-6224, e-mail [email protected] or visit www.agencyconsulting.com.
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