Agents who use a professional marketing method are easily recognizable — they’re the most active and successful marketers. Al Diamond explains why a marketing plan should include intent, method, timing, cost, and expected results.
For most agents, the beginning and end of a marketing plan is mass-mailing a letter, approving a Yellow Page Ad, or putting an advertisement in a local newspaper. Some will even accept a radio “special” to insert several spot ads on a local station.
But few agents actually draft a marketing plan that includes intent, method, timing, cost, and expected results. Agents who use the professional marketing method are easily recognizable — they’re the most active and successful marketers. They’re not afraid to spend sizable sums on marketing and advertising because they know empirically that these programs work and what they can expect from their efforts.
GOAL
Every marketing and advertising program must have a goal — at a minimum, to increase the public’s awareness of the agency — more likely, to increase new sales. The goal must be written because one of the ongoing tests of any campaign is the question, “Is this fulfilling my intent, clearly and unambiguously?” Many campaigns get out of hand when language, graphics, and technology, all meant to enhance a message, actually detract from the intent of the campaign, leaving the reader wondering, “What was the point?” Some recent sneaker and jeans ads on television are perfect examples of professionals “glitzing” the ad so much that it completely loses its meaning.
State your goal clearly and test every part of a campaign to make sure that this goal shines through the method of delivery. For example:
This marketing campaign is intended to increase sales of Homeowners Insurance by at least 30 new policies each month.
METHOD
Insurance marketing and advertising is most often done in print (letters, newspapers, and Yellow Pages), visually (television), and over the airwaves through radio. Internet advertising is the fastest growing medium (banner ads, pop-ups, and e-mail). Fax “blasting” has also gained popularity during the past 10 years. Telephone solicitation has seen its heyday and has declined as a useful marketing tool.
Every method has valid uses, and serious flaws. It depends on how the medium is used and whether the message fulfills the intent of the marketing. One repetition of any form of advertising or marketing is usually useless. Unless that spot ad (on radio, television, or newspaper) offers $100 to anyone calling you, the reader, viewer, or listener won’t even know that you advertised. The public is simply inundated with ads — that’s why a one-hour television show or radio program has less than 40 minutes of program content(with less and less each year). Never run an ad once and expect a valuable result.
The extent of marketing and advertising and the number of repetitions is a function of cost and expected results.
It’s hard to determine the number of repetitions and iterations of a message needed to motivate a target market to buy a product or service from you. Unless you calculate the cost and benefit (both short and long term), you might find yourself spending thousands of dollars to gain hundreds of dollars — not a good deal for any businesses.
COST/BENEFIT ANALYSIS
Sketch out a comprehensive campaign that repeats your core message in the same and different ways often enough to cause a revenue-generating reaction from your intended audience. This might involve one or a number of media. Before you commit to any campaign, however, cost out the entire process. How much will it cost for all of the print media you intend to use in a campaign? What are the development and printing costs? How about the cost of developing radio spots? How much will the delivery of the message cost? You need to consider the costs of mail, print ads, and radio or television spots. What are your expected levels of response for an acceptable campaign? For a successful campaign? And what will this level of response cost you in time spent responding to inquiries?
After you’ve sketched out the cost estimates in detail, consider the returns generated by a campaign.
Most of us are shortsighted. We see only immediate returns, or those during the year of a campaign. However, most insurance products can deliver income for years (we hope). So when you estimate the revenue-generating capabilities of your marketing campaigns, you must estimate both current year revenue and recurring (renewal) income. But don’t forget to factor in normal retention loss!
For instance, using the goal stated above, you’ll commit to a 12-month program of placing flyers at the homes of every homeowner in three different desirable Homeowners neighborhoods. Focus on about 1,500 homes, each requiring 12 different marketing messages about your products and agency. Even at the lowest possible cost, this will require 36 reams of paper and approximately $.04/copy for documents printed on your color laser printer. The paper and copy costs will come to $1,440.
Although you can create the messages yourself (at no additional cost), you’ll need to hire someone to deliver the items to each door. That estimated cost is $4,500 (far less than mailing and much more likely to be read). Figure your “dead” costs at around $6,000. Because the value of a Homeowners policy sold from the selected neighborhoods is $110 of revenue to the agency, you’ll need revenue from 55 new Homeowners customers (assuming that you don’t write any of their other business). If your agency’s Personal Lines policy/customer ratio is 1.5 (primarily Auto/Homeowners), you can expect 1/2 of your new customers to buy Auto policies from you, adding another $150 revenue per policy for 1/2 of your customers (or $75 additional revenue per policy on average for all new customers). At an expected revenue of $185 per customer, you’ll need only 32 new customers in one year to recoup your “dead expenses.” Since your Personal Lines closing rate is 33%, you’ll need to quote approximately 100 prospects in order to write these 32 customers. The time to deal with those extra prospects will come to approximately 50 CSR-hours (or $769 of acquisition costs), adding another four new customers to the Break-Even Analysis.
According to this Cost-Benefit Analysis, if you write 36 new customers, with half of them buying both Homeowners and Auto coverages, your marketing program will break even in its first year.
The program projects a 2% per iteration return. In other words, every time you drop 1,500 pieces, you can expect to have 30 callers. Since your record is 33% on prospects, the program should generate 10 new customers per month. Because your historical track record is writing more than one policy for half of your customers, five of these new customers each month should buy a second policy from you.
Over the course of the 12-month program, you can expect to quote 360 prospects and get 120 new customers, half of whom will buy more than one policy. This should yield you $13,200 in initial annualized commission (only writing Homeowners policies first) of which $7,150 will be earned in the first 12 months of the program — earning 1/12 of each commission every month. This does not include any second policy purchases in the first year, even though your New Business Rep will re-contact every new policyholder quarterly.
At 90% standard retention, even if all activity stopped after 12 months (which it never does), you would generate $11,880 in Homeowners commissions in Year Two, together with 75% of your multiple-policy sales (40 new Auto policies generating $6,000 in new annualized commissions), for a total of approximately $15,000 in earned commissions in Year Two. Year Three results with the same 90% retention and adding the remaining projected sold Auto policies would generate $17,600 in earned commissions.
This program will bring you $39,750 in earned commissions in three years for an investment of $5,300 in “dead” and acquisition costs. That’s not bad!
MONITORING
This example shows you how to calculate your costs, determine your required sales, and project results. But none of this matters if you don’t keep score! Most agents are salespeople. As such, we use our sales as a “score-keeper” of our successes. Do the same thing with marketing campaigns.
You can use the same work that provided the costs, benefits, and projections above to monitor whether the results match the projections, and whether the costs match your expectations. After spending three months implementing a marketing plan with little or no results, only a fool would keep throwing money down the hole. You have one of two choices: Terminate the program, or fine-tune the effort to improve results and try it for another three months (perhaps having a marketing professional offer their opinion).
Never, never, never stop an annual marketing program in fewer than three months. That is the shortest time to determine if the results match your expectations.
Believe it or not, most marketing plans fail due to lack of implementation. We spend the money and don’t do what we, ourselves, acknowledged must be done in order to gain the results. When that happens, it doesn’t make spending the money any easier or make the results less dismal; but don’t blame a perfectly good plan for lousy implementation.
EGO VS. IMAGE
Finally, be wary of advertising and marketing that show little tangible results and suggest that the greatest benefit is an improved public image. Often, the result is meant more to enhance the ego of the agent than the image of the agency. Green Giant brand canned vegetables spent millions of dollars convincing the public that their peas were, somehow, superior to store-brand peas. This was money well-spent, resulting in a great image that continues to sell higher priced vegetables at supermarkets. But one or a few spot ads will not convince your public that your agency is better, friendlier, or more professional than your competitors. Frequent repetition of this same message might do so — but at what cost?
The dead giveaway to ego-centered marketing is when an agent tells us that the ads worked because his friends and clients saw and commented on them. They remember this result, but don’t know if the campaign generated new customers or revenues.