Plenty of noise blurts about the value of service to an independent agency. Industry pundits keep repeating that superior service is the only way an agency can differentiate itself and grow. This concern begs one question: How do you know if you are providing superior service? Many agents think they have found the answer, based on their discussions with their peers and the fact that they have implemented the advice of books, associations, companies, and consultants. In all likelihood, their competitors have assumed the same thing.
There is really only one way to find out if your agency provides superior service: ask your customers.
Market Research can take a number of forms and have a number of purposes.
Typical studies include these objectives:
GENERAL MARKET KNOWLEDGE: Learning more about your marketing territory, customers (either business or individual), their motivations, and changes that are occurring in your marketplace (e.g., slowing or declining population growth could be trouble for a personal lines agency).
NAME RECOGNITION: Most agents receive a sizable percentage of their business from referrals. A name recognition study will show you your customers and potential customers agency s top-of-mind awareness of your agency. This can also show you how aware your customers are about your product line.
SERVICE QUALITY: A study can tell you where you are faltering and where you exceed the standards of your competition (selling points).
ADVERTISING EFFECTIVENESS: Are you getting maximum leverage from your advertising dollar? Research in this area can tell you if you are hitting your target market or wasting money.
PRODUCT OFFERINGS: This research locates gaps in your product lines. Today's market demands that you capture all of your client's insurance business. Any other route invites your competition in.
COMPETITIVE ANALYSIS: To whom are you losing business and why? What weaknesses can you exploit in your competitor's marketing plan?
Market Research can be divided into several broad categories. Research begins with a hands-on investigation into customer needs. In primary studies, clients are asked directly what they think about your products, services, quality, etc. Typical approaches include focus groups and questionnaires. A focus group is a gathering of six to 10 individuals who spend a few hours with an interviewer to discuss a project, service, product, or organization. Generally, the participants are paid a small fee, and the meeting takes place in pleasant surroundings. (There are facilities in every major city that can be rented for focus group meetings.)
Notes are taken or the group's observations are recorded on audio- or videotape. The Formula Group consultants insist that all key staff members attend meetings regarding each profession's area of expertise (producers if the topic is sales or products; service staff if the subject is quality), and top management should attend all meetings. Whether the focus group profits by the group studies depends on the moderator. Skilled moderators can direct (or focus) participants to the targeted area. They are excellent listeners and understand the importance of avoiding bias and interjecting their opinions into the group. They will also have knowledge of the subject and the industry and understand group dynamics and consumer behavior. Focus-group research provides qualitative rather than quantitative information, and is a useful exploratory step before designing a larger-scale survey.
Another form of primary research is one on one interviewing. In this approach a questionnaire or topic guide is covered directly with a carefully selected respondent (e.g. business owner, client, or risk manager). Generally, this is used prior to a larger-scale survey to test the questionnaire, identify any issues that were missed, and pick up any visual clues that would be overlooked if a survey was conducted over the phone or through the mail.
Questionnaires or surveys are used to gather quantitative data (i.e. price sensitivity, product awareness, coverage statistics, etc.). Surveys are generally mailed to participants or can be performed by phone.
The questionnaire is the most common market research approach. In developing a questionnaire, a professional market researcher will carefully select the questions, scrutinizing their form, wording, and sequence. Poorly designed questionnaires contain queries that are unnecessary, overly personal, loaded, or difficult to answer. Avoid questions with relative terms (Do you like our service?) or complex language (What were the salient attributes that led to your purchasing insurance from us?).
Secondary market research approaches use information that has been gathered by others (i.e., governmental sources, associations, and trade groups) to identify characteristics that may help you develop or refine your marketing plan. If you have a large book of Personal Lines business, you form a profile of the lifestyle led by your customers. Relatively inexpensive information is available by ZIP code. Block-level data can tell you such things as household income, home value, education, type of automobile, hobbies/interests, and other interesting information. Comparing this data to your current customer base can give you a direction for your marketing effort, new products to be offered, and new territories to penetrate with your product line. It can also tell you if your carrier mix is in synch with your customer base.
If you are marketing upscale Homeowners products and your past success and marketing territory is predominantly in blue-collar neighborhoods, you face a challenge. Market research is critical to the growth and profitability of your business. Marketing campaigns, business plans, new product development, and introductions that are undertaken without any investigative research are little more than a crap shoot.