Four Insurance Marketing Strategies to Beat Your Competition and Bolster Your Bottom Line

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Most insurers rely on traditional underwriting, accident prevention and claims tactics to bolster their bottom lines. However, savvy insurance leaders know that strong results require another critical component: powerful insurance marketing communication. 

Whether you’re focused on new business growth, or would just like to be more profitable, results-oriented marketing may be the difference between success and failure. Powerful communication creates brands that entice desirable business and command adequate rates.

You probably think of marketing as a critical tool for generating new business. But did you know that marketing can also hike profits by increasing business retention, improving loss ratios and stabilizing employee turnover? It’s true.

Don’t make the expensive mistake of leaving marketing out of your strategic plan – or worse, leaving your marketing up to someone else. Unlike many other aspects of the insurance business, insurance marketing is proactive instead of reactive, and a purposeful way to add dollars to your bottom line.

The following points will tell you how to increase quality submissions, improve loss ratios and retain profitable customers – All without adding to costs!

1. Get more from insurance marketing and sales dollars by replacing expensive activities with economical, powerful marketing designed to generate more return on investment.

One specialty carrier was able to decrease its marketing budget by 35% while at the same time tripling its revenues and boosting brand awareness within its target market. This company began by calculating the cost per exposure and cost per lead for each of its marketing activities. Here’s what the company learned:

• Tradeshows and golf sponsorships had extremely high cost per exposure and cost per lead.
• Advertising had low cost per exposure, but high cost per lead (it was hard to identify that any leads were generated).
• Direct mail had moderate cost per exposure and the lowest cost per lead – plus prospects and marketing activities could easily be tracked throughout the sales cycle.
• Published articles had lower cost per exposure than advertising and high cost per lead (again it was hard to track leads).

The company drastically revised it marketing approach by attending four tradeshows per year instead of 28, sponsoring five golf tournaments each year instead of 22, eliminating the bulk of its advertising, and allocating the majority of its marketing budget to direct mail and published articles. The results speak for themselves – three times the revenue at two-thirds the cost.

2. Fortify the quality, quantity and rate adequacy of new business submissions with a unique selling proposition, convincing headlines, testimonials and case studies.

A while back, Progressive Auto Insurance did something unheard of in the insurance industry. It provided its customers with price quotes from the competition. Then, it counseled customers to go with the company that could save them the most money – even if it meant not choosing Progressive.

Why did they do it? Because it was unique, it generated attention, and it cultivated an amazing amount of customer loyalty. This is an example of a unique selling proposition (USP) in action. 

To hone your company’s USP, carefully review your competition to ensure that your offering is truly different. Most insurance companies sell peace of mind. So, if you want to command a higher price, you’ve got to go beyond peace of mind. If you think service sets your company apart, then describe the aspect that is different rather than generalizing. Think of State Farm’s “Like a Good Neighbor” and “Here to Help Life Go Right” or Allstate’s “You’re in Good Hands with Allstate.” Each of these companies could have said, “We give great service.” What a difference! 

Next, make sure that your offering specifically relieves your customer’s pain-point. In the words of Bill Gates, “Your most unhappy customers are your greatest source of learning.”

In a nutshell, if you take the time to learn your customer’s pain points and hot buttons, then you will know how to structure your offering so that it’s worth more to your purchaser. You may find that some items with high-perceived customer value, have low delivery costs.  

Finally, communicate your offer so that it’s easy for the purchaser to measure the monetary worth of the value gained by working with you. Translate features into client benefits – what’s in it for them. Use compelling headlines and motivating copy sequences. Prove yourself with industry specific examples, case studies and testimonials. Make it easy for insurance purchasers to envision something they’ve never experienced.

Is this worth your time? Yes – high performance organizations depend on it. In Brand Leadership, authors David Aaker and Erich Joachimsthaler discuss a causal relationship between brand and stock return. They cite Equitrends’ brand power research, which found that firms experiencing largest gains in brand equity saw their stock return average 30 percent.  The authors suggest that the brand equity/stock return relationship might stem from brand equity’s tendency to support a price premium, which contributes to profitability. They report, “When a high level of perceived quality has been created, raising the prices not only provides margin dollars but also aids perceptions.”

3. Strengthen loss ratios with strategic and persuasive accident prevention advice targeted at segments experiencing high frequency or severity.

Your accident prevention staff can only do so much. They can see their best customers a few times each year.  But what about the other customers? Too often, the small or remote customers are never seen.  Personal visits cannot be the only way to convey accident prevention advice to policyholders, or many policyholders get left out. That’s where a strong accident prevention communication program comes in. Accident prevention communication is valuable for the following reasons:

• It reaches all sizes and locations of customers with a low cost per exposure.
• It can be repetitive, which is critical for changing behavior.
• It can be specifically targeted to customers with specific loss experience or risk factors.
• It supplements and augments the work of your consultants.
• It provides a perception of strong service, even when no personal contact takes place.

So, what does this look like in action? First, your financial or underwriting analyst will identify a list of policyholders that have high potential for a loss you’d like to mitigate. A few examples include non-sprinklered buildings (high risk for fire loss), accounts with noisy work environments (potential for hearing loss claims), or accounts located in disaster-prone regions (potential for power outage claims.) Chances are good that if you’ve been paying attention to your loss trends, you already know the types of losses that are causing your book problems this year.

Once you’ve established the risks you’d like to target, we’ll design a campaign designed to help accounts prevent and mitigate their potential risks. The campaign may involve email marketing, a postcard tip of the month, infographics, an employee training manual, accident prevention signs ready to be posted, or a newsletter series – the possibilities are endless, and will be tailored for your specific goals.

Most campaigns cost only a few dollars per account. So, if you mitigate or prevent even one loss, the campaign is already paid for. Even if you don’t prevent a loss, you create good will, and increase your chances of retaining the account at renewal.

4. Retain their most profitable policyholders by giving them a compelling reason to stay. 

Your best policyholders are often those who aren’t generating a lot of claims. These policyholders can be harder to retain because they’re not experiencing your great claims service or building relationships with your staff.  And, if they have good loss ratios, there’s a good chance that your competitors are talking to them.

There’s an easy solution to this problem: Proactive written communication.

Newsletters, customer service surveys, helpful industry articles, accident prevention tools and being published in the journals they read, all add up to a perception of high service, even when there are no claims.  The key is that the communication is not about you – it’s about them. Too often, companies send their clients newsletters that show photos of the company picnic, President’s vacation, latest awards, etc. These things have a place – but the place isn’t your customer newsletter. 

For smaller customers, a direct response renewal package may be appropriate. The package goes in the mail 120 days prior to the x-date and makes it easy and convenient for the agent and client to renew.  It contains a breakdown of all of the valuable services along with their monetary values and a few testimonials or case studies to drive home your value as their insurance partner. Again, framed correctly, this carries high-perceived value at lower delivery costs.

For customers who do experience an occasional claim, make sure employees deliver your marketing promises. According to the 2018 Edelman Trust Barometer, a greater percentage of people rate employees as credible spokespeople compared to CEOs. Employees should be seen as key brand ambassadors.

The mantra at Walt Disney is “marketing creates the brand but training brings it to life and keeps it refreshed from customers and employees alike.” If you’ve experienced Disneyland or Disneyworld, you’ve seen the mantra in action. Disney delivers its marketing promise!

If you’re not already aligning your hiring, training, policies and procedures with your marketing promises, you need to start now – your retention rates depend upon it. Consider these statistics:

• Acquiring new customers costs between five and 25 times more than retaining existing ones, according to the Value of Keeping the Right Customers by Amy Gallo in the Harvard Business Review.
• Increasing customer retention by 5 percent can increase profits by more than 25 percent, according to Bain & Company’s Prescription for Cutting Costs by Fred Reichheld.
• A company has a 60 to 70 percent chance of selling to an existing customer, but the chance of selling to a new prospect is only 5 to 20 percent, according to the book Marketing Metrics.

Imagine … Fred Smith’s insurance company promises excellent service, but when he phones with a coverage question, he’s placed on hold for over five minutes. Frustrated, he tries the use the website.  It seems like it’s going to work, but when he submits the question form, it repeatedly errors out.  Could this be your company?

Too often, the gap between the marketing promise and the actual customer experience is huge! While a small glitch on the website and an extended hold time may seem like small infractions, they’re monumental if you are a policyholder with an alternate expectation.

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