In an earlier article we focused on a couple of the poor marketing habits that many insurance organizations rely on time and again:

  • Low price is the only measure of value,
  • Most of the industry has no ethics and is out to screw the public but XYZ Insurance is one of the few that does the right thing.

This post will identify what the directs and captive carriers are doing right, why they are winning today, and what we can change so that the independent channel can begin to compete effectively.

Before we get there however, we’re going to dive deep into the new shopping behavior.

The Evolving Buyers Journey

Insurance is a fairly opaque topic for most consumers. We have our own language, which ranges from confusing (underwriting, all risk) to downright incomprehensible (co-insurance, aleatory contracts).

In that mythical time known as ‘the good-old days,’ insurance buyers were on the wrong end of the information asymmetry problem.  They had less information, and insurance professionals had more. The only way for an insurance buyer to become educated was to interact with an insurance professional.

Because of that information asymmetry, carriers and agencies had the upper hand.

Consumers didn’t know what the pricing models were. They didn’t understand much about insurance; they certainly didn’t have resources like

Not that the issue was confined to insurance, we just deal in an arcane subject. This situation existed in all types of industries, both B2C and B2B.

For example, car manufacturers used to control all of the information about their model line-up. An enthusiast’s magazine might have some performance information. Ads on TV might lead you to believe how much better your life would be if you drive the 2017 Gizmodo SuperSport.

But if you really wanted to know about option packages, colors, and how it felt to sit in one, you still went to the dealer.

Now all you need to do to get information on which model of the SuperSport has collision avoidance, you just fire up your browser and search. Want to see what the interior looks like? Use the panoramic camera option to take a look.

Same thing if you want to know what a comprehensive deductible is. The internet has become the source for almost all information. And according to SiriusDecisions, 70 percent of the new buyer journey is completed prior to the buyer contacting the seller. Say it again:

70% of the buyer’s journey is complete BEFORE the buyer reaches out to you.

The new buyers journey consists of 5 stages:

  • Awareness – The process of realizing you need to purchase a product or service, and doing the research and investigation.
  • Consideration – Evaluation and inclusion or exclusion of various sources and providers.
  • Decision – Selecting the provider who will win the business.
  • Experience – Using the product and/or service and determining it’s relative value
  • Advocate – Encouraging (or discouraging) others to use the product.

In this article, we’ll be focusing on the first three steps of the journey, which culminate with purchase.

Journey In Detail

The average consumer goes through their busy life focused on the last social update, today’s EHollywoodTonight or sports scandal, or getting the kids to their next event. That is, until a trigger event takes place that refocuses their mind.

A trigger event is something that changes the status quo. They aren’t thinking about buying a new car until they are waiting for a tow truck on the side of the interstate. Or the last thing on their mind is their lack of a renters policy until an uninsured friend has a loss.

A trigger event creates awareness of a need.

When a consumer enters the awareness stage, their equilibrium has been disturbed. The trigger event has prompted them to reassess their situation and start researching.

In the Awareness stage, buyers are trying to understand and talk about their problem. But they may not even be able to clearly state what their needs are, nor identify what the root issue is. As they do their research, their understanding of the problem grows, and they are more able to articulate the issue.

As the buyer becomes more knowledgable about their needs, they enter the consideration phase.

During the Consideration phase, the buyer begins to look for a solution to their problem. They have a much better understanding of their problem, their needs and potential solutions.  They can now clearly articulate and define their problem and their search for information becomes much more targeted.

In the consideration phase the buyer starts ‘trying your product on,’ seeing how your solution addresses their needs. In this stage, potential solutions and providers are starting to be either eliminated or added to the short list.

If the need to solve the problem continues to have urgency, the buyer will now enter the Decision phase of the journey. At this point, the buyer’s questions are less about whether or not your solution fits their needs and more about how you will deliver the product or service.

This is typically when the buyer reaches out to the seller. They already know that the product or service meets their needs, they just want to get the details.

If your solution hasn’t been part of the Consideration phase, you are fighting an uphill battle to get the prospect to add it in the Decision phase. 

The Elephant in the Room

Unfortunately, the direct writers and captive agency companies have a distinct advantage in this new buyers journey. Their massive advertising budgets have allowed them to guide the conversation for decades.

They have done a wonderful job of defining what the trigger event is for the insured. And what is it?

When they get their bill. How insidious is that? Every time the policy comes up for renewal (or is billed, if the insured is on a payment plan) they wonder whether they are paying too much.

The directs and captive companies have also built out wide and deep resources on their websites that allow buyers to do their initial research, narrow their choices, and if they so choose, make a decision.

Compare and contrast that with the way we in the independent channel do our marketing.

In the old insurance buyers journey, insurance purchases were hyper-local. The buyer visited a neighborhood agent to have their questions answered and if they they were comfortable, they purchased a policy. The information asymmetry meant that the agency had the answers and there was no other way for a consumer to purchase.

It made sense for insurance companies to focus their marketing dollars locally at point of purchase. The agency was the voice to the insurance buyer and the exclusive source of information.

Unfortunately, that model doesn’t work with the new buyer journey. There are few consumer awareness marketing campaigns (aka top of funnel) being run by IA channel carriers. And of those, only a fraction actually co-brand to a local agency.

Today, the hard truth is that when a buyer gets to an independent agent, the agent has to sell an unvetted option. Unvetted, because in the eyes of the buyer that carrier was not part of their research on potential options, and thus wasn’t on the short list.

The marketplace has changed, and our marketing tactics haven’t kept pace.

That’s why we’re losing.

Long Story Short

The internet has leveled the scales for information. Any number of comparison sites will quickly provide quotes. Many sites, including offer information about insurance products and services.

Directs and captives also provide this information in great volume with high quality. But here is the difference. They spend billions of dollars creating awareness.

The independent channel doesn’t.

In the live debate between the author of the McKinsey Report “Agents of the Future” that predicted “The End of An Era for the Local Insurance Agent” and Bob Rusbuldt, the CEO of the Independent Insurance Agents and Brokers of America, interesting data was presented.

The McKinsey consultant didn’t just parrot the report, he provided details on the research that supported his conclusions. He presented one slide that showed the relative positions of marketing spend in insurance. He pointed out a couple of interesting data points for insurance marketing spending.

  • In order to create unaided brand recall, a company needed to spend $ 800 Million per year.
  • To even create aided awareness of a brand, a company needs to spend $ 425 Million per year
  • The entire IA channel combined only spends about $425 Million.

This last point is the crux of the matter. Insurance company A spends some marketing money telling consumers why the ‘Solid Foundation” insurance is the one you can trust. Insurance company B markets the cuddly stuffed bovine. Daybreak Agency  promotes itself as the ‘Hometown Value’, while the Twilight Agency claims to be the ‘Last Choice’.

Individualized, mixed, competing marketing often ends up diluting the message of the IA Channel that consumers also need to hear.

The Solution

As self-serving as it is to say, Trusted Choice ® is the only brand that the independent channel has that comes close to a being national in scope, consisting of:

  • 21,000 Trusted Choice agencies in 27,000 locations.
  • 60+ Trusted Choice Partner insurance companies.

It is time for us to work together to change the dynamic.

If you are a member of the Independent Insurance Agents and Brokers of America, encourage your non-Trusted Choice Partner carriers to participate. Direct more of your production to Trusted Choice partner companies as a thank you for their support.

If your insurance agency isn’t a member of the IIABA, this is the time to join us.

If you are an insurance company that isn’t a Trusted Choice Partner, it is time to join the battle for the new insurance buyer.

If you are already a Trusted Choice carrier partner, it is time to stop spending your marketing dollars at the bottom of the funnel where they are less than effective.

Carriers must start or continue efforts to create awareness at the top of the funnel for the IA channel brand via cobranded marketing with Trusted Choice.

That’s how we begin to compete effectively again.

Good Selling,

Marty Agather

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