How Insurance Agents Can Win in a Soft Market
As many veterans of the insurance industry know, a soft market can lead to swift declines in prices as carriers compete for premium growth. Prices will fall as the excess of supply over demand increases. For example, assume that 40 commercial buildings are put up for sale and 35 possible buyers enter the market. Five of these properties will not be sold assuming each buyer purchases one property. This forces the 40 property owners to compete on price in order to attract a buyer. As a result, this type of real estate market would be called soft.
In a soft market, targeted selling requires excellent customer service, good insurance carrier ratings, and a reputable agency to back up the agent. Also, as you are likely aware, in a soft market cycle insurance providers typically have a lot of excess capital and are willing, and even competing, to underwrite most businesses. Alternatively, in a hard market cycle, while some business are paying higher prices for less comprehensive coverage, other businesses find it difficult to obtain insurance at all. These businesses typically end up in the program business or specialty side of the supply chain.
So what can you do today to start winning in this soft market? Investing in a telemarketing campaign is the clearest answer. Telemarketing is one of the biggest tools available to Insurance Agencies, Wholesalers and Program Administrators. Besides investing in acquisitions, using outbound calling to attract new business is the most cost effective marketing medium to increase market share. The most successful and profitable agencies are implementing this marketing strategy over a long term basis.
These agencies are the ones that will see immediate growth as the hard market approaches. The best part about the telemarketing efforts in a soft market is that building a bank of qualified expirations dates gives these agencies a competitive advantage over their competitors. Telemarketing also allows the sales force to be proactive in reaching out to the business owner 60 to 90 days prior to the renewal.
Telemarketing is a sales strategy being used by the most profitable and successful insurance agencies. What about email marketing? Most producers don’t have time to keep their name in front of an expiration date, let alone an active client. The agencies that have success are designing professional emails that encourage prospects to take action. It can take anywhere from 8 to 11 connections before a prospect may realize who you are and what it is you’re offering. It’s imperative in today’s world to send a personalized series of emails that nurture your leads. Even if 20 to 30% of your leads become clients, you’ll be ahead of your competitors.
Another factor to consider with telemarketing in a soft market is your agencies hit ratios. Hit ratio will depend on the class of business, geography, size of the business and reputation of the agency within the community. Let’s say for example that hotels, which happen to be SIC code 7011, is our list target since you may have a market. Historically in this class of business, it is very difficult to reach a key decision-maker, so does that mean we’d avoid calling them? No, not at all! Your agency should call this industry knowing that the cost may be a little higher due to less leads. Eventually you’ll insure enough accounts that when the market cycle hardens you’ll be in the driver seat.
Another nice attribute of using outbound calling is that the cost to acquire the new piece of business goes down every year you renew the account. The average life of a commercial lines piece of business is 6 to 8 years. According to the SBA’s Office of Advocacy, there were approximately 28.2 small businesses and 17,700 firms with 500 employees or more in the U.S. as of 2011. Using Dunn & Bradstreet data, there are approximately 18 million businesses in the U.S. today. This is a good barometer for you to sink your teeth into when attempting to project lead flow.
It’s important to keep in mind that there are certain industries that just won’t yield extraordinary hit ratios, such as real estate, lawyers, dentists, restaurants, social services, and a few others. However, by utilizing the Insurance Telemarketing services and Email Marketing service in place at Neilson Marketing Services, you can expect to see a substantial growth in your x-dates as well as your appointments.
For more information or to sign up for our services, please contact us at 1.800.736.9741.
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