De-Commoditize Insurance (and Never Sell on Price Again!)


De-Commoditize Insurance (and Never Sell on Price Again)

Let’s imagine that your competitor can offer the same policy and protection you can.

The exact same.

Who wins the customer? This is a critical problem in insurance today.

After all, a LOT of policies are so similar, the average customer just can’t tell the difference.

Certainly, not the average customer.

And, the mouthpieces at GEICO and Progressive Direct keep brainwashing the consumer: price is all that matters because everything else is pretty much the same.

A lot of the market thinks that insurance is just a commodity.

This is where you can stand out. Not just to get attention.

But to earn respect, trust, and loyalty.

How?

By delivering MORE than the product.

Because – while you could try to change the minds of consumers who only care about price, that’s the hardest, most expensive thing a marketer can do. Especially, when a company like GEICO is willing to spend a billion dollars a year, not to change their mind, but just to offer that part of the market what they want: the ‘promise’ of cheap insurance. (NOTE: I’m not commenting on how well they deliver on that promise.)

It’s much, much more lucrative to attract the people who have the problem you can solve. The ones who want protection.

Key point: marketing is not just about lead generation.

The savvy marketer knows that there is more money with marketing after the sale than before it.

Because marketing is simply communicating in order to bring people closer, you’ll get even more bang for your buck after they know you.

That’s how you turn customers into loyal customers. And, research by Bain & Company showed that loyal insurance customers are worth about 7 times the lifetime value of non-loyal customers. And three times the value of neutral customers.

Further, they showed that advice, information, or ‘tips’, delivered the most customer delight besides the product itself.

Bain & Company research shows useful tips are a great way to delight insurance consumers

The savvy agency ‘wraps’ its policies with valuable and meaningful information.

That automatically makes you different than your competitors.

And, it’s one of the most powerful uses of content marketing for insurance agencies.

If the product is the first ‘ring’ of defense – and protects people after misfortune, then valuable information can be the ‘second ring’ of defense… and may prevent misfortune altogether. (And, everyone wins then: the customer, you, and your carriers!)

The Double Ring Circle of Safety

But, of course, don’t wait until your prospects become insurance customers before you deliver great content.

One last point. If you’re thinking, ‘Price is the only thing that matters to customers’, you simply know that’s not really true. You’re a very rare person if you only buy the cheapest of everything. Not only does Bain’s research prove that it’s not true, EZLynx demonstrated this unequivocally by analyzing actual customer behavior. According to their research, only 57% of customers reject the first, lowest quote and opt for more expensive insurance.

And, how much more is a customer willing to pay for insurance? Again, according to EZLynx research, between 19-53%.

Which quote gets approved by the consumer?

Here’s what’s most remarkable about that research: It’s a complete analysis of industry performance, and does not consider if the agency has any price-related policy at all!

Price is ‘elastic’. Consumers do not have a ‘price speedometer’ in their head that scientifically measures the value of a particular insurance product. If in fact, your agency does provide value above and beyond the product, the actual price is determined by the customer – not by you. They choose if they but it or not.

How much higher are subsequent quotes that insurance consumers select?

And, if they feel that a relationship with you is worth the price they pay, that is a consumer’s choice.

Of course, it’s up to you to create and deliver that extra value.

The big advantage of charging higher prices? Not only does it support your margins, it gives you more resources to create more value.

Leave the price shoppers to other channels. For the independent agent, it’s about value – not price.

The best way to earn their trust and loyalty from prospects is the same way you earn it from customers.

Shower them with value. They’ll remember you. And appreciate you.