Why Most Questions About 'Digital Marketing Strategy' are Wrong, Misplaced, and Out of Order

Because of our firm’s attention on organic growth, our clients typically have asked us for shortcuts to top line revenue acceleration.

Members of our client community have frequently shared success stories — ‘this campaign worked really well,’ or ‘this one really got the phones to ring.’

Then the questions would fly in.

Years ago the questions might be: ‘What works better? A letter or a postcard?’

Now the questions about how to grow are completely different

Now, it might be: ‘Should we focus on Instagram? Twitter? Tell me more about email auto-responders versus broadcast messages. How often should we blog? What’s a responsive website? How important is mobile? Which campaigns get the best results?’

The team at Agency Revolution could probably recall two or three hundred ‘frequently asked questions’ about digital marketing that we get every month or two.

All of them are great questions, they’re just the wrong ones.

They’re almost all about tactics without a strategic direction.

The core problem about ‘digital marketing strategy’ is this. ‘Digital marketing strategy’ is a subset of ‘marketing strategy.’

And ‘marketing strategy’ is a subset of ‘strategy.’

digital marketing strategy

The questions of strategy must be answered first.

So before you select any media – which is really a tactical issue, first you must answer:

  1. Who is your market? Then, that raises critical secondary questions about their psycho-motivators, their dreams and fears.
  2. What is your message? Because, once you know your market, you can begin to test the message to which they’re most responsive.
  3. Then — finally — we can ask, which media should we use to reach them?

The strategist — the role we’re exploring for you — however, has to even dig deeper.

Here’s one critical reason why. The choice for ‘Question #1’ above (Who is your market?) will have major business consequences for years to come.

There’s a huge demographic in North America that’s perfectly suited to the potential strengths of the agent-broker channel.

If agencies can direct their marketing and customer communications to this growing demographic, they’ll find the ‘strategic match’ that generates the highest customer lifetime value, profitability and equity.

The strategist is challenged to develop an unflinching, clear-eyed view on just what is happening in the real world — internally and externally — in order to give direction to marketing.

Along with the ‘Five Forces’ model, the SWOT Analysis delivers that clear-eyed view.

SWOT challenges us to ask four questions about the agency-broker channel:

  1. What are our inherent strengths? These are the assets upon which we can build our strategy. These are the qualities that give us distinction over our competitors.
  2. What are our inherent weaknesses? We must be wary of attempting to compete in areas in which we are weaker than our competitors.
  3. What are the emerging opportunities? These represent the external forces we can take advantage of.
  4. What are the emerging threats? These represent the external forces we must protect yourself against.

analysis of insurance agency channel

What are the inherent strengths of the channel that we operate in?

Let’s compare it to some of the other channels. One distinguishing feature between the direct channel and ours is that we’ve got real people.

If that isn’t strength, then all hope is gone.

You’ve got real people in your marketplace, real people in your community who can develop and cultivate and create real relationships.

Everybody knows they call a cubicle at GEICO.

They don’t expect a relationship. They expect the efficient delivery of a commodity.

Another strength is that within the hearts and minds of real people, there is expertise.

Applying expertise helps our customers make more informed decisions. And we can help with those decisions because, in most cases, we represent more than one carrier and more than one policy option.

One more strength, which we will focus on in more detail later, is your existing book of business. (This is a huge strength, and because it’s often so overlooked, it also may be the greatest untapped opportunity in the industry.)

strengths of the insurance broker channel

Now what about our Weakness?

Our channel is a little more expensive than the direct channel, according to five years of analysis by A. M. Best.

weaknesses of the insurance broker channel

Why do you think that we’re a little bit more expensive? After all, our underwriting costs less. So what makes this channel more expensive than the other channel?

(I’m not saying being expensive is inherently ‘bad.’ Many of the most successful companies, across industries, are more expensive than their competitors.)

It’s largely because we have the least efficient delivery system. Sales and distribution models like ours have overlapping infrastructure costs and lack the enforced and streamlined discipline of direct channel models.

Again, additional expense is only an inherent weakness when you’re competing on price. But, it’s enough to make you wary of price marketing as a strategy.

The problem is, the additional cost can’t just be additional expense. You have to add value to the insurance experience as it ‘passes through human hands.’

Another Weakness we have is a fundamental, core problem — our customers actually don’t like us that much.

According to a recent survey by Edelman, 48% of the consuming population ‘does not trust the insurance industry to do the right thing.’

Half the population doesn’t trust our entire industry.

low trust in the insurance channel

As I write this I have a perfectly reliable cup of coffee by me. I can drink it. I can taste it. I can smell it. I know it’s there.

But you’re selling an intangible. So isn’t trust supposed to be at the core of your model? Doesn’t that need to be woven in to the fabric of your relationship with your customers – because they don’t see what you’re selling them?

(As an aside, the coffee that’s sitting on my desk is absurdly expensive – considering that it’s beans and water. But it’s from Starbucks – and if you want a master class on how to sell a commodity for more, study them.)

A third weakness infects the industry in general: commoditization — the perceived sense that price is the only distinguishing feature.

That, indeed, could be a strength of the channel that chooses to sell on price. But for the channel that has more built-in cost, clearly that is a weakness.

commoditization of insurance

And that leads to our Opportunities.

Remember my friend who complained about never hearing from his agent?

The next thing I asked him was, “Do you feel like you have the right coverage?

“I don’t know.”

“Do you feel like your agents doing the right thing for you?”

“I don’t know.”

“Do you think that you have gaps in your insurance?”

“I don’t know.”

That’s unacceptable.

The money is in the relationship.

And we have a tremendous opportunity to deepen and multiply relationships. From that you’ll get higher retention, more revenue per customer, and more referrals.

However, there’s a critical decision. With whom do you want a business relationship? Ideally, those who want a relationship with you. The ones who will reward you most richly.

In the next section, I’ll show you who they are, how to find them, and how to ethically extract maximum value from them.

opportunities for insurance brokers

And as for our Threats …

We should remember that we are in a rapidly changing business environment. Emerging digital competitors loom on the horizon. Larger agency competitors are amassing resources.

The nature of risk itself is changing. New technologies — driverless cars, the ‘internet of things,’ telematics and more — may disrupt many of the common coverages we take for granted. And, of course, customer behavior is changing much faster than that of the average brokerage.

Again, the days of calm sailing, where we can anticipate that this year will be similar to the previous years are over.

Speed is a strategic advantage. And now, the ability to adapt and act fast is a matter of life and death.

We should remember that we are in a rapidly changing business environment. Emerging digital competitors loom on the horizon. Larger agency competitors are amassing resources. The nature of risk itself is changing.

New technologies — driverless cars, the ‘internet of things,’ telematics and more — may disrupt many of the common coverages we take for granted. And, of course, customer behavior is changing much faster than that of the average brokerage.

threats to the insurance agency channel

What happened to my friend who said he never heard from his agent?

He said, “The thought — the mere thought of going through the pain of switching makes me crazy.”

The inertia. The resistance to change. That cannot be a customer retention strategy. We cannot permit that to be an element in our value proposition.

As we’ll see as we examine the research in the next section, the price to pay for not building on our inherent strength — relationship of real people to real people — is much, much more expensive than making the investment in genuine customer relationships.

So, let’s summarize our SWOT analysis.

  • STRENGTHS. Our great strength — the one that differentiates the agency-broker channel over the digital or direct channels is ‘people.’ It can’t be a platitude. And, as we’ll see, it also cannot be effective ‘old school,’ one-at-a-time. That is much too expensive. People build relationships. And, for our tribal species, relationships matter.
  • WEAKNESSES. Our channel is a tad more expensive. Hence, selling on price is absurd. The perceived commoditization of insurance by consumers forces agents & brokers to add value at the retail level.
  • OPPORTUNITIES. The most valuable asset is a customer. The most valuable customer is a loyal customer. Designing and managing a customer loyalty path and plan opens up a dynamic shortcut to more policies, more referrals and higher retention.
  • THREATS. As new competitors flood the market and existing channel competitors continue to erode agent-broker market share, agency leaders must act with the urgency demanded by a disruptive and uncertain environment.

SWOT analysis of insurance broker channel

Here’s the Action Plan

  1. Make ‘relationship building’ the core strategy of your brokerage. Make it central to your strategy and your culture.
  2. Don’t get caught in the ”price trap.’ If your prospects and customers are declaring ‘price’ as their main reason for doing business with you, they’re probably not a good fit for the broker channel or for your agency.
  3. Make those relationships matter to your market by delivering an ongoing stream of value.
  4. Act with urgency. Change is coming fast.
  5. Of course, explore technology solutions that allow you to communicate meaningfully with your prospects and customers.


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