How to Develop a Smart Advertising and Marketing Strategy

How do most agencies get new business? The answer is usually from referrals. Business generated this way is great—it’s already “half sold” and the new client’s perception of the agency, products and service is already high.

The downside is that many producers do not ask for referrals. Also, if the agency is new, the salesperson is just starting out, or the program or product is new, then there is no referral business. In order to attract new clients without referrals, the agency needs to develop the right advertising and marketing strategy.

Determine your target
The first step is to determine the firm’s target markets. This would be the end result of an analysis of agency location, economic conditions, carrier products and producer talents, to name a few. For example, an agency or a producer might wish to focus on artisan contractors, retail shops or personal lines auto prospects.

The mechanics of this process can take some time to do right. Do not be stingy with the time spent researching and understanding who these new clients are, what their needs are and what they have in common.

The next step is to focus on the most efficient and highest leverage (cost-to-return ratio) marketing techniques to attract and inform new clients. This process includes identifying the most viable, efficient media in which to reach them. The key is to get your name in front of the prospect and let them contact the agency or be contacted by the agency in a low-key manner at first.

If the target market is very broad, namely homeowners insurance or auto insurance, use Yellow Page ads, newspapers, television, ZIP codes, mailing lists, radio ads, etc.

Conversely, if the goal is to cater solely to one segment of the marketplace—such as lawyers, contractors, or any other commercial lines business—Yellow Page ads, radio or newspapers are among the most inefficient, cost-ineffective marketing options one could elect.

Why? By using media like Yellow Page ads, newspapers or radio, the agency pays for advertising rates based on reaching 100 percent of the exposed market. If the target is to sell commercial lines, only a tiny percentage of those reached are even modestly qualified prospects. The firm ends up paying 99 times more than is necessary to reach a prospect.

A good website is one leg of the whole strategy. The website doesn’t need to be fancy and have a quoting engine. However, it must have background on the agency, products sold, services available and why your agency is unique. People today like to do a little research on their own time and it usually makes the prospect feel better to know something about the agency.

Test your technique
When entering into a new specialized market, a good approach is to rent mailing lists of the generic-type business the firm wants to target.

Mail a number of test offers, ranging from a complete sales pitch asking the recipient to respond, to a qualifying, non-threatening, lead-generating proposition seeking to secure a request for more information.

Test three to six different mailing approaches, ranging from an ultra-hard, one-step offer (meaning a letter that attempts to secure a complete sale) to a soft two- or multiple-step offer (meaning a piece designed to secure a lead prospect which can followed up).Keep in mind that direct mailing is still inefficient. Where do most sales brochures go? Right into the trash—without ever being opened.

The key to the success of a brochure or marketing letter is the cover. Be creative, provocative and arouse the reader’s curiosity. Tell them that they might have a lack in coverage that they were not aware of—the prospect must open and read the brochure to realize the answer. A mistake still made in many agency brochures is the concentration on what the agency can do, rather than a concentration on the customer’s needs.

An effective technique today is to mail out a CD with a presentation the prospect can view on their computer. The presentation can include the actual pages from company websites so that the time and effort developing it can be amortized over the whole marketing approach. Add to the CD any unique presentation for the target market group.

When mass-produced, CDs cost less than one dollar apiece. Take advantage of today’s technology by getting the hardware so the firm can “burn” its own CDs. The CD brochure can also be customized for several target markets, and copies can be made in-house at a relatively cost-effective price compared to printing.

While experimenting with direct mail to the target audience, use the list of phone numbers to experiment with telemarketing. The telemarketer should call the target prospects, using variations of the sales procedures being tested in the mailing piece.

Use everything from the one-step approach (a complete sales pitch) to a lead qualification, where telephone marketers solicit requests for either an outside salesperson to call, or a packet of more expansive sales material to be sent.

Joint venture advertising
This is a catch-all category which includes both endorsements from other businesses, and referral or consignment business. A great example of this approach is for an insurance agency to work with a real estate agency. The real estate agency will refer their clients to the insurance agency and visa versa.

This idea can be expanded into the commercial lines arena by working with a vendor or with another professional service provider to jointly sell to new prospects. Consider working with a CPA firm. If the targets are manufacturers, work with a parts supplier or industrial engineer.

It’s decision time
Now that some of the marketing options that are available have been reviewed, how does one refine the best approach for their business? There are two parts to the answer.

First, eliminate all the inefficient options right away. As stated earlier, large Yellow Page ads should only be used for personal lines, especially auto. For example, to reach attorneys, money is wasted if ads are run in the Yellow Pages or in the daily newspaper.

When targeting commercial lines, advertising should only be done in trade journals. The agency’s name does need to get out there once in a while. Just remember even Coca-Cola and Pepsi advertise. The more efficient approach is to locate mailing lists of the target market—both at home and at the office.

If the target market is local rather than regional or national, perhaps the local trade association has a publication. Many national publications offer regional selectivity, so for a premium the agency can advertise to a specific section of the country, instead of paying to reach people outside the marketing area.

Then, test conservatively to see which marketing application is most efficient. For example, a one-step mailing to that list might be a better way to go than a lead-generating approach that has to be followed up in the field by a salesperson. Or, will a field salesperson or telemarketer produce better results? Or, perhaps a display ad in the regional edition of the trade journal may prove most beneficial. Or, you may find that they can all work together.

Wrapping it up
The only way one can find the ultimate answer is to narrow down the approaches and to put all the questions to the marketplace. In other words, test and then collect and analyze the data. What does it all mean?

One approach or a coordinated approach should emerge as more successful, lucrative, and profitable than the others. That approach should become the main marketing thrust. Keep in mind that it’s possible to have five separate marketing techniques that all make money.

It will take time and money to become established in a new niche, so develop a smart advertising and marketing plan and stick with it. The good news is that once the agency and producers are established in that new niche or program, the referral business conduit is now open. New business will then easily flow.

Bill Schoeffler and Catherine Oak are partners in the international consulting firm Oak & Associates based in Northern California. The firm specializes in financial and management consulting for national and international insurance agencies, including valuations, mergers, acquisitions, clusters, sales and marketing planning, as well as perpetuation planning. For more information, call (707) 935-6565, e-mail catoak@sonic.net, or visit www.oakandassociates.com/catoak/.