How Insurance Agencies Can Get The Most Bang for Their Marketing Budgets
According to Gartner’s 2017 CMO Spend Survey, we can expect marketing budgets to continue receding in 2018. If that’s true of corporations with an office reserved for a Chief Marketing Officer, it’s doubly true of smaller independent insurance agencies. A limited budget doesn’t have to limit your agency’s growth, however. By using data effectively, a tight marketing budget can deliver a robust return on investment.
Use accurate measures to understand true client value
Conventional thinking suggests that retaining existing clients is more cost-effective than acquiring new clients. However, that logic doesn’t take into account the quality of your agency’s existing clients. Do you have clients who purchase only low-margin insurance products, for example? Do you have clients with higher-than-normal servicing costs? In these cases, retaining clients can actually harm your bottom line.
If your agency wants to make informed decisions about your marketing budget, you’ve got to have a clear picture of your clients’ and prospects’ actual value. That’s the only way to understand the true ROI of marketing efforts.
In order to gain a comprehensive view of client value, agencies must gather and analyze copious amounts of client data. Fortunately, marketing analytics technology makes data analysis much faster than easier than it once was. It empowers agencies to pinpoint promising prospects and eliminate existing clients who are a drag on profitability. Unfortunately, many agencies have grown accustomed to outdated legacy technologies and balk at the learning curve required by modern tools.
Segment markets based on your most valuable clients
Once your agency has pinpointed your most valuable clients and prospects, you can use that data to hyper-focus your marketing efforts. The data you’ve collected on these model clients will give you a more accurate picture of their purchasing behaviors as well as their preferred channels and products.
This information can be synthesized to build client personas and look-alike audiences that faithfully reflect your target markets. Once you’ve got a clear picture of your ideal clients, you can apply that knowledge to discover and win over new clients with the same characteristics. That ensures a more profitable marketing spend.
Identify the most effective marketing channels based on data (not trends)
According to Gartner’s report, 6 out of 10 marketers expect flat growth or cuts in offline advertising investment due to the shift from traditional to digital marketing. While there’s no doubt that digital marketing is an absolute necessity for those in the insurance industry, going all in with online marketing at the expense of more traditional methods could be a mistake.
Bain and Company’s 2017 report Customer Behavior and Loyalty in Insurance found the following paradox plaguing insurance agencies:
[I]nsurance clients who rely exclusively on digital channels tend to be less loyal than those who use multiple channels, including agents and call centers. Compared with multichannel customers, digital-only customers give their insurers lower marks in the areas of personalization, understanding their needs and trust in the company’s ability to resolve an issue.
For insurers, then, it pays to diversify marketing budgets to accommodate modern consumers’ desire for digital convenience and personal attention. A hybrid marketing approach that offers your clients a streamlined experience on and offline is likely to give your marketing budget more teeth.
Visit the AgenciesOnline blog to learn more about making the most of your marketing dollars. Better still, get in touch with our insurance marketing experts to see how we can help untangle a shoestring budget through our specialized expertise.