The commodification of any market leads to a big box style approach of more, faster, for less. The same holds true for insurance agencies. It seems as if aggregators and direct-buyers have captured the insurance market. However, as boutique business owners everywhere have learned, that doesn’t necessarily spell the end of the independent insurance agency.
The secret to staying relevant in a commoditized market is to provide a specialized service to a niche market. As early as 2013, The Independent Insurance Agents & Brokers of America’s Best Practices Studies had revealed an increase in profitability among those agencies that turned to specialization to develop new revenue streams. The 2015 report confirmed that specialization continues to help independent insurance agencies compete against “big box” direct-buyers.
You can’t win all the leads no matter how good you are, and as a generalist, you’ll be in competition for a general market against lots of other generalists. Right away, you’ve got more competitors, and you’ll be relying on the same sales pitches as they use to target the same consumers.
By specializing, you can target a narrow subset of a market with differentiated advantages and benefits. Because a niche market is looking for very specific value, you can focus on being the agency that serves that value up most effectively.
Specializing allows you to develop a much higher degree of expertise than generalists are capable of. As you become more expert in your chosen field, you’ll be better equipped to assist your market in more nuanced decision-making.
Limiting your market may also improve your retention rates, according to the report. This may result from a boutique-style agency’s ability to delve deeper into the needs of their targeted market and anticipate problems, objections, and desires before they surface.
In particular when it comes to marketing, specializing can be more affordable than attempting to appeal to a broad audience with a wide array of offerings. As many consumers rely on Google and other search engines to find agents, agencies naturally want to be at the top of the first search engine results page. The narrower your niche offering, the less competition you’ll have. Ultimately, that means it’s less expensive to optimize your online presence and to adopt competitive SEO strategies.
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