"Don’t sell life insurance. Sell what life insurance can do.”
Ben Feldman (1912-1993)
One of the questions we are asked more and more these days is “what sort of marketing should we do?”
A complex question, as ‘marketing’ covers everything from developing individual relationships to building a corporate brand, however the fundamental issue is whether commercial insurers will embrace longer-term investment in marketing, especially in a cost-constrained environment?
Marketing costs are technically an expense not an investment, so in finance-speak marketing is a P&L (cost) as opposed to a balance sheet (investment) item. Costs are more exposed to budget cuts than investments, which tend to be seen as value building and long term, so marketing budgets have historically been tiny and easy targets for the finance department seeking to cut costs.
Over the past 8-10 years in commercial insurance most of the marketing spend has been on corporate (usually sports) sponsorships: these are high profile, simple to set-up, require little in-house resource, and come with ready-made corporate entertainment packages.
Our Marketing Effectiveness Report (2012) showed however that corporate sponsorships and advertising created high awareness but when used alone, created little positive impact on brokers’ likelihood to choose an insurer. In fact, we found that specialty insurers could gain much higher impact on ‘sales’ from deploying targeted, content-based marketing. This was because brokers and clients were hungry to learn more about what specialist insurers could offer. Sadly, one of our key recommendations (create targeted communications using digital channels) was not picked up and a quick scan of London (re)insurers websites and utilisation of social media in 2016 shows the sector lags way behind in terms of exploiting digital marketing.
While this may seem a bit depressing, I actually believe that this is all about to change and that commercial insurance marketing will develop rapidly in the next five years and have much more prominence (and investment). Why? Several reasons, but the big driver is brand competition: brand is now being used as a competitive weapon to build market share and this exposure will both legitimise and accustom insurers to the greater use of marketing generally. At the pointy end of the business the underwriters who are being asked to ‘sell more’ will also demand more marketing collateral and support, so the pressure to invest in marketing will come from the Executive Boards and from the key people tasked with growing the business.
Marketing is as much a science as it as an art and the challenge for insurance marketing professionals in the short-term will be to evaluate which types of marketing will give the biggest bangs-for-buck and to convince the business leaders to adopt new approaches that are outside of the industry’s traditional comfort-zone.
Ben Bolton, CEO Gracechurch Consulting.