Apply Cutting Edge Thinking To Marketing
“Cutting edge” thinking should be focused on reaching and attracting new customers, not just developing new products, as is more customary.
In fact, given that growth is a primary objective within most companies, the concept of “cutting edge” might be better applied to marketing and distribution.
At its recent annual meeting, LIMRAs president, Richard Wecker, suggested to attendees that all policies sold as replacements might pay renewal commissions only.
It is a provocative concept, substituting behavior modification for seeming absence of innovation.
But, it is also well-intentioned, born from collective frustration over a lack of growth in the number of new life insurance policies sold throughout the life insurance industrya problem that has persisted for nearly 20 years.
Beginning with the “cutting edge” invention of universal life, companies and agents alike have focused too long on replacing value (i.e., death benefits) already held by existing customers, instead of creating value by adding new customers.
Beyond insurance, the term “cutting edge” is often linked with technology. And, when we think of cutting edge technology, value is usually defined by what it enables, not merely what it saves us in price.
But, that seems to have been the industrys definition, as “cutting edge” as evolved into aggressive reinsurance treaties, underwriting programs, “dial-down” term riders, etc. The industry seems to have moved away from the sale of life insurance as a solution, to the shopping of life insurance as an opportunity.
While UL might have been deemed “cutting edge” when first introduced, it didnt change the fundamental underlying benefit (i.e., death benefit protection). It merely recompiled existing product components.
However, this in no way diminishes what Tillinghast did, because the fundamental probability and aggregated savings concepts behind life insurance leave little room for real “cutting edge” creativity.
But “cutting edge” could have significant potential with the distribution of life insurance and the industrys ability to penetrate other existing, insurance needing markets.
And, in the process, it also might be the catalyst needed to shift away from the current shopping and replacement emphasis to a new prospecting and sales emphasis.
As commissioned distributors have migrated toward the higher income market segments, millions of lower income potential customers, still with significant, basic life insurance needs, and an ability to pay for the protection, are being systemically ignored.
This is not the fault of distributors, who are as profit-minded as the companies they represent.
Rather, it is driven by both the efficiencies of the shopping and replacement methodologies, and the inefficiencies of the prospecting and selling methodologies, that the industry continues to employ.
And, it is almost paradoxical, this is happening as ever lower premium products require ever more efficient distribution means.
In an attempt to meet this requirement, many companies are looking to mass-marketing alternatives, such as banks, the Internet, or other direct marketing schemes. But, here too, most seem to be marketing comparative price as the principal value proposition.
However, published research would seem to suggest that the lower income, “new sales” potential markets are not demanding lower premiums, but rather improved planning and purchasing access. Just like their higher income counterparts, they want to understand their options and have access to advice. They want to talk to an agent in person.
Instead of focusing only on product improvements, the industry needs to respond with more efficient prospecting methodologies, simpler sales presentations, and easier application processes. It needs to better understand the wants and motives of potential new customers. It needs to focus on marketing and efficiency improvements in distribution.
Alas, what a wonderful opportunity for “cutting edge” creativity!
Bruce W. Gordon, CLU, is senior vice president and chief marketing officer at Kansas City Life, Kansas City, Mo. His e-mail is firstname.lastname@example.org.
Reproduced from National Underwriter Life & Health/Financial Services Edition, December 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.