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Speaking at the first convention of the National Association of Life Underwriters (now the National Association of Insurance and Financial Advisors) in 1890, author Edward Everett Hale urged the agents to extend the benefits of life insurance to all classes of society. “You should not be satisfied with this upper crust whom you are insuring now,” he said. “Take in us poor dogs who belong to the lower grade and insure everybody.”

Hales words in 1890 are still germane today and worth heeding. It is well to remember that the tax advantages that flow to life insurance have been put there because of the broad social base we are supposed to serve and not for, as Hale puts it, the benefit of the “upper crust.”

Target marketing continues to be a subject for much discussion at industry meetings as well as being a favorite topic in industry literature. Reduced to its simplest terms, target marketing is a deliberate selling process to maximize ones selling time and exposure to prospects. You might say it is an attempt to go directly to the mother lode without having to pan the whole river for gold.

Target marketing makes a lot of sense, but there are problems, which I do not hear being discussed as seriously as the advantages. The primary problem is the target itself. Most, if not all, advocates of target marketing have shown a strong preference for the affluent market (where the gold is) and, in some cases, almost a disdain for all other prospective buyers. Such a concentration of interest inevitably leads to an overcrowded market.

Overcrowding creates its own set of problems, particularly in competitive situations. Price-cutting, business failures and shoddy practices are all manifestations of an overcrowded market.

It is ironic that at a time when there seems to be excess attention being showered upon the affluent, the largest potential individual insurance market is receiving only scant interest and attention. Demographic data indicate that the fastest growing market is among minorities making their financial emergence. These may well be the people who will be at the top of the economic pyramid tomorrow. My own experience has been that it is good to prospect among those who have it made, but it is also important to be working with a large group that is still climbing the economic ladder and to go up with them.

I may be missing something significant in industry deliberations on this subject, but the problem of training new people to serve the more complex needs of the affluent has, I believe, been shortchanged. Too many people are being pushed into the affluent market before gaining the knowledge, insight and seasoning required to serve a sophisticated clientele. You cant pan for gold if you cant recognize it when you see it. I guess I will be more impressed with agencies and producer groups that have narrow targets when I find out what their new people are doing while they are getting ready for the big leagues.

Narrow targets also can be a problem at the company level. Over the years I have observed companies that have more or less become specialized with respect to a particular market. Professional athletes, doctors, religious groups, farmers and others are typical examples. In some cases, relationships to the specialty group have been excellent and all parties have benefited from the association together. In other cases and where the specialty was merely a “target,” success, over time, has been fleeting. If a company is going to serve a narrow target, then I believe there must be a common bond that holds them togetherrather than just a buyer and seller relationship.

Prospectors combing the hills of the old west looking for the mother lode probably walked over more gold than they ever found. A high percentage of gold mined today comes from copper, lead and zinc mines. Gold is most often found commingled with other minerals that are easier to locate. The mother lode is an elusive and sometimes illusory target and one much too narrow for modern mining operations.

The future of our business, I believe, is better protected and enhanced by companies and agencies that cast a large net in the marketplace. It is not enough just to look for nuggets among the affluent, but in the words of Edward Everett Hale, we need to “insure everybody.”


Reproduced from National Underwriter Edition, May 7, 2004. Copyright 2004 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.