Of all the challenges faced by the insurance industry, the toughest is the one that is transforming consumer behavior and business models on a daily basis — digital technology. More and more, people are turning to technology or, more specifically, social media, for referrals for everything from a local doctor to a car mechanic to, you guessed it, a trustworthy insurance agent or financial advisor.
Industries such as telecommunications, consumer products and media and entertainment have already harnessed digital to attract and retain new customers. It is time for insurers to evolve and respond. No industry can afford to stand on the sidelines while potential clients, new products and emerging markets whiz by on the way to success and profits. Today, if you stand still, you fall further behind. It’s time the insurance industry made digital technology a top priority.
One of the most used, most influential and yet least understood forms of digital technology is social media. LinkedIn, Facebook, Twitter and YouTube: all are there for the taking, a blank canvas that you yourself create a distinct message upon. But think carefully, because what you put out on these platforms could forever haunt you, embarrass you or ostracize you. In other cases, it may bring you business.
Every day there is a missed opportunity due to an agent or firm’s lack of interaction with social media. In fact, LeadSift, a software platform that identifies leads in social media conversations, found that the total value of missed sales opportunities for the health insurance industry in October 2013 was $14.6 million on Twitter alone. The report further found that of the 12 billion monthly tweets for that time period, 2.7 million were about insurance and of those conversations, 61 percent indicated intent to buy.
There is clearly a market in social media, one that is asking questions about insurance and relying heavily on social media for referrals from friends. But users are also putting information out there for companies to use. Consumers often take to social media to publicly discuss their buying process, starting with awareness, consideration, evaluation, purchase intent and post purchase reaction. According to LeadSift, this is one of the biggest, yet frequently overlooked, opportunities on social media, as businesses can make more intelligent decisions with this information while also presenting the perfect time to engage.
And some companies are taking the opportunity to do just that. Prudential Financial’s career distribution system in the U.S. recently rolled out a company-wide LinkedIn initiative, asking all of their financial professionals to become active participants on the site. By the end of this year they hope to have more than 1,000 financial agents engaging with prospective clients. “Clients want to hear more from us, as we learned in a survey one year ago,” said Anthony Fontano, vice president of strategy and relationship management with Agency Distribution at Prudential Financial. “The more they hear from FPs, we learned, the more likely they are to refer FPs. It’s about being top of mind.”
And with this, Prudential has experienced some impressive results. According to Fontano, the company’s FPs are able to increase their LinkedIn connections by about 150-300 per year. “These numbers are a significant breakthrough for FPs in terms of their outreach,” he said. “From a social media standpoint, it’s critical to keep in touch with clients.” In addition to LinkedIn, Agency Distribution at Pru is planning to “aggressively explore” using Twitter and Facebook, LinkedIn’s less-businesslike-but-still-meaningful cousins.
Some agents embrace all modes of social media on a daily basis, finding them to be a better way to find prospects, instead of networking or age-old cold calling. In fact, many consumers in the younger generation prefer it. “Certain clients are resistant to traditional methods of marketing but respond kindly to information and tips on social media,” said Aprilyn Geissler, a New Mexico-based agent with Farmers Insurance. “We’ve been able to make connections with potential clients and they are making the move to get quotes from us because they see the information we put out in cyberspace and come to view us as they authority for insurance.”
But social media is not a panacea for low lead generation and lagging sales. It’s oftentimes impersonal and a passive form of advertising. It’s also very time consuming and the chances of someone on the other end misinterpreting your message is high. Oh, and let’s not forget compliance.
Like a rabbit in a hole, many traditional agents have been timid in the face of something so big and scary as the public world of social media. And rightly so. This (now not-so-new) form of sharing and communicating comes with its share of ways to get agents and advisors humiliated, fired or even stripped of their securities license.
Due to regulatory constraints from FINRA and the SEC, companies have been forced to be more cautious and thoughtful about social media use by their financial advisors (life insurance representatives, brokers, wealth advisors, etc.). These regulations limit what advisors are able to do on social media and require that all of their interactions be recorded and discoverable. Advisors or agents who do not know the specifics of social media compliance could get themselves (and the firm) in trouble.