Reaching the Middle Market, Part 1: Why You Need a Strategy

Most agents and advisors make their first sales in the middle market. Many then move on, but those first anxious visits around the kitchen table or in small, cluttered offices are part of their foundation.

Lower life and health commissions have re-focused agents elsewhere, but the middle market is still there, bigger than ever. As the affluent, senior, and large-group sectors become saturated, advisors are showing more interest in coming home to the middle market.

(Related: 5 Long-Term Care Hybrid Perspectives)

Advisors may have to re-think how they approach this behemoth demographic. Older-style, generic approaches (like mailers keyed to ZIP code or income level) are giving way to high-tech, micro-segmented, education-centered marketing.

“Consumers are used to being able to ask questions and get education before having to engage anything,” says Eric Palmer, chief marketing officer at Brokers Alliance, a life and annuity wholesaler in Fountain Hills, Arizona. “They’ve got access to a lot of information online.”

Middle Market: Huge Potential Rewards

The vast “middle” market (broadly defined by the authors of a 2014 LIMRA/Epsilon middle market study as about 50 million households with $35,000 to $100,000 in annual income) is on record as under-insured and keen for financial advice.

Most of these households are accessible through social media. The younger families will inherit trillions in the next few years. The older families already know the value of insurance and retirement planning.

Average producer commissions on the life insurance shortfall alone (estimated at $1 trillion dollars face value by the authors of the LIMRA/Epsilon study) could run in the billions.

Investment dollars, annuity deposits, health, disability and critical illness premiums (not to mention business, auto and home coverage) are not far behind. Many households even admit they don’t buy or invest because they just haven’t taken the time!

Tapping the Middle Market: New Ultra-Focused Approaches Needed

Sixty-eight percent of the insurers surveyed for the LIMRA/Epsilon study said the middle market is the first priority.

Seventy-three percent said it will be their focus in the future.

One hundred percent said that they haven’t found a reliable way to penetrate it.

(Image: Thinkstock)

While there are pockets of success (including the workplace and senior markets), most companies still don’t see consistent middle-market profits.

The November 2016 Society of Actuaries report “Middle Market Life Insurance: Findings From Industry Thought Leaders” shows that executives think:

• Traditional sales practices “don’t work anymore” or are “too expensive” in this market.

• Middle-market households don’t have enough disposable income.

• Many middle-market buyers “don’t understand” insurance or planning needs.

• Millennial and other buyers expect a virtual “D2C” (direct to consumer) Amazon-style experiences.

• DIY internet platforms lack the sense of urgency or “call to action” often needed to close sales, especially of life insurance.

• Online portals don’t improve complex product sales (but create instead that old agent nightmare “analysis paralysis.”)

This low penetration stems more from an “engagement gap” than the market itself. Broad brush, legacy-style marketing (think advertising lowest price, multi-state generic “need creation” mailers, “close-heavy” traditional sales scripting, not going beyond age group or income level in any strategy) may no longer be enough.

(Related: 5 Long-Term Care Hybrid Perspectives)

The middle market is “very segmented,” says Michael J. Moody in his Rough Notes blog, but the authors of the LIMRA/Epsilon study note, “Less than half of the companies surveyed had a segmentation approach for the middle market.”

Segmenting, or sub-dividing, broad mid-market categories helps the advisor address target-segment concerns, and make the best use of resources. There are many ways to divide up this enormous market.

“Micro-Segmenting” the Middle Market