Price Marketing Weakens Agencies & Brokerages, Disappoints The Customers And Is The Worst Strategy Possible For The Insurance Agent & Brokerage
What do most business do when competitors steal their customers? Copy them.
That's the natural, logical tendency. If competitors have a new killer feature, we copy it. If they have a new killer marketing message, we copy it. If they have a new killer sales system, we copy it.
Sooner or later we all start looking the same. (And yes, the consumer can hardly be blamed when they think this insurance is a commodity. Looks like one... acts like one... well, quack!)
And that - the copycat strategy - is among the most dangerous, destructive things we can do. In fact, the massive amount of copying witnessed in the retail insurance industry just might be the early ringing of the death knell.
"But if we don't copy what is successful for others, then what should we do?"
Of course agents and brokers read the reports on market share erosion. They see the billion-dollar barrage of advertising from alternative distribution systems. They read the forecasts and predicions about innovators, disrupters and new well financed outsiders poised for the kill. They know consumer behavior is changing rapidly and question whether they can keep up.
There is - naturally - a deep underlying anxiety about the future of this system. These current and impending attacks on what has so long been our safe harbor, frighten agents & brokers. They need a strategy.
And, far, far too many have simply chosen the wrong strategy. They see, hear and read (daily!) GEICO’s message about “price, price, price” and they see that train only picking up speed.
And, naturally, what do they do? Copy it. They advertise on price. They give “quotes” and hope the price is attractive enough to win the business.
If it’s working for the opposition, it should work for us, right?
Three reasons never, ever to copy strategy
Business coaches tell us that “success leaves footprints,” so, what’s wrong with following those footprints and copying a successful strategy? At least, three things:
- We copy what we see. We don’t copy the important behind-the-scenes business processes and systems we don’t see. Staring at those “footprints,” we very rarely see the whole story. We see the surface.
Beneath the surface, there is an entire alignment of complex business processes and systems that make that surface shine the way it does.
You think you can see Starbuck’s strategy for being the most successful coffee house on the planet, right? It’s right there in the open.
But, behind charging more and delivering a reliable, delightful customer experience are billions of dollars invested in sourcing, roasting, shipping, presenting, training and other systems that we never see.
Following part of a recipe is a sure way to end up with a plateful of garbage.
- Generally, following is in itself a bad strategy. The best you’ll do is a weak second place.
Unless your strategy offers something different and something that matters, those who you are following have the advantage of leadership. They own that niche in the mind of the customer.
Of course, if you have massive resources, you may be able to leapfrog your leading competitor. With GEICO alone investing a cool billion a year on advertising, that will not and cannot happen.
Those resources simply do not exist in the agent-broker channel.
- Copying strategy means that you’re skipping the hard work of strategy: clear-eyed analysis of what’s happening in the real world and how you can unleash your best assets to win there.
As every serious student of strategy knows, good strategy is based on an unflinching analysis of internal and external forces, and disciplined choices about where to play and where not to play.
And here, we get to the serious flaw in the most common copycat strategy performed by agencies and brokerages. We see the consumer being “brainwashed” with the incessant pounding of “price, price, price,” and we witness the loss of market share in our channel, and what do we do?
Copy that strategy...and try to sell on price. And, herein, lies the most dangerous part of trying to copy your way to success. A good strategy for one company or one distribution system is almost always a bad strategy for everyone else.
For more than 20 years, Agency Revolution has studied what makes a successful independent Insurance Agency or Brokerage. While some things change - tactics, techniques, even consumer behavior - others remain the same. Leaders must constantly assess the shifting insurance environment and adapt to remain competitive. With Agency Revolution's new ebook: "4 Reasons Insurance Agents & Brokers Should Never Sell On Price: Why Price Marketing Weakens The Agency, Disappoints The Customers And Is The Worst Strategy Possible For The Independent Insurance Agent & Broker" the dangers of an all too common strategy and what the independent insurance channel must do to succeed. This blog post is an excerpt.