Since moving to Branson, Mo., I have become a student of nature due to the pageantry of wildlife in our backyard. The other morning I was marveling at half a dozen squirrels that were foraging in the yard. Thinking that they were industrious by nature, I watched them scurry about, looking for the next big nut. Sometimes they would drop one nut to pick up another. Then their search for food would suddenly break into playtime, as they would chase each other about leaping from tree to tree. I also noticed that they would tend to steal one another’s nuts—or at least scare the other squirrels away from a juicy one.
The more I watched them, the more I began to compare them to insurance producers, or just about any sales person. Do we scurry about in a haphazard manner trying to find the next big account? Do we occasionally lose focus and engage in playful, non-productive activities? Do we use scare tactics to frighten the competition instead of positioning ourselves in a positive light with resources beyond price?
As I pondered these questions, several rabbits hopped into the yard in search of their morning meals. These meek little creatures hopped around until they found a good section of clover and dandelions. On finding it, they intently and slowly proceeded to eat their fill without moving more than a few feet in any direction. They ignored the squirrels, as well as a few deer that also stopped by for a quick snack. They didn’t infringe on one another’s feeding area, each finding their own. Their focus amazed me and I wondered whether a good sales person should be more like a rabbit than a squirrel.
Are you more like a squirrel or a rabbit when it comes to niche marketing? In today’s turbulent economy I have been watching agencies scurry about opening new niche markets. Unfortunately, they are not putting a lot of research into these niches, nor are they effectively assigning the right producers to these niches. As a result they keep trying to find a niche that will work for them—without ever really focusing on any particular one with any degree of persistence.
Niches can be a critical factor in your success. You are able to leverage experience and knowledge to open doors, and you can develop an archive of value-added resources that are specific to that particular niche. But you need to plan and strategize before jumping into the market.
A number of years ago I visited a very successful agency in the Northwest. We were undertaking several days of training and motivation for a new niche market they were about to enter. Toward the end of the first day, their top producer asked if he could buy me dinner because he had something to discuss with me. During dinner, he said, "You’re talking about going out and selling this coverage. The problem is I’ve never sold anything in my life. His comment threw me for a loss. How could the top producer not sell anything? When I questioned him, he explained that every Monday the owner would come into the office with a list of people to see. From social events to civic organizations to golf games, the owner was the rainmaker. All the producers did was go and write up the applications. They truly didn’t sell.
Over the years I’ve seen that this is all too common a practice in many independent agencies. So before going after a new niche, agency owners need to look into their hearts to determine whether they truly have a sales force that can effectively prospect, nurture and write new business on their own. And do you have the management protocols to manage the process?
One of my agency clients is in the process of evaluating a new niche for the agency with dental practices. The client has been doing the research, has the markets and a potential producer. During a recent strategic planning meeting, the agency realized that it needed some additional help to avoid reinventing the wheel. A dentist and good friend of the agency is about to retire. He has been active in dental associations at the local, regional and national level. The agency hired him as a consultant to the development of the program. He helps the agency understand the unique problems the industry faces, associations that might endorse it and places to effectively advertise and promote its programs. The money paid to the consultant should be minimal compared to the value brought to the table and potential revenue from this market.
Earning the Right
I’ve told this story numerous times, but it still holds true. An agency gained access to a great transportation program for truck fleets. It hired a knowledgeable expert as the producer. The agency implemented an advertising campaign and took it to the streets. After 6 months, the results were zero. Bottom line was that the producer couldn’t get access to the decision makers. He had not earned the right to his time.
Joining forces with an experienced marketing associate of mine, we ascertained the three biggest problems facing truck fleet owners. We then found the top experts in each of those areas and created informational audios aimed at providing solutions to the problems. We began a mailing program, sending these audios out to the prospects with a respectful cover letter. Before all the programs were sent, the calls started coming in requesting appointments to review insurance coverage. By providing solutions and indicating a concern about their problems, the agency earned the right to their time. Today that agency maintains a major market share in their region.
There are significant signs of a firming, possibly hardening market in the near future. Too many agencies are betting the farm that increased premiums and commissions will solve their problems in 2012. Unfortunately, they are deceiving themselves.
First, the coming market may be a first of its kind: a combination of hardening and economic recession. Second, many agencies have not prepared themselves to justify higher premiums with greater resources. Therefore, they will find themselves in bidding wars for the lowest price instead of providing risk management services to clients.
Niche marketing can be a potential part of the solution, but it requires a lot of hard work and strategy. Are you up to the task? Are your producers?
If you choose to look at new niches to grow your agency, take the time to do it right and focus on the potential in front of you—just like a rabbit.