The essentials of marketing an insurance program

-Exclusive vs. non-exclusive: Offering an exclusive agreement to a producer in a particular market area makes your program more attractive to the producer and may help you "land" the dominant market player in a territory. If you make the agreement mutually exclusive, you receive the added benefit of knowing the producer won't shop his or her clients around with other markets.

If your agreement is not mutually exclusive, however, it can be disastrous for you. A one-way exclusive in favor of your producer gives him or her the ability to block you out of a market area. So if you can't obtain a mutually exclusive agreement, you're probably better off with a non-exclusive producer agreement. Furthermore, you won't be dependent on just one production source in a market area.

-Specialist vs. non-specialist: We do business with at least one or two specialist producers with each one of our eight programs. Working with specialists can make it easier for you to do business and guarantee your program will be sold accurately. Since specialists have expertise in the niche your program serves, you can devote fewer resources to educating them about an industry and your program than you would with a non-specialist. Many specialists are also the larger producers in a niche, so by marketing your program through them you're gaining access to a larger list of prospects.

Specialists might cost you more, however, because they're also attractive to national-carrier programs. Non-specialist agencies are generally smaller and thus have fewer program options, so you may be able to get an agreement with a non-specialist at a lower commission level than you would with a specialist. While a large specialist may have a market area with a 300-mile radius, we also like the smaller non-specialist who has a closer relationship with his insureds. Many insureds may be less sensitive to a small price difference because they value that relationship with their agent. As with a non-exclusive producer agreement, using several smaller nonspecialists also lessens your risk of losing market share if you lose one big sub-producer.

-Minimum appointment qualifications: We're fairly stringent when it comes to producer qualifications. We require that they have particular expertise in the program they want to represent. We're able to insist on this because our programs are all standard-market products. If you're marketing a nonstandard product, you may need to accept producers with less expertise.

We require all interested producers to visit our Web site and fill out a one-page producer survey form. That form is forwarded to our marketing director, who decides which producers to approve. The form asks for information about the producer's agency principals, bank references and the agency's estimated annual premiums. Producers also must list three standard markets they represent, and we want to see two standard markets that we recognize. Producers also are required to list general agents they have represented, and their reasons for terminating any company relationships in the past five years. We verify a producer's E&O limits before approval, and all producers must sign a contract with us.

With just one of our programs, we sell directly to insureds, in addition to marketing through producers. We do this only because the program's annual premiums can be as small as $300, and many of our producers don't want to spend time on it. Other program administrators have told me they combine direct-to-insured marketing with wholesale marketing on all their programs. We stay away from this because we consider it an issue of trust. It's harder for us to form bonds with our producers if they see us as competing with them in the retail market.

Your marketing weapons

Since marketing your program correctly is so important, it's a good thing you have so many "marketing weapons" at your disposal. Like using the real thing, you should know how to use your marketing weapons before you start pulling the trigger.

-Association affiliations: You can participate in your niche's industry associations in a number of ways. Many offer some type of associate membership. This might allow you to receive an association's publications, which will keep you up-to-date on what's happening in the industry. You might sponsor a trade booth at an organization's annual meeting, or serve on its insurance committee or some other advisory board.

It might be difficult to precisely measure the return on investment for some of these activities. Many of our programs, for instance, serve what I would call "touchy-feely" industries, in which many conference attendees have little or no interest in business-oriented topics. Rather than visit an insurance booth, they're looking at a demonstration of the newest toys for children. Yet we continue to participate, because we feel we need to be out there waving the flag. In some industries, I believe we'd be noticed more for our absence if we weren't there.

Perhaps the most visible form of affiliation is to receive an official endorsement from an association. This can also be the most expensive form of affiliation. If an association is asking you to pay for the endorsement, you should certainly demand that it be exclusive. There's no point in wasting money if the organization is going to endorse three or four competing companies. Before you arrange such agreements, also be sure you understand what the total cost of the endorsement will be. If you haven't firmly agreed on what you will pay, don't be surprised if the association finds 100 different events you could be involved in sponsoring.

?Media advertising: We've done very well by advertising in magazines, both insurance magazines and trade-industry publications within a program's niche. We like to know a lot about the magazine we're buying space in, and we also create and control our ads carefully.

Before you advertise, find out who reads a publication and why. Some magazines are mailed as a benefit of membership in an association. We feel these are less likely to be read than if "subscribers" have requested the publication. Among insurance magazines, we're more interested in those whose readers are in insurance agents or brokers, rather than national carrier officials, since the agencies are our target audience. If we're going to spend our money on an ad, we want to be sure it's as effective as possible. We prefer color ads over black-and-white, and we usually request that our ad be placed on the right edge of a right-side page, nearer the front of a magazine than the back. This is where we've learned a reader's eyes are more likely to fall across the ad. If a publication is printing an article on a topic connected to one of our programs, we naturally ask for the ad to placed near that article.

?Direct mail: Direct-mail promotions remain a staple of our marketing efforts. They're effective because we constantly seek ways to keep their cost low and make them eye-catching. We're also savvy about purchasing and obtaining mailing lists.

?Brochures: Rather than stuff and mail envelopes, we use self-mailing brochures. Part of the brochure design is a blank space for a mailing address, and our logo is visible on the outside when the item is folded and mailed.

?Postcards: A mailing list for our small-premium daycare program might include 100,000 prospects. In this case, pre-printed postcards drastically reduce the cost of a direct-mail campaign, compared with letters and envelopes.

?Newsletters: We've created several newsletters in-house that we send out once a year. One type is geared to producers. In addition to a small ad, it contains news about each of our programs. The other type is aimed at insureds in a particular industry. It includes an ad for our program, as well as industry news for that niche. Insureds may be more likely to read this than a straight marketing letter.

?Letters: When we do send letters directly to insureds, we sometimes take advantage of our association endorsements by having the letters printed on the association's letterhead and over the signature of an association officer. The letter might say, "We wanted to let you know we endorse this program, and a brochure is attached."

When compiling a list for such a campaign, the devil is in the details. We use lists that allow us to break down information about prospects in ways that help us better determine whom to target. For example, we have a list of more than 90,000 daycare centers. The list tells us that certain centers are actually programs in public schools. Since we can't write our program for public schools, we save the time and expense of sending such daycare centers anything. We don't buy lists if the vendors can't give us such a breakdown of information.

How much effort does a list vendor make to ensure a list is up-to-date? We can get a list of daycare centers from a state's department of human services, and it will cost less than what we get from a private vendor. But we have found that many daycare centers will have moved, and the government won't know about it until well after a private service has corrected the information. You get what you pay for. One service we work with is so conscientious about the accuracy of its lists that it pays us to let them know of returned mail with incomplete or outdated addresses.

?Electronic marketing: We have always been quick to take advantage of the marketing opportunities offered by technology-from the telephone to the Internet. We're also quick to learn and address limitations of each type of technology.

-E-mail: We're increasingly saving the cost of postage and printing by using e-mailed fliers. When we purchase e-mail address lists, we inspect them to ensure the e-mails are going to "real people" and not just general inboxes at a business. We also want to be sure the people on the list haven't asked to stop receiving e-mail. Everyone says that nobody's on their list involuntarily, but we've found that sometimes people who have opted out seem to creep back on the list again. In addition to purchasing e-mail lists, you can use the services of programbusiness.com, Insurance IQ or similar organizations that will send your flier for you. Keep e-mail fliers brief and don't let your art director go crazy. Our advertising guy can do some state-of-the-art work on our fliers. But not everyone on a list has a high-speed connection. Some people may just toss out your flier because it takes too long to load. In worse cases, your e-mail might shut someone's computer down.

-Phone and fax: Particularly if you're starting a new program, there are some real advantages to a telemarketing campaign. Do your research and pick a reputable telemarketing firm, and make sure they speak fluent English. In addition to reaping any sales that may result, you can learn a great deal through telemarketing. You can find out what the "hot buttons" are for many prospects. By asking people who their producers are, you might identify your competition, ass well as available producers with sizable books of business.

We still use fax fliers as well, although it's clear the practice is on the way out. Whereas we don't have problems when sending e-mail fliers to 10 different people in the same agency, we're careful to send only one fax flier per office. We've actually had people scream at us in the past about the paper and ink they're using to print the faxes. We often use a fax vendor such as Contact Telephony. They're quite inexpensive, and they send the fliers mostly at night, so that everyone sees them in the morning. -Web site: We don't create a paper producer kit anymore. Rather, all the kit's information is now up on our Web site. When we call on producers, we bring along a CD that contains the same marketing material we have on our Web site, and use it as the kit.

Our Web site actually is much more useful to a producer than a paper kit. In addition to the basic information found in a paper kit, we provide links to the Web sites of carriers we work with. Our site includes an archive of advertising we've done in the past, as well as newsletters we've produced. We also have "staff locators" that allow visitors to select a particular state from a menu and get contact information for our program in that state.

We're currently beta-testing a new Web portal addition to our online service. Our goal is to have our producers use our Web site to get any information they need about their business with us. Using a password, producers will be able to see such information as the status of applications they've submitted, x-dates for their accounts and credits for new business they've brought us.

?Virtual storefronts: Virtual storefronts are a type of online "outlet mall" that connects program managers and retail agents in a number of ways. Two national virtual storefronts are targetprograms.com and programbusiness.com.

Program managers participate in a virtual storefront by registering and submitting information on their program(s). The program then has a "storefront" that can be accessed by retail agents seeking to place business. Retail agents can search a storefront database of wholesalers and can also post their needs at the center. Wholesalers can then browse information about what retailers are looking for and may even be notified automatically when a retail agent has visited their storefront. With targetprograms.com, we'll get an automatically generated e-mail that says, "This is the telephone number, name and e-mail address of a producer who has expressed interest in your product." The storefront Web sites usually contain helpful editorial content as well, which presents an opportunity for your program to contribute items of interest to retail agents.

And there you have the basics of successful program marketing.