Consumer use of social media sites such as LinkedIn, Facebook and Twitter grows unabated, yet insurers and producers have been slow to embrace them as communications tools. Those who stay on the sidelines risk lost business and a diminishing ability to protect their brands.
To be fair, producers are ahead of insurers in their social media activity, ranging from a single Facebook page to ongoing dialogue on multiple sites. Indeed, there are estimates that up to 50 percent of producers may be using social media in some form.
In contrast, a survey conducted in June by the Insurance Marketing and Communications Association showed that as few as one-in-10 insurance companies had any type of social media program, although many more had begun to study the issue.
Companies have hesitated to jump into social media for many reasons, including budget constraints, a fear of the liability risks, and a failure to grasp the enormous power of social media to strengthen relationships with policyholders and defend their corporate brands.
The fact is, the social networking now taking place on hundreds of sites is not new but has been ongoing since man learned to communicate. Social networking is nothing more than individuals coming together to discuss topics of mutual interest–a hobby, a school, a business, an industry, or a political viewpoint.
In the insurance community, this networking still takes place on the golf course, at the business reception or the educational seminar, in an agent's office and at the kitchen table.
What is new is the technology, which enables networking to take place at any time and at any place with a spontaneity, immediacy and permanence that carries both risks and rewards.
In these cyber-settings, people ask questions, debate issues, share stories, pontificate, rant, as well as seek and give advice. It's the small-town coffee shop or local watering hole–the difference being the conversations take place 24-hours-a-day, participants can number in the thousands, and details are transcribed and posted on an electronic bulletin board for future reference.
Insurers and producers that have embraced social media enjoy tangible benefits in lead generation, customer retention and employee recruiting. Producers are much more open about trumpeting these benefits, embracing the notion that a rising tide lifts all boats.
On the other hand, insurers that use social media effectively are far less willing to talk freely about their activity–they enjoy a distinct advantage over their competitors and do not want to lose it.
One independent agent told me just recently that of the insurers the firm represents, only one has developed an effective social media plan.
That same insurance company coordinates its online activity with those of its agents, creating a powerful win-win arrangement–agents receive assistance on social media best practices and more access to the company's marketing efforts, while the company gets greater influence in agent marketing and more prospects.
Although somewhat few in number, these savvy companies come in all sizes–from large, national insurers to midsize regional carriers and one-state operations.
They all share a common trait, however, in their understanding of social media's power to reach their niche markets at lower cost, in contrast to more expensive and intrusive mass-media techniques.
As political candidates have already discovered, social media activity is tailor-made for reaching core constituencies.
For insurers, nonparticipation in social media is no longer a viable option. Because agents, policyholders and a company's own employees are participating in greater numbers and with more frequency, firms that sit on the sidelines increasingly lose their ability to protect their brands and shape how social media affects them.
I know of several companies that have blocked employee access to Facebook and Twitter, only to find their corporate logos prominently displayed and product discussions taking place without company sanction. The conversations about a company's brand take place with or without a company's participation. The only way to defend the brand, therefore, is to be actively involved in those conversations.
There are liability risks, to be sure. The online social media phenomenon is still in its infancy, and like any development, it will take time to fully understand what liabilities may exist.
There are many areas of law that may apply, including those of contracts, intellectual property, privacy, market conduct and insurance trade practices. These risks, however, can be mitigated with a carefully crafted strategy, plan and operating guidelines.
It may be tempting to copy what other companies are doing in social media. However, the fact is social media activity must reflect a company's own character and personality. Authenticity is a critical ingredient in any social media plan.
A policyholder's relationship with their insurance company and agent is usually limited to receiving bills, policy cancellations and filing claims–none of which are automatically positive experiences. These same policyholders, however, are deeply involved in activities and issues related to their cars, homes and businesses.
As social media participation grows, insurers and producers must create integrated marketing efforts that link these social conversations to their brands to retain customers and attract new ones.
Tom Wetzel is president of Thomas H. Wetzel & Associates, a Chicago-based insurance marketing communications firm that counsels insurance firms on the use of social media. He can be reached at twetzel@wetzelandassociates.com.
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