One of our clients, a Midwest employee benefits agency, came to us with a serious problem. Revenues were down 19% over the previous year, despite an increased marketing budget. They spent their $137,000 budget on brand-building - including a $15,000 sponsorship of the 18th hole at the local pro-am celebrity golf tournament, a $10,000 sponsorship of the Heart Gala, full-page glossy ads in the local business magazine and half-page ads in the weekly business paper. While they couldn't say for certain what, if any, new business resulted from these efforts, the net result was an almost 20% drop in revenue. Not surprising, but still a terrible waste of resources.
The principal of a West Coast agency asked us for help after the economy put a severe dent in his revenues. Although he created a tremendously innovative practice offering cutting-edge value-added services and built the business solely on referrals, he discovered that referrals alone were no longer a viable marketing strategy. He realized he now needed to aggressively market the agency. The old ways of marketing and prospecting no longer fill the sales pipeline. Agencies are struggling merely to replace lost revenue, never mind actually grow the bottom line. The old tools - a good Rolodex, membership at the country club, season tickets and image building - just don't cut it anymore.
Plug the marketing drain
My partner, Scott Cantrell, one of the industry's top marketing minds, has identified a phenomenon in most agencies that he calls the "marketing drain." This is a costly condition that wastes agency resources (money and manpower) due to the agency's failure to measure results and hold its marketing accountable for results.
The reality is that agencies don't hold their marketing accountable for measurable results . . . because they can't. How do you really measure the number of leads or sold accounts generated by your company banner on the 18th hole? You don't (although I can assure you the ROI for that sort of thing is infinitesimal).
We know of only one proven way to plug the marketing drain and make your marketing dollars count and it draws your ideal prospects to you, ending the need for endlessly chasing after prospects and leads.
The system we call high-ROI marketing uses multiple direct-response communication tactics and activities that have been tested, measured and optimized to predictably achieve the highest level of growth and profit for your agency. It's the only way to guarantee a high return on your marketing investment.
Direct-response marketing, also called direct marketing, is contact with prospects and clients where they are asked to respond, usually to obtain a benefit. The request to respond, known as a "call-to-action," is often to take advantage of a free offer, called a "lead magnet" because it attracts the prospect to you.
Here's one example of a direct-response marketing piece. You might send a postcard to business owners or HR directors with a headline, "Cut your benefits costs by 15% while increasing employee benefits!" The postcard would include a request (call-to-action): "Call (866) 333-1234 to get our free special report, 'Lower premiums, better benefits'." (lead magnet)
Direct-response marketing is interactive, a two-way conversation with your prospects. You engage your prospect and offer your value proposition; the prospect is given an easy and direct means of answering back and indicating interest.
Incidentally, direct-response methods are ideal for interactive online media, both websites and social media. Think how much more valuable your website is if a prospect can not only learn of your products and services but also get access to an informative e-book or video in exchange for submitting contact info.
To ensure high-ROI marketing, direct-response methods should be used with all of your marketing, including direct mail, email, website, display ads, seminars, etc. There are two key benefits to your agency. First, you give those prospects who actually are interested in your value proposition the opportunity to easily raise their hands to identify themselves and indicate their interest. Second, because you know which and how many prospects respond to your call-to-action, you actually can track the results of your marketing, measuring the number of leads generated and how many are converted into sales. Imagine knowing which marketing activities to increase and which to eliminate based on real metrics.
When asked once at a workshop if he knew one marketing strategy to get 20 prospects a month, Cantrell replied, "No, but I know 20 strategies that will get you one prospect." Thus was born the 'Million Dollar Prospecting Method,' which guides our marketing strategies. In short, it states that to generate a large and steady flow of qualified prospects, you must use multiple prospecting tactics and activities. While most agencies and producers use at least several, "multiple" does not refer to the three or four things you're doing now but rather to the eight or 10 or 12 strategies and tactics you're not doing now.
Legendary marketer Lenny Lieberman, the direct-marketing genius who generates $1 billion in annual sales with products such as Proactiv, says, "Always brand while you sell, never before you sell. Brand building should be the by-product of your marketing, not the primary objective." In other words, effective direct-response marketing builds your brand for the future while it fills your sales pipeline today.
The Holy Grail is a steady and reliable stream of good prospects. Yet few agencies actually manage their marketing by measuring and evaluating the results of their prospecting efforts and marketing investments. With direct marketing, you have the key metrics you need to demand high ROI from your marketing dollars.
While much of my emphasis here is on traditional marketing, the principle of holding your marketing activities accountable applies to referral partners, too.
Let me share a fantastic, three-pronged strategy from a very progressive Texas agency for creating formalized, highly productive referral partnerships. The agency invites select professionals and trusted advisers who have their own well-developed client networks - for example, an attorney, CPA, commercial P&C agency, owner of an IT consulting firm, etc. - to join a small, exclusive referral group.
Second, along with the exclusivity, is an annual fee to join the group. It can be anywhere from $500 to $1,500. The purpose of the fee is to require all members of the group to be invested in its success, to have some skin in the game. The fees are used to pay for meals and other activities for the group over the year.
Third, each member of the referral group establishes numerical goals for each of the other members. Now, not only does each member have a target to shoot for in terms of referrals to the other members, but the existence of production targets allows for regular monitoring of progress toward the goals. Now the meetings are an occasion both to discuss business opportunities and to review progress on the goals.
With a financial investment and real accountability, the members of the referral group are inclined to take the process seriously and work to provide the other members with solid referrals.
With every agency facing its own moment of truth amidst the industry chaos, now is the time to develop and implement a cohesive and comprehensive marketing strategy that will ensure a high return on your marketing investment.
Leave the brand building to the Fortune 500 companies and let your branding be a by-product of your marketing. Measure the results and tweak your marketing accordingly.
Reach Griswold, president of Bottom Line Solutions, at (615) 656-5974 or nelson@ InsuranceBottomLine.com.
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