Increasing your income

Increasing your income

Butler, Ken

In previous columns we have discussed how some agencies are feeling financial pressures as measured by ratios of expenses to income.

Many people have discussed ways to improve performance by cutting expenses, but you can only go so far in cutting expenses. In this column, we are going to explore the concept of building better ratios by increasing income through the concept of marketing.

Marketing is not the same thing as selling, although sales are certainly the end objective. It is also not the same thing as advertising, although advertising is a part of marketing. We define marketing as “creating a favorable environment for trade, whereby my business enjoys a competitive advantage.”

We assume you are already running advertisements in the Yellow Pages, handing out business cards at the Rotary Club meetings, and so forth. If you do this enough, the laws of random chance will bring you a certain amount of business. Unfortunately, the same laws will prevent you from ever emerging head and shoulders above the competition, as they will also get their random share of business.

Our goal is to use proper marketing techniques to make us rise above the competition, and to make our clients want to buy from us instead of them. Once this momentum is built, you will begin seeing sales coming in from the marketplace, independent of any particular marketing campaign.

Now, let us look at the four components of marketing which require much thought and consideration. These components are the product, our own knowledge, our agency’s image to the public, and our market’s awareness of us.


Before it makes sense to undertake a major marketing campaign, you must first have a product to market. In our business, the product is made up of insurance coverages and service to the insured.

Of course, you already have some products, or you would not be in business. We would like to suggest, however, that it is not sufficient to simply have a product, if that product is indistinguishable from the products of the competition. You must have a product that is demonstrably better than that of the competition.

If you are selling the “mass markets,” by which we mean homeowners, personal automobile, etc., it is going to be difficult to distinguish yourself on coverages and price, as those are largely determined by the company. The companies’ choices in turn are often dictated by various regulatory agencies, as well as competitive forces. Moreover, other insurance agencies are likely to be representing some of the same companies.

Thus, for these lines, you must determine what “value added” services you are able to offer that makes buying this insurance from your agency desirable to the insured.

There is often a vast untapped marketplace available to you through specialization. For example, every agent can sell insurance to an auto dealer, but how many are experts in the needs of auto dealers?

What if you became such an expert, and were able to dominate the auto dealer insurance market not only in your home town, but in your entire state?

The list is endless. Raise your awareness and look on every street corner on the way home from work tonight. Every business is an opportunity. When you factor in your personal knowledge, and the nature of the area you live in, the answer may become more clear.

This is a critical step in your planning process, because all of your future marketing activities are going to be based on this product you are developing. In the end, you are going to make your agency’s name synonymous with this unique product. This is going to be who you are.


One of the first things you must do is to actually become an expert in the field. It h been said that if you will spend an extra one hour per day studying your chosen field, you will be an expert within a year. You should read everything you can get your hands op. You should join trade associations in your chosen area of specialization, and attend the meetings.

Think about it. How many people do you know who actually spend one hour per day learning? It is distressingly easy to become a national expert on any subject. There is no excuse for you not to succeed in this effort.

Your sources for learning are practically limitless. You can learn a lot about insurance coverages by reading Rough Notes’ own PF&M manuals, or the Coverages Applicable publication. In addition, you can subscribe to and read the trade journals of the area you are specializing in. You can study regulations published by your insurance department. Again, read everything you can get your hands on, and do it every day.


After you have chosen your specialty line or service, and after you have become an expert in your field, you must create an image for yourself that makes you stand out from the crowd.

Just as an experiment, open the Yellow Pages and look at the advertisements for insurance agencies. Almost all of them say they have low rates, or low down payments, or no driver is tuned down. Many simply say ABC Insurance Agency, 100 Main Street, Anytown, USA.”

None of these project any image at all, at least not that distinguish themselves from the crowd.

Your job is to build yourself an image that makes you special, that makes your prospects want to do business with you. You are not a quote mill, nor are you necessarily the cheapest.

It is now time to create your agency’s specialty logo. If you have an older, well established agency, it is obviously proper to say “Serving Seattle Since 1947.” Your goal, though, is to integrate your special place in the market. We could change our logo to “Protecting Seattle Homeowners Since 1947,” if you are going to be the preeminent homeowners specialist.

Market awareness

Finally, it is time to bring your entire image to the public, by including it on your business cards and stationery, on your front door, and possibly in your telephone greeting. In short, tell the world who you are every time you say anything.

While you will certainly integrate your new image into your advertising, you are still subjecting yourself to the laws of chance when you run an advertisement beside those of your competitors.

Your real opportunity lies in direct marketing, which is made up of personal contact on two levels.

The first level is achieved by continuing to promote yourself as the expert in your field. Write articles for publications which are read by your target clients. Speak in front of trade group meetings if your target has such a group. Start your own newsletter or publication if you have to, and carry the word directly.

The second level is personal contact with the target client, through direct mail. You must build a mailing list of prospects, and then communicate directly with them, by mailing them a personal letter telling them who you are and why they should get to know you.

Again, you will project the most professional image. You will spend a few cents extra and mail the letters first class. You will also personally address each letter and envelope, because this is a personal communication, not “junk mail.”

Now, we are at a critical junction. You will probably not get a large response from your first mailing. Some statistics indicate that you will get a 1% to 2% response from any given mailing. That means you may hear from 10 to 20 people out of a 1,000 piece mailing.

Most people would make the mistake of stopping at this, and getting a new list with a different group of people, and then repeating the same mailing. Once again, they will get a 1% to 2% response.

We want to dramatically increase our success rate. The secret is to keep mailing to the same people over and over again. This repetition is what burns your special products into their minds.

In addition, the same statistics show you can get up to a 25% response by calling the target clients after the mailing. The purpose of the call is not so much to sell a policy immediately, as it is to introduce yourself personally, and to again reinforce your position as the recognized expert in this type of coverage. Even if this is not the time for the client to buy, he will remember you favorably when the time is right.


Building a new image and specialty for yourself is definitely not an overnight proposition. It will probably take two or three years to fully implement this strategy and to see real penetration.

However, the cost in dollars is not very large, and the long term rewards could be enormous.

You may remember in our December column we told you of an agency which was losing money every month, and is now their lead company’s largest agency in the state, and in the top 25 nationwide. This agency’s owner did it largely by applying these exact principles for a period of just over a year.

You will most likely still be in your agency in a couple of years. At that time, you can be the recognized leader in your specialty, if you will start now.

We welcome your questions, comments or suggestions for this column. Please fax us at 770-772-9984.

Tony Wilkie is president of The Rough Notes Company, and has been a licensed agent for 35 years. In addition to having management responsibilities in several successful agencies, he was a branch manager for Home Insurance Company and the territory manager for Zurich-American Insurance Companies. In those capacities, he had the opportunity to work with hundreds of agencies in various situations across the country.

Ken Butler is vice president of the Rough Notes Automation Division, and is the author of the Rough Notes System. He has been a management consultant in the insurance industry since 1983, and is a regular columnist in Rough Notes magazine, as well as a contributing columnist in many other industry publications.

Copyright Rough Notes Co., Inc. Feb 1996

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