Programs vs. Target Markets

Everybody wants to be in the Program business. But as I travel around the country I find that very few of us understand the difference between developing specific programs and target marketing, as we have done with our carriers for many years.

If you determine each year which products your carriers possess that could be sold through your agency and direct your sales efforts to those markets — you are pursuing target marketing. You may learn how to sell to that target market as you learn the products delivered by the carrier, or you may already be a specialist in that market with many clients fitting the characteristics of the carriers product.

If, on the other hand, you design a product (with or without carrier assistance) that provides you the security of exclusivity and that creates a uniqueness for the customers of that product, you are in the program business.

Target marketing requires focus, concentration and hard work and yields revenue growth for the agency in those target markets that are properly penetrated. Programs require a different level of creativity and professionalism that establishes the agency as the “guru” of that product. While some programs are sold on a local or regional level through the originating agencies, many are distributed through carriers on a national level with the agency participating as the underwriter or the administrator. Even when the originating agency is not involved in the underwriting or administration, it is not unusual for true programs to bear an override commission to the originating agency.

If you are a target marketing agency, your success will be dictated by the honesty and creativity of your carriers product development. If you choose to take your fate in your own hands and develop you own program, you will spend must time, effort and money in their development but will share in a much larger scale on their successes.

Next month we will continue the series with an article on Market Research as the key to developing programs.