AVOIDING MARKETING MYOPIA
IF WE DON’T HEED THE MISTAKES OF THE BUGGY WHIP MANUFACTURERS OF THE EARLY 20TH CENTURY, WE ARE DOOMED TO REPLICATE THEM IN THE 21ST CENTURY.
Theodore Levitt was a man much smarter than me. He was a legendary marketing scholar and Professor Emeritus at the Harvard Business School who passed in 2006. In his keystone article in the Journal of Business Ethics in 1999 titled Marketing Myopia, he successfully criticized John Kenneth Galbraith’s view of advertising as the creation of artificial “want.”
25 years later, even this insightful view appears flawed and we realize that while Mr. Levitt could point out the weakness of traditional marketing, he only responded by advocating an even more sophisticated form of selling. He avoided the tough problem of marketing the MEANING BEHIND THE MARKETING. This failure affects us as insurance agents as much as the failures of buggy whip manufacturers at the beginning of the 20th Century.
THEY COULD HAVE CHANGED AND SUCCEEDED
Buggy whip manufacturers thought they were in the business of selling buggy whips. They failed to realize that technology was passing them by and they were really in the business of providing for the transportation equipment needs of the American public. If they realized this real concept, they would have added tires, steering wheels and replacement parts for automobiles to their fine lines of buggy whips and, as the transportation industry changed, they would have only had to change their names (taking references to buggy whips out of the name) in order to remain viable businesses.
In the early years of the auto industry, the vehicles were not very reliable and there was a crying need for repair parts that could (at that point) only be filled by the auto manufacturers. That changed in the auto industry and there has been a thriving business for 3rd party parts to maintain vehicles.
This didn’t help the buggy whip manufacturers who counted on making high quality buggy whips and didn’t take the changing marketplace into account in their businesses. This is the meaning of Levitt’s Marketing Myopia.
But Levitt didn’t go far enough. Those auto parts makers found it necessary to make their products as inexpensively as possible in order to viably compete with the car manufacturers who, by the way, didn’t make their parts, but labeled parts made for them as original parts when selling them to the consumers. The 3rd party manufacturers found that they could make and sell parts competitively and thrived.
Just as there were solutions that would have saved the buggy whip manufacturers a hundred years ago, there are relatively similar solutions available to save and re-invigorate insurance agencies in the 21st Century – for those who are able, capable, and energetic and committed enough to pursue those answers.
MARKETING THE MEANING, NOT THE PRICE OR PERCEPTION
The answer is in MARKETING THE MEANING of insurance instead of the product or, of a certainty, instead of marketing the price of insurance.
A few years ago, it was ludicrous to imagine the possibility of surgeons ever MARKETING surgeries and procedures. Now we have begun seeing competitive hospitals and surgical centers actually advertising their services, suggesting that they are “better” and more knowledgeable than others. They are marketing the perception (whether real or not) of higher quality just as every car maker spends millions to make you think that you will feel better in their models than in those of their competitors or that one truck is more reliable than another. At least they haven’t lowered themselves to advertising “surgical sales.” This is the level of marketing that Levitt perceived as the next step after a generation or two of advertising and marketing actual lies (like the Cure-All medicines of the 19th Century). Imagine how much more success they would have if they actually told the public their success statistics compared to other alternatives?? That additional level converts marketing from perception to Marketing the Meaning.
Insurance marketing is still stuck in the Galbraith concept of marketing, “it’s all the same and we can give it to you cheaper.” We have insurance agents and entrepreneurs trying to compete with GEICO and Progressive to offer price-shopping online through their websites and web gateways. They won’t succeed because the price-competitive marketplace is controlled by how much is spent and how often the concepts are marketed to the general public. The new insurance marketers can get the service and the automation, but they can’t get the millions in advertising that attracts people to the giant insurance ‘Price Mills.’
WOULD YOU LIKE TO BE LIKE THE IRS??
Another analogy is the relatively new move by the IRS to get everyone to file their own taxes and the on-going dual marketing of the major tax preparation companies. Many readers of the PIPELINE are acquainted with Sherry, my wife, my financial manager and the most proficient tax professional I know for individual and small business taxation. She is an Enrolled Agent (licensed to practice before the IRS), the past President of the New Jersey Association of Tax Professionals, has an arms-length list of accreditations and represents taxpayers against the IRS. She also maintains strong relationships with the IRS and acts in an advisory capacity as needed. She is a professional and knows her business.
Sherry takes between 150 and 200 hours of continuing education every year because of the complexity of the tax laws in the U.S. She never understands how the major tax prep companies can give their employees 10-20 hours of cursory review each year and put them in front of taxpayers to manage their client’s liability to the IRS. And these are the same companies that MARKET the fact that they will review returns for mistakes (that most often they have made themselves in prior years) to get the clients back more money. Most of the tax package products are owned by the very same tax prep services that want you to come to their “professionals” (the dual marketing system that I alluded to above).
IRS goes even further to support the personal input and ‘tax-in-the-box’ packages that permit taxpayers to enter their own data and calculate their taxes with absolutely no education regarding the tax codes that define their actual tax liability. IRS implies that the tax code is simple enough for most average taxpayers to do their own.
The IRS tax code is now estimated to be over 60,000 pages, 5.5 million words, with 721 forms. Does this sound simple enough to permit the average high school graduate with a job, a home, a few investments, and a pension to figure out how he can minimize his tax obligations legally? I think not.
Similarly, GEICO, Progressive, and even our web entrepreneurs are suggesting that all insurance is alike and that, whether auto, homeowners, or business policies, you can enter a few pieces of information and get a quote. This implies that all products of all carriers in all jurisdictions are the same and that the combination of products and needs of a consumer should be of little or no regard in his buying decision.
Obviously, in light of a thoughtful analysis of the complications of both taxation and insurance, a knowledgeable professional counselor who is more interested in fulfilling the need to protect the consumer’s assets than in “selling” a product is much more valuable than a quote machine on a website or a ‘tax-in-a-box’ solution.
ANOTHER APPROPRIATE ANALOGY
The reason we have family doctors is for a caring, human professional to assess our health, our ills, and our personal condition in order to maintain a desired level of health for as long as possible. If we can get the same message across to the consumer about the complexity and their needs for an insurance professional, we will finally accomplish the task of our conversion from the Buggy Whip Manufacturer to the Transportation Assistance Company. Instead of “Insurance Salespeople’ we will become Asset Protection Counselors providing advice and products or services only when and if appropriate. Your doctor has thousands of medications and procedures available to you. He does not (I hope) suggest different ones to you based on his potential revenue and profit potential. Neither should we when we assess the asset protection needs of our clients.
We already have the knowledge base in the agency industry. We must continue to increase our level of knowledge and refuse to let the companies ‘dumb-down’ our employees. If we convert and use our marketing and websites to explain (in as simple of terms as possible) the role of an insurance counselor in light of the complexity of the products and services in combination with each other and tailored to the needs of each consumer differently, we will make the conversion necessary to change with the technology and still maintain the integrity of our businesses for generations to come.
MARKETING THE MEANING
The public still needs the knowledge and services of insurance professionals regardless of the tactics of the ‘snake oil’ salesmen who are trying to convince everyone that their products are the cure-all for their ills at the lowest cost possible.
Does cost make a difference? ABSOLUTELY! In a competitive industry, you must have a product at a fair (but not necessarily the lowest) cost. If the lowest cost was the only consideration (as has been told to me constantly by direct writers and agents, alike), everyone would simply move to the lowest-cost product each year. They would buy only the lowest cost cars and would be calling doctors and surgeons to comparison-shop for surgical procedures.
IF CONSUMERS UNDERSTAND THE COMPLEXITY OF INSURANCE, BOTH IN THE ANALYSIS AND SELECTION AND IN THE AFTER-THE-PURCHASE SERVICE DURING CLAIMS THEY WOULD CONTINUE TO SEEK PRICE COMPETITIVENESS, BUT WOULD BE MORE LIKELY TO LOOK FOR QUALIFIED PROFESSIONALS TO SERVE THEIR ASSET PROTECTION NEEDS.
Our job is to convey the complexities as well as the qualifications of the independent agent to analyze and provide appropriate solutions to individuals and businesses.
Today we are seeking every means available to grow our businesses through a particularly difficult marketplace. We ABSOLUTELY SHOULD consider our internal automation and the strength of our websites and the Internet as means of getting our message to our consumers. But if you either ignore the downturn, try to continue to use traditional marketing approaches that haven’t worked in the past few decades, or try to mimic the same giants who are aiming at the lowest common denominator, you will help the industry convert from the trusted advisor role of our parents and grandparents toward the same end as the buggy whip manufacturers of the 19th and early 20th Centuries. Market the Meaning, not the product or the price and you will find a loyal, growing group of clients who find ongoing value in the use of a trained professional for their insurance programs.