With the passage of Obamacare, 2010 was a very challenging year for brokers in the employee benefits market. For 2011 many insurance companies have slashed commission rates to meet new MLR requirements. Still, there are plenty of brokers in this market who are growing their business. We will explain what these brokers are doing to grow, and a simple approach that even the owner of a small agency can utilize.
NEW MARKET NICHE
A recent article in the Los Angeles Times * by Noam Levyy reported that more small businesses are now offering health benefits to workers. How is this possible in the current market? Because Obamacare provides a new tax incentive for businesses with less than 25 employees to provide health care benefits. In 2011 the incentive is a 35% tax credit to companies with less than 25 employees with moderate to low pay scales.
This is a major growth opportunity for group benefit brokers because 99% of companies with more than 200 employees already offer health care benefits. But for firms with 10-24 employees only 75% provide employee benefits, even less for those with fewer than 10 employees.
Still need convincing? In the first 6-months since health care reform was enacted, United Health Care added 75,000 new customers from companies with fewer than 50 employees. Blue Cross Blue Shield of Kansas City reported a 58% jump in the number of small businesses buying insurance since April of 2010. Both insurance companies made a commitment to market to small businesses using the new tax incentive.
MORE FROM EXISTING CLIENTS
Over the years various studies have reported it can cost from three to six times more to acquire a new customer than it does to retain a current one. Regardless of which study you believe, anyone who has been in business long enough to have clients know the cost is significant. So keeping the clients you already have is critical to your success. The most important factor in retaining clients is your relationship with those clients because, all things being equal, people would prefer to buy from someone they know and trust.
In their monthly column in Benefits Selling * magazine, Gil Lowerre and Bonnie Brazzell of Eastbridge Consulting, a leading insurance marketing consulting firm, made a strong case for benefit brokers to increase their efforts in selling voluntary benefits. They point out that, of 28 insurance companies that surveyed who offer voluntary & worksite benefits, 13 offer only group voluntary benefits, two offer only individual, and 12 offer both group and individual voluntary & worksite benefits. They further point out that half of the companies in the survey get more than a third of their new sales from voluntary benefits.
WORK SMARTER – INVEST IN YOUR BUSINESS
Many companies have reduced staff & overhead in recent years. That is also the case at many insurance agencies. So to execute the strategies noted above it is imperative that brokers work smarter and be willing to make smart investments in their business. Start by listing what you need to achieve:
- Continue to develop stronger ties to existing clients.
- Develop relationship with new clients & prospects.
- Educate clients & prospects on employee benefits, including voluntary benefits.
There are only so many hours in a day and you have to organize your time each day based on your priorities, the limits on your time and logistics. This makes investing in tools to accomplish the declared goals critically important to your success. As technology has advanced, in particular internet-based technology, many new tools have become available. Even some older & proven tools have been improved upon for use via the internet.
One such example of this is the client newsletter. For many years the largest brokers have produced their own client newsletters in-house because they have the resources and time needed to produce an effective newsletter. Most insurance companies have some type of publication that send to clients – with limited visibility for the broker. In recent years many of those newsletters are now delivered to clients via email instead of the US mail. One thing is certain, the insurance companies and the large brokers would not bother with client newsletters if they did not produce good results.
So what do you need to have good, effective client newsletter?
- It has to be a newsletter that your clients and prospects will actually read! If you send a newsletter that is filled with “fluff” articles or comics, your clients will give it the time it describes and throw it in the garbage – unread. Do not disrespect your clients & prospects by wasting their time with a newsletter devoid of news. What your clients will read is a newsletter that will inform and educate them on current issues that are relevant to them.
- Your newsletter should provide a high level of branding for your agency. After all, if you are working to keep your clients informed and educated, they should be reminded that it is you that is providing this valuable service. An effective client newsletter should provide an area for your company name, contact information & logo to be prominently displayed.
- The newsletter should be published & sent to your clients on a regular basis. There is some disagreement as to the desired frequency. Some believe in a weekly newsletter while others think that is too often. There are those who take a more minimalist approach by providing their newsletter on a quarterly basis. The most common approach is a monthly client newsletter.
- Ideally, the newsletter will help you to identify prospects.
- Finally, in the interest of time, you should be able to send the newsletter to your clients via email. An email-based newsletter will save you on the cost of printing and postage, plus allow you to deliver it to your clients in a very timely manner. There are those who maintain that only a newsletter sent via the US mail will work well. They contend that too many emails are blocked by the spam software used by many clients. However, if you inform your clients you will be sending them a newsletter each month, they can adjust their spam software to allow delivery. Once they read your newsletter, and find the content to be informative and useful, your clients & prospects will look forward to receiving your newsletter each month.
As stated earlier, insurance companies and the largest brokers produce their client newsletter in-house because they have the time and resources necessary. For the small to mid-size agency this may not be the case. Many such agencies have tried to tackle this task, with limited success. They proudly distribute the first edition, then a second & third, before something more vital to their business requires their attention. Before you know it the newsletter is a forgotten marketing tool.
Therefore, if you have a small to mid-size agency, save yourself the frustration and find a third party to provide your client newsletter. If you know another agency that outsources their client newsletter, one that you believe meets the requirements stated above, ask them the name of their newsletter provider. Otherwise, start with a Google search using terms such as, client newsletter for employee benefits.
Of all the requirements we listed, the most critical is the content of the newsletter. If your newsletter does not connect with your clients & prospects by providing them with news and information that is meaningful to them, nothing else will matter because your newsletter will go directly to the trash can. The next most important feature is the visibility (branding) it provides for your agency.
Once you have identified a potential newsletter provider, contact them and ask for a sample, and for a list of past articles. This will provide you with better insight on the quality of the content of the newsletter so you can determine if it will connect with your clients & prospects – yet still achieves your ultimate goal of increasing sales.