What marketing strategies can brokers use to meet the challenges of today’s volatile market? We have some suggestions for a notoriously conservative sector

Attracting and hanging on to new business is a tough challenge for brokers in today’s market. With the growing influence of large aggregator sites, margins are being squeezed to the limit and the pressure is on to find new ways to reach customers.

Trying new marketing strategies will put many brokers out of their comfort zone, but there is little choice according to Avantia chief executive officer David Walker.

“A lot of people slashed their commission, and that worked for a while,” he says. “But in the second or third year, that becomes untenable and you have to look for other things to do. If you’re a small intermediary, you will go into long-term decline unless you do something different.”

Marsh head of networks Martyn Denney says the sector is “very conservative; we need to buck up our ideas”.

So what strategies can brokers use to get new customers – and keep them? Below are ten ways to cope with today’s market conditions. They won’t all suit every broker, but at least some should help cut through the clutter of the market.

1 Become an expert

Develop a website with strong content on a specific topic or become an expert the media turn to. This can increase brand awareness and boost a broker’s credibility in a sector, so helping to attract new customers. Groupama encourages its brokers to take this approach. “We want them to become the first port of call for journalists looking for comments about particular subjects,” says head of customer proposition Lynne Harris.

2 Be topical

React quickly to changing conditions and you’ll grab the initiative from rivals. The RAC took this approach with a fuel cash-back offer. “People buy breakdown cover hoping they’ll never use it, just like insurance, so acquisition is difficult,” says UK managing director Gemma Lovelock of TLC Marketing Worldwide, the company that developed the campaign. “You have to be topical and forward-thinking. With the fuel cash-back you can turn it on and off quickly, so if prices go up you can quickly put the offer on. It gives you standout for a time.”

3 Exploit untapped niches

A crowded market makes it hard to develop a unique selling point, but in quieter corners it is possible. Avantia tried this when it switched focus to non-standard home insurance just over two years ago. “We’ll take all the people most insurers shy away from,” Walker says. “People with subsidence, criminal convictions, unoccupied properties. There are brokers who do manual underwriting, but we’ve systemised it so you can do it online – that’s the difference.”

4 Keep it simple

Insurance can be complex; the greater the complexity, the higher the chance that customers will walk away or not renew. The problem can be particularly acute with health insurance, which led Westfield Health to develop Health365, a online product that pares questions to the minimum. “When people look for health insurance they have to provide so much information on their weight, height, last visit to the doctor and so on,” sales and marketing director Paul Shires says. “We just try to make it as easy as we can so that they feel comfortable.”

5 Use social media

Most brokers shun them, but Facebook and Twitter have been exploited to good effect by Comparethemarket. It is a good way to reach potential or existing younger customers and doesn’t have to cost much, as brokers can use the resources they have already in their call centres. “Brokers need to understand the power of the social networks – it’s a powerful medium if you’ve got the right brand,” Harris says.

6 Keep up the conversation, online and offline

Brokers usually only contact customers a month before a policy is due for renewal, ignoring them for the other 11 months of the year. Regular email newsletters or direct mail campaigns help to promote brand loyalty and give the opportunity for cross-selling other products. “You don’t want to overplay it, but three to four emails a year can cement the relationship,” Higos Insurance Services’ Neil Wyatt says.

7 Reward loyalty

With margins under pressure, retaining customers is vital. Try giving them rewards through the year. Admiral regularly offers Diamond brand customers rewards, such as gym membership. More Th>n has done something similar with free magazine subscriptions or

MoTs. “It’s a different way of talking to customers so they can see a benefit of being with that insurance company without it just being about selling,” Lovelock says. “And it helps with selling other products.”

8 Go mobile

It may still be too tricky to sell insurance via text message, but it is a useful channel for holding on to customers. “SMS marketing is more of a client service,” Wyatt says. “We use it to update them on their claims process or for renewal reminders.” Denny thinks more brokers should consider it too. “Using mobile messaging for acquisitions would be quite a big step,” he says. “But they should explore it for keeping existing customers up to date.”

9 Exploit your database

At the heart of any marketing activity is customer data. But the information isn’t always properly exploited. “One of the big challenges is to conduct marketing in a rigorous fashion,” Denny says. “Brokers should be sending marketing copy digitally so they can track it and see who’s read it. Some brokers are, but what’s missing is what you do with the data that is captured. You can run campaigns based on what you know interests the customer.”

10 Mix the old with the new

Innovation doesn’t need to be done to the exclusion of established marketing activity, but the two things should be integrated. Higos, for example, personalises its email newsletters so that they appear to come from a customer’s local branch.

“A lot of brokers are retreating from the High Street, but we’re expanding our presence there,” Wyatt says. “I’m never going to compete with the online aggregators, so we have to play on what is our strength.”

Brokers who refuse to innovate will struggle to survive. “In a recession, the first reaction from a marketer is: let’s drop our costs to the lowest,” Lovelock says. “The problem is that, once the recession starts to lift, it’s hard to trade out of that. If you just concentrate on price, you’ll end up in a pricing war and only the biggest will survive.”

Walkers adds:?“You have to be prepared to invest a lot of time, effort and money, and be prepared to be disappointed.” As margins come under constant pressure in the years ahead, brokers have little choice but to do just that. IT