Meet in the Middle: The Life Insurance Cross-Sell

There is a $12 billion revenue opportunity—and independent agents are ignoring it.

Accenture estimates the life insurance gap at approximately $12 trillion for U.S. middle-market customers, with $12 billion in revenue to be gained by simply serving them. Yet independent agents often overlook the middle market because high acquisition costs can erase profit margins.

The industry is changing. Digitization is delivering significant cost savings. New, simpler products are designed with middle-market consumers in mind.

And advisers have a critical role to play by helping these millions of under-insured or uninsured households get the protection they need—while also adding new revenue.

Define the Target

Let’s level set the definition of the middle market, since there isn’t a consistent industry understanding:   

  • Households with incomes of $50,000-200,000 per year, typically dual income
  • Consumers ages 25-45 who are transitioning through key life events, such as getting married, having children or buying a home
  • Higher debt-to-income ratios; lower net worth

It’s also important to recognize just how much diversity exists in the middle market. A 25-year-old first-time homebuyer is obviously a very different customer than a 40-something who is getting remarried and blending families, but they both need life insurance, as do the roughly 60 million other potential customers that comprise the middle market.

As an independent agent, the economics of pursuing the middle market directly have traditionally been challenging. It’s one reason emerging InsurTech companies are by-passing agents and selling direct to consumer.

But frankly, that approach won’t work with life insurance. Life insurance products provide financial stability in the wake of a disaster, and consumers need expert guidance to navigate the process and determine the best suite of solutions for their unique situation. The human-to-human connection of the life insurance sale can’t be replaced with an algorithm.

How Tech Can Help

That said, there are many things that technology can do well, including targeting consumers and reducing customer acquisition costs. In addition, the insurance buying population today is digitally savvy, and many in the middle market are digital natives. Their buying habits have changed, and the insurance industry is still trying to catch up.

A recent report from Morgan Stanley and the Boston Consulting Group on the state of life insurance distribution notes that “sales processes remain ‘old-school,’ cumbersome and inconsistent with the fast-evolving customer expectations that are now being set by digital leaders.”

In today’s on-demand world, consumers want to research and compare products online, whenever and wherever they want. This is not news.

But for agents using digital channels for business development, it’s great news. Consider the following:

  • Consumers are willing to share data in return for products and services that make their lives easier, according to the Accenture Global Financial Services Consumer Study.
  • 54% of millennials are likely to ask social media connections for recommendations on financial professionals, according to the LIMRA 2018 Insurance Barometer.
  • 82% of customers surveyed list the ability to provide an online quote as an important factor in purchasing decision, according to Accenture.

Each of these data points provides a discrete example of how agents can use digital tools to cost-effectively find qualified life insurance leads.

Ultimately, though, success comes from understanding the buyer’s journey and being the right resource at each stage of the process.

Stage 1: Awareness

Consumers don’t sit around thinking about life insurance on a regular basis—they think about life insurance when transitioning through key life events such as having a first child or buying a home. This is when consumers are most receptive to the life insurance message and actively looking for the expertise agents provide.

But today’s consumer typically doesn’t want an agent to come to their home or schedule a series of appointments during work hours or during family time in the evening. That means agents need to shift gears and focus on meeting the consumer on their own terms. Here’s how:

Target. Knowing your niche and understanding your buyer’s persona are key to cost-effective digital marketing. In the digital world, the narrower your target, the stronger your resulting leads. Don’t be afraid to start small.

Educate. Today’s consumer goes online to self-educate—and that’s the adviser’s first opportunity to establish trust. Personalized landing pages with FAQs, needs analysis calculators and quoting tools with definitions and explanations can bring leads directly to your inbox.

Make sure the link to your page is on your business card, your LinkedIn profile and any other social media tools you use.

Qualify. Asking the right questions via digital calculators and applications makes it easy to see if a prospect is a good match for your services. The better the match, the lower the cost of acquisition.

Stage 2: Consideration

Once a consumer understands their need is real, they begin evaluating solutions. This is your opportunity to shine.

Consumers need your expertise and guidance, but they will seek it on their own terms. Offer live chat, click-to-call and scheduling tools on your landing page to make it easy for prospects to reach you the way they want to, when they want to.

Education is still very important at this phase, so providing more information on the products you offer—ideally personalized based on prior interactions—can be a big help.

Also, consider sending a personalized check-in email to qualified prospects who provided an email address in the awareness phase but haven’t been back to your site in several days. It’s pretty easy to automate these types of workflows with modern email clients and low-cost tools.

Remember that your goal during this phase is to build trust, just as you would do in a traditional sales process. But now it’s enhanced with digital tools to reduce acquisition costs.

Stage 3: Decision

The cardinal rule for converting today’s consumer into a client is to offer a frictionless buying experience. By now, you have collected quite a bit of information about what your prospect is looking for in life insurance solutions, so don’t make them answer the same questions more than once.

Depending on your product portfolio, it may not be possible to enable direct online transactions for each product. Instead, think about how you, the adviser, can make it easier for the customer, even if the carrier isn’t making the buying process easy for you. Evaluate your portfolio of products and consider transitioning to carriers that offer more consumer-friendly products and buying experiences.

Stage 4: Upsell

The traditional buyer’s journey ends at the decision. But for advisers targeting the middle market, the opportunity to grow with your clients is key to success.

Review your book of business regularly to identify clients whose needs have likely changed since the initial sale. Remain visible by following your clients on social media, attending local events and regularly updating your own digital presence.

Today’s adviser cannot continue to grow the business without a robust online strategy. For many agencies, the existing book of business is aging, and the need for new clients is increasingly acute.

At the same time, the middle market is uninformed and underserved. They are also online—a fact savvy agents can use to their advantage by implementing tools and strategies that cut the cost of acquiring middle-market customers.

You know who your target customers are, so find them and serve them on their terms. Digital is not a barrier to agent success—it’s an enabler of long-term success for the life insurance cross-sell. The hardest part of the transition to digital is getting started.

Ian Jeffrey is CEO of Breathe Life, a provider of consumer-centric digital solutions for the insurance industry. A marketer, entrepreneur and investor for almost two decades, he has founded several companies and helped others in Montreal and San Francisco.