Insurance Agents Learn How to Market to People Unlike Themselves

The middle-aged white woman told the audience of mostly older white male businessowners that much of the country and many of their future customers don’t look like them or necessarily share all their values.

While whites make up 64 percent of the U.S. population today, by 2041 whites will be a minority in the country, multicultural marketing expert Kelly McDonald told agents at the recent legislative conference of the Independent Insurance Agents and Brokers of America (Big “I”) in Washington.

The numbers of minorities and women owners in the agency system are low. The 2010 Big “I” Agency Universe Study found that the number of agencies with principals who are women, Hispanic and/or African-American had increased since 2008. The proportion of independent agencies with African-American principals grew from one percent in 2008 to just over four percent in 2010. There has been more progress for women. More than a third of new small and medium small agencies have women as principals, according to the Big “I.” New agencies appear to be the main driver of this change, according to Quincy Branch, chairman of the Independent Insurance Agents & Brokers of America’s National Young Agents Committee, writing for Insurance Journal recently.

But McDonald was not in Washington to lecture agents on increasing minority ownership. She was there to help them learn to market to diverse populations so that they have an agency fit for the future.

Communities, customers and the workforce are changing and independent agents need to know this and lead, she said in her presentation titled, “How to Market to People NOT Like You.”

“You will have minority customers,” McDonald said.

She said America is “no longer homogenized.”

“We are no longer a melting pot, we are a salad,” she said. “The tomato doesn’t look like the radish.”

McDonald, president of New Mexico-based McDonald Marketing, works with IIABA and its Diversity Task Force that is trying to increase diversity within the agency ranks and improve agencies’ capacity to serve diverse populations.

McDonald had plenty of figures at her fingertips to drive home her point that America has changed and will continue to change:

• One in three Americans is not white, although this varies by state. Four states and the District of Columbia have minority populations and across every major market, the majority child population is non-white.
• The country’s multi-racial population is growing three times faster than the overall population.
• The biggest shift is the “browning” of America—the rise of Hispanic population.
• One in 6 Americans is Hispanic and one in four children is Hispanic.
• Even rural areas are growing in their diversity.

“These are your future customers and workers,” she said.

In addition to recognizing that America is changing color, agencies need to learn to understand the younger generation — Generation Y or Millennials (born between 1982 and 2004).

Agents might want to start by bringing some young people into the agency business, suggested Tom Minkler, Big “I” chairman. Minkler said the independent insurance agency force is one of the oldest industries in the country. “Look around,” he told attendees. “Fifty percent of people in the system will not be here in five to seven years.”

The younger generation has different attitudes about family and marriage than the older agents may, according to McDonald.

“We need to redefine family,” McDonald said, noting that Generation Y has been raised by a variety of different families including unmarried parents, divorced parents, single parents, gay parents and grandparents.

“They value parenthood over marriage,” she said.

“It’s not just Hollywood liberals either,” she said, citing Sarah Palin’s pregnant unwed daughter Bristol as an example.

As America changes so does the customer base for agencies.

So how should agents relate to their new customers?

For one, McDonald said agencies should know there will be more women owning businesses. Women are more about customer service than men and they tend to place trust in other women, she said.

As for members of the younger generation, they don’t need more information—they can get that on the Internet, according to McDonald. “But they will want advice, guidance, counsel,” she said.

“Helping beats selling” when it comes to appealing to Generation Y, she said.

How the younger generation builds relationships is different “but they still believe in relationships,” said McDonald. Agents have always valued face-to-face contact whereas younger people prefer to use social media to build relationships.

Millennial’s relationships regarding family are different. Younger people define family more broadly and they expect their insurance policies to do this as well, McDonald said.

In terms of recruiting, the younger generation likes cities and likes a progressive work environment. They like “green and community values” in the businesses they patronize — which she said is a reason they should also like independent agencies that are involved in their communities.

Regarding marketing, customers respond to images that look like them, she said, pointing out that 40 percent of 18 to 35 year-olds have multiple tattoos.

Minkler reminded agents how much of today’s insurance shopping experience takes place online as opposed to in the agency or over the phone.

Minkler said 75 percent of personal lines buyers started their purchase online. Online shopping is the “new normal,” he said.

He said online shoppers like “customization and choice” —which he said is exactly what independent agents have to offer. “That is the independent agent’s value proposition,” Minkler said.

However, individual agencies can’t conquer the internet alone; to do so requires a collective approach, Minkler said, putting in a plug for the updated TrustedChoice.com website that provides customers with comparative quotes and agencies with leads.

The independent agency force has about 30 percent of the personal lines market, which means there is 70 percent out there for agents to get, Minkler told the Big “I” crowd.