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PRINCIPLES OF INSURANCE
TOPIC: SERVICE MARKETING OF INSURANCE
SERVICE MARKETING OF INSURANCE
INTRODUCTION
Understanding the best way to market your business can save you time and money in wasted effort and ensure that you have the best chance of success. As per the Registration of Insurance Marketing Firm Regulations, 2015, an Insurance Marketing Firm is defined as an entity registered by the IRDA to solicit or procure insurance products, to undertake Insurance service activities and to distribute other financial products
Insurance Service Promotion relates to the process of forming demand for the insurance services. Promotion includes any kind of informing people about insurance services or an insurance company. There are two basic and two auxiliary kinds of promotion. Basic kinds of promotion include advertising and personal contacts, auxiliary kinds of promotion include publicity and stimulation.
Advertising is any paid form of impersonal providing the insurance service.
Personal contact is an oral communication with one or more insured persons to conclude the insurance contract.
Publicity is impersonal and unpaid stimulation of the demand for the insurance product by means of making people aware of it with the help of mass media.
7 p’s of Service Marketing
Product marketing strategy often centres on four main factors known as the four Ps. When it comes to marketing a service-based business, things get a bit more complex and instead of four, there are a total of seven main factors you will need to think about if you want to have a complete, effective marketing strategy.
If you want to market your service successfully the first step is to define what it is you’re selling. Although you have flexibility around what you are offering, you need to differentiate yourself from the rest of the market.
- Pricing Pricing is an important element of successful marketing. Charge too much and you are likely to struggle to find customers, price yourself too low and you may end up selling yourself short as well as earn a reputation for being cheap. Getting the balance right can be tricky.
There are several factors you need to think about when pricing your services. When you are pricing products you can calculate a charge from the cost of the raw materials, production and distribution, but pricing your services is a more complex process.
When considering how much to charge you will need to think about the market rates, your level of expertise and the benefit to the client as well as your overheads, paying employees and any other expenses
- Place Where you offer a service is important. Regardless of what you do, your location or office premises will form part of your overall image. Will you work from an office or meet clients at their home? If you are considering your options for a physical premise, think about where it is located. Your office or business premises is like the packaging on your product. Clients will form an instant impression of you and your abilities based on what they see.
As well as a physical location it’s important to think about your online location. In most cases your website will be the first contact that your potential clients have with your business, so think of it as your virtual shopfront. With so many people turning to online facilities to find services, it’s even possible that your clients may never actually visit your physical premises. Your website should create a positive, memorable impression and be easy to use.
- Promotion Promotion is essential when you are marketing a service-based business. Services, unlike products, aren’t unique. Chances are you are not the only person in your area to offer the same service. Even with the best skills, the most up to date software and a plush office or website, if you
don’t take a proactive approach to promoting yourself, nobody will know you’re there. If you are going to be successful you will need to think about how and where to advertise your services, plan a promotional strategy and regularly analyse the results.
- People Unlike a product, which exists independently of the person selling it, a service is indistinct from its provider. This means that people become a crucial factor in the marketing of any service. In fact, the quality of customer experience is likely to be a determining factor in whether your clients refer you to their friends and/or use your services again in the future.
Whether you are a one-person operation, or you have a team of employees, it’s important that customer service is the priority and a high standard of professionalism is maintained always. Contact employees should be given specific customer service training and the way they deal with the public should be aligned with your brand values.
- Process To present a consistent image and brand you will need to make sure your level of service is consistent, reliable and your clients know what to expect from you every time they use your services. This usually requires some level of process implementation, especially if you have a large team of advisors and support staff.
Even if you are a small business or a one-person operation, you can probably benefit by creating a few basic processes to allow you to keep on top of everything. By creating systems and processes you can ensure that your clients receive a consistent experience every time they deal with you, and that you continue to live up to their expectations.
Showing that you are efficient and reliable can build customer confidence and make it more likely that your clients will refer you to others. If you have multiple staff members, good systems equate to more consistent service delivery and happy clients.
- Physical evidence Physical evidence is still important when you are selling something intangible like a service. Although there may be no physical product to associate with your business, think about the physical experience your clients have when they visit you. As well as the environment your
Financial Institution Distribution Systems - Many insurers today use commercial banks and other financial institutions as a distribution system to market life insurance and annuity products.
Direct Response System: is a marketing system by which life and health insurance products are sold directly to consumers without a face-to-face meeting with an agent. Potential customers are solicited by television, radio, mail, newspapers, Internet.
Other Distribution Systems:
- Worksite Marketing- Individual sales interviews on site with employees interested in purchasing life insurance products
- Stock brokers - are licensed to sell life insurance products.
- Financial Planners- provide advice to clients on investments, estate planning, taxation, wealth management, and insurance.
GROUP INSURANCE MARKETING
Many insurers use group marketing methods to sell individual insurance policies to members of a group like employers, labor unions, trade associations...
Life insurers typically sell and service group life insurance products through group representatives. Some property and casualty insurers use mass merchandising plans to market their insurance
Mass merchandising is a plan for selling individually underwritten property and causality coverages to group members; auto and homeowners insurance are popular lines that are frequently used.
BANCASSURANCE
An arrangement in which a bank and an insurance company form a partnership so that the insurance company can sell its products to the bank's client base. This partnership arrangement can be profitable for both companies. Banks can earn additional revenue by
selling the insurance products, while insurance companies are able to expand their customer base without having to expand their sales forces or pay commissions to insurance agents or brokers.
