In our last lesson, we talked through creating a business overview. That’s the groundwork for taking a closer look at your selling market.
We need a good understanding of client demographics, what our potential clients are looking for, in order to exceed or at least meet their expectations and needs.
Completing this research early on will help define your footprint.
You’ll be able to choose the products that work best with the providers in your area. You’ll also be able to offer options to fit the varying needs of your prospective clients.
Plain and simple, this is market research.
Every industry does it. Some call it market analysis, but potaytoes, potawtoes. The terms are essentially interchangeable.
Market research should provide your investors or bankers with the knowledge that you know your selling market and that the area you’ve chosen can sustain your business.
This is displayed through market demographics and segments, competition, and pricing.
It’s the plan that shows you’ve thought a few things through beforehand.
Let’s talk demographics and segments first.
Your market demographics provide a snapshot of an estimated number of prospective clients in your area.
We can find this information in local census results or based on information gathered from knowledgeable references in your area.
When you have an idea of the total number of potential prospects, you can break them into segmented groups based on your product portfolio.
We’ve already thought about the products and services we’ll offer.
This is where we take that consideration one step further.
Ask yourself, are there many seniors that travel south in the winter?
Are there already a few agencies in town that offer Med Supps as well as property and casualty products?
Will there be a constant flow of prospects aging in and needing benefits?
Asking these questions can help you get a clearer picture of your area.
You also want to develop an estimate on the market value, and this can be accomplished in one of two ways.
One way is to use a bottom-up method. You’ll take the number of potential clients and multiply that by an average transaction value or estimated average commission per sale amount.
The other way is a top-down approach.
You’ll take the total estimated value of the full cost of senior market insurance in your area and divide it by a rough number of the total number of seniors in the area.
Based on the information available, the bottom-up method can provide a clearer estimate.
Well, the total number of prospective clients in a given area can be pulled from census data.
The estimated commission amounts per sale can be averaged based on commission schedules provided by carriers through the contracting process.
After demographics and segments, we want to take a closer look at competition.
Scoping out your local competitors should definitely be a part of your business plan.
Remember when we said to check out if other agencies are selling the same products?
We want to make sure the market isn’t already saturated before we begin.
That being said, don’t get lost in the competition.
It’s very easy to get caught up in trying to outdo your competition and forget why you wanted to start your own business.
Next up, pricing, because money talks, right?
Well, the insurance industry works a bit differently than other industries.
Product premiums are set by the insurance carriers and the federal government, depending on the product.
You can’t undercut your competition, but you can provide your prospective clients quotes to compare different products to provide the coverage they need.
You can also provide products that fit their price points.
And if you’re wondering how to do that, our Medicare Quote Engine here at Ritter helps you gather those quotes and then provide your prospects with options.
You can compare like plans side-by-side to get an easier comparison, too.
You can pull quotes for Medicare Supplements, Medicare Advantage, stand-alone Medicare Part D Plans, and final expense/whole life products.
And then, in addition to products, you can build up your value to clients with the level of service you offer.
Listening to your clients and asking the right questions makes a world of difference.
As I mentioned earlier, you can find an adequate plan to fit basic needs, but any insurance agent can do that.
Instead, why not provide a full complement of products to provide top notch coverage and peace of mind.
That will bring them back to you as they develop new needs.
And they’ll probably recommend you to their friends and family as well.
After you’ve made these market considerations, it’s time to switch gears and think about management.
We’ll see you in the next lesson!