What can Life Insurance Companies Learn from Steve Jobs’ Washing Machine

Much has been written about Steve Jobs so I have no intention of contributing redundantly to the accolades and analysis already asserted about his genius.  However, the question of how Steve Jobs might approach the challenges facing life insurance companies represents an intriguing intellectual exercise that hasn’t been tackled yet.  Granted, there are huge differences between envisioning sleek technological gadgets to deliver entertainment content to consumers and marketing legal contracts that pay off upon death.  In fact, it’s uncertain that, despite his genius, Steve Jobs would have made a decent insurance company CEO.  However, there are a few nuggets of wisdom in some early interviews that offer insight into how he approached basic business challenges, and those ideas are applicable to any industry. 

 

For example, in a 1995 interview with Robert X. Cringley for the PBS television series, “Triumph of the Nerds” Jobs was asked how he learned to run a company at such a young age when he had no management experience and training.  Jobs replied “You know, throughout my years in business I discovered something.  I would always ask why you do things.  Nobody knows why they do what they do.  Nobody thinks very deeply about things in business.  That’s what I found.  If you are willing to ask a lot of questions and think about things and work really hard, you can learn business pretty fast”. 

 

Nothing particularly earth shattering in that observation. 

 

However, at the very end of an interview with Gary Wolf published in Wired Magazine in February 1996, Jobs provides a more specific example of the type of questioning he pursues.  Wolf asks Jobs “is there is anything well designed today that inspires you?” 

 

“Design is not limited to fancy new gadgets.  Our family just bought a new washing machine and dryer.  We didn’t have a very good one so we spent a little time looking at them.  It turns out that the Americans make washers and dryers all wrong.  The Europeans make them much better – but they take twice as long to do clothes!  Most important, they don’t trash your clothes.  They use a lot less soap, a lot less water, but they come out much cleaner, much softer, and they last a lot longer.  We spent a lot of time in our family talking about what’s the trade-off we want to make.  We ended up talking a lot about design, but also about the values of our family. Did we care most about getting our wash done in an hour versus an hour and a half?   Or did we care most about our clothes feeling really soft and lasting longer?  Did we care about using a quarter of the water?  We spent about two weeks talking about this every night at the dinner table”. 

 

I had no idea there was such a difference between how Americans and Europeans washed their clothes.  I’m also glad I was never invited over to Steve Jobs’ house for dinner – what fascinating dinner conversations they had! 

 

It’s interesting to see how Jobs approached design from the perspective of defining values and priorities.  Who knew that even something as mundane as washing clothes can inspire an evaluation of different ideals and standards?  It seems that his obsession with understanding why things are done a certain way went beyond mere factual explanations and focused more on motivation, lifestyle, and preferences. 

 

Since I am only anecdotally familiar with washing machines (much to my wife’s chagrin), I embarked upon some personal research regarding what could be so wrong with the American system.  I was surprised to learn that the brands I was most familiar with were all manufactured by the same company — Whirlpool makes Kenmore, Maytag, and Amana washing machines in addition to their own.  The rest of the market is rounded out by other huge players such as GE, LG, Frigidaire, and Samsung. 

 

A quick look at these companies’ websites immediately revealed a disconnect between their approach to consumers and Jobs’ more thoughtful analysis of his family’s values and priorities.  The majority of the websites provide an excellent example of what life insurance company websites would look like if they were designed by actuaries – lots of product specifications supported by vaguely descriptive undefined terms whose meanings are unclear.  To Whirlpool’s credit, they offered a search option that allowed consumers to search by need or by product feature.  The “search by need” option more closely mirrored the values discussion that Jobs no doubt had with his family. 

 

So what type of washing machine did Jobs ultimately purchase?  “We ended up opting for these Miele appliances.  They are wonderfully made and one of the few products we’ve bought over the last few years that we’re all really happy about.  These guys really thought the process through.  They did such a great job designing these washers and dryers. I get more thrill out of them than I have out of any piece of high tech in years”. 

 

It’s probably important to note that this interview took place years before the first iPod was invented – this might explain why a washing machine garnered such an exalted position in Jobs’ technology hierarchy. 

 

The differences between Miele’s website and all the others are immediate and obvious.  While every other company positions themselves as an “appliance manufacturer”, Miele is selling “laundry care”.  Perusing their “features/benefits” section is a lot like eavesdropping on the conversations that took place at the Jobs family dinner table.  While the other manufacturers help consumers identify products by color, capacity, and cost, Miele reinforces the love of clothes and educates them on their care. 

 

It’s impossible to not see parallels between selling life insurance and selling washing machines.  Rookie agents love to launch into the technical differences between term and whole life while balancing the living benefits with the amount spent on premiums.  Veteran agents wisely spend the majority of their time helping consumers understand their goals and dreams in order to properly identify the most effective financial vehicles to achieve them.  In the same way, American manufacturers of washing machines focus on all of the wrong things.  One of the most prominent selection features on their websites is price, immediately eliminating the most attractive options from consideration for cost conscious consumers.  There is no evaluation of values and priorities.  No passion for clothing care.  No education or motivation.  And no meaningful explanation about why or how their technology is even relevant.  

 

So what insights can we apply from Jobs’ love of Miele washing machines to the life insurance industry?  What sort of things would Jobs love and hate about our products and processes? 

 

The number one consumer complaint about our products is that they are so complex that no one understands them.  Jobs’ notorious fixation on simplicity would undoubtedly compel him to hate our products with a passion.  Jobs is famous for immediately seeing the potential benefits of using a mouse to interface with a computer, and then driving his developers crazy because of his insistence that the mouse utilize just one button because two buttons was just too complex.  It’s amusing to conjecture about how he would have responded to a term versus whole life presentation by a hapless but well intentioned advisor.  This is a great lesson for life insurance companies.  For decades we have ignored consumer gripes about the complexity of our products.  It’s hard enough to get consumers to even think about death, and then we reward them for their foresight with complex financial products that offer multiple methods of solving a single problem.  Consumers want their survivors to be taken care of in the event of their death while insurance companies respond with a variety of underwriting, cash value, and premium guarantee solutions.  Anyone who has recently negotiated a new cell phone contract and navigated their way through a variety of roaming, minutes, and data options when all they really want to do is have the ability to make phone calls will sympathize with what we put our consumers through. 

 

Of course, a properly executed fact finding session does wonders to address this complaint and is a process that Jobs would probably have approved of.  After a careful and detailed evaluation of a consumer’s goals and dreams, the right life insurance policy is suddenly more of an obvious solution than a confusing choice.  In fact, the life insurance industry is one of the few industries to incorporate the dinner table discussion that was such a critical component of Jobs’ washing machine decision into a standard element of our sales process. 

 

The second biggest complaint consumers have about our products is the fact that they have to (in their words) “die to win”.  This is less a complaint about our products than it is about the nature of the life insurance sale.  Just imagine if Jobs had dictated that you could only buy an iPod as a gift for someone else – that’s essentially the position the majority of our consumers are placed in.  Certainly an emphasis on the living benefits of our products is helpful, but the fact remains that any living benefits, no matter how potentially lucrative, still pale in comparison to the beneficiary’s promise of a large lump sum payment in cash! 

 

And this brings us to another interesting query in the Jobs context – who is our primary customer?  Most companies have developed concise conclusions on this matter usually fixating upon their agents, their consumers, or both.  From Jobs’ perspective, it seems crystal clear who their customers are – yet in the case of the iPod, they could easily have made an argument that their key customer was the record companies.  After all, what good is an iPod without music?  Clearly the relationship with the providers of the content is critical to the success of their product, yet imagine how different the iPod would look if the needs of the recording industry were placed ahead of the consumer. 

 

It’s certainly possible to have multiple customer groups so this isn’t meant to be an indictment of companies who place their distribution ahead of their policyholders on the customer chain of command.  However, it’s also possible that choosing between policyholders and agents both miss the mark when it comes to identifying the true end users of our products – the beneficiaries.  If there’s a single insight that Jobs might have contributed to the life insurance industry it would probably be to design our products for the beneficiaries more than for the policyholders or the agents.  Yet this group is most often completely overlooked at least as respects discussions of who our customers are. 

 

And this leads to the final area that Jobs would probably find room for improvement – our product solutions themselves.  We alluded earlier in this article to one of the coolest features of any life insurance policy – that fact that at some point some named beneficiary is going to be given a very large check.  As appealing as this potential windfall may be, we also know that in most cases the actual amount of the check falls far short of the actual need for the dollars.  From this perspective, our products look less like solutions and more like financial triage.  Yet as with triage, it’s critical that priorities are established and the proper choices are made among a selection of increasingly inadequate alternatives.  Yet too often, consumers are left to fend for themselves – or to rely upon the advice of investment professionals who were never privy to the years of fact finding discussions that led to the insurance purchase in the first place.  It’s a bit like Apple coming out with the iPod without creating iTunes and just letting consumers figure out how to get music onto their sleek new devices. 

 

This is especially true in the case of final expense life insurance sales where funeral directors are in the position of having to implement a funeral whose cost has no coordination with the final expense life insurance policy intended to fund it.  Not only do funeral homes find themselves grossly underfunded in terms of meeting the expectations of the family, but the delays involved in processing a final expense death claim can often place the funeral home in the awkward position of having to charge interest or late fees since they have to cover the cost of the funeral up front.  Considering how controlling and obsessive Jobs was about understanding and meeting the expectations of their customers, it’s difficult to see how he would have left so much of Apple’s product performance left to chance. 

 

I realize we’ve read an awful lot into the fact that Steve Jobs loved Miele washing machines, and have used that insight to make some pretty significant leaps to life insurance.  However, there is one hidden gem in Jobs’ love affair with Miele that I have never seen appear in print anywhere.  People always ask why all Apple products begin with i – iMac, iPod, iTunes, iPad, iPhone.  The Jobs interview took place two years before the release of the first i product – the iMac.  In Jobs’ keynote address he indicated that the i stood for “internet”.  However, he also hedged his bet by claiming that the i stood for a litany of other terms such as individual, instruct, inform, and inspire.  It is fascinating to note that Miele’s iconic logo has also incorporated a distinctive i with a long slanting line over it for nearly a century.  In fact, consumer research has indicated that consumers can recognize the Miele brand merely by their distinctive i alone. 

 

So did the Apple i merely reference the i in internet or was Jobs subtly influenced by the logo of a washing machine he claimed to be “the most thrilling technology” he had encountered?  The world may never know, but keep in mind that you heard it here first! 

A New Approach for Motivating Mediocre Agents

Wanted:  entrepreneurial minded individuals who want to be their own boss, own their own business, and control their own destiny.  No limit on how much money you can earn.  No experience or specific education required.  No requirement of capital investment or loans.  No franchise or territorial limitations.  Training and support provided.  Apply at your local life insurance company or agency. 

 

Considering how attractive we make it for someone to become a life insurance agent, it’s curious that the challenge of recruiting and retaining a successful field force is one of the most persistent problems our industry struggles with.  This is even more perplexing since our training tools have been tested, honed, and documented over more than a century. 

 

There are no shortages of highly sophisticated assessment vehicles that adeptly predict the aptitude of the prospective agent to help companies identify the most promising candidates.  Prospect inventories consisting of the names of 200 friends, family, and acquaintances ensure a wealth of warm contacts to help the new agent get on their feet.  Highly effective and time tested sales tracks and telephone techniques turn potentially problematic interactions into routine exchanges and rout responses.  All aspects of the sales cycle, from appointment making, case opening, fact finding, needs assessment, case closing, and the all important referral talk, have been refined to a science and captured and conveyed in interactive multi-media training technology. 

 

We rationalize the high agent turnover rate with the justification that selling life insurance is just hard – and that’s certainly true.  But the most successful agents will tell you that selling insurance is not difficult if you’re disciplined.  Successful people just do more of the unpleasant things that unsuccessful people don’t want to do.  Anyone who has ever persisted through a weight loss program, an exercise regime, or has quit smoking understands this simple truth.  In fact, successful agents often tell rookies to expect to be grossly underpaid their first few years in the business until their client base is established, and then overpaid (or at least more than adequately compensated) thereafter. 

 

The life insurance compensation structure supports this expectation and the pyramid of modest but steady first year sales against a foundation of increasing renewals confirms it.  The agent who consistently produces a reasonable amount of persistent, quality business can eventually expect a predictable cash flow consisting of renewals, repeat sales, and referrals from satisfied long-time customers. 

 

Why then, is it so difficult to get many of our agents to reach this point? 

 

Assuming that our assessment and training tactics are effective (that’s a topic for a future article), one obvious place to consider is whether our incentives are aligned with our objectives.  At first glance, it’s difficult to argue that the direct cause and effect of commissions is anything but perfectly aligned, especially considering how much emphasis is placed on new sales.  You want your agents to sell new policies?  Offer them five to ten times more compensation in the first year than you do in subsequent years and you have certainly provided adequate incentive.  Combine that with the ability to qualify for lavish trips to exotic locations and report their status on a weekly, monthly, and quarterly basis to their peers as well as to their spouses and you’ve expanded the motivation well beyond the agent’s bank account. 

 

The effectiveness of this approach is evident from the number of perennial top producers that dominate sales for every carrier or agency.  This rare breed of agent combines the discipline and competitiveness of a world class athlete with the dedication and practiced effectiveness of a virtuoso musician.  Every aspect of our support structure is geared toward identifying, motivating, and rewarding this unique individual. 

 

Yet our industry is littered with the “also ran” agents.  The more mundane minions who eventually settle for mediocrity in return for the freedom that comes from being self-employed.  Often times, they are the beneficiary of a working spouse with access to affordable health care, and are able to indulge in the illusion of full-time employment by occupying themselves with busy work that passes for customer service, prospecting, or continuing education.  These agents rarely qualify for conventions, are content to cover their expenses, and maintain their dignity by the sheer fact that they have survived in this business while so many others have failed.  Although not highly motivated for sales, these agents are often the most technically knowledgeable and have the most loyal and well serviced – albeit small — customer base. 

 

Given the different priorities, it’s easy to see why no amount of first year commissions or alluring conventions are going to profoundly impact the behavior of the mediocre agent.  Yet there are far more agents who fall into this category than industry superstars.  The challenge of finding a means to leverage this significant, yet largely idle resource has significant implications for companies of all sizes and types of distribution, especially considering that they have stubbornly remained resistant to all of our promotions, campaigns and motivational contests. 

 

Author Dan Pink’s new book titled “Drive: the Surprising Truth about What Motivates Us” uses 50 years of behavioral science to overturn the conventional wisdom about human motivation.  In an MIT study with economists from the Federal Reserve Bank, the University of Chicago, and Carnegie Mellon, three levels of rewards were offered for performance of a variety of different tasks.  Similar to the life insurance commission system, people who performed fairly well received a small reward, those who performed “medium” well got a medium reward, and those who performed exceptionally well received a large cash prize.  Not surprisingly, for simple, straight forward tasks such as those involving mechanical skills or memorizing strings of digits, this reward structure worked very well.  However, for tasks requiring even the most rudimentary cognitive skills, conceptual thinking, or creativity, the reward structure actually seemed to have the opposite effect – the highest performers actually performed worse. 

 

These results ran so contrary to accepted economic theory that they repeated the study in Madurai India where they could afford to offer top performers a large reward that was actually quite substantial.  The results were the same.  Eventually, similar studies were conducted for economists, psychologists, and sociologists with the same outcome – for more complex tasks the traditional “carrot and stick” approach de-motivated rather than motivated most top performers. 

 

Although the reasons behind these surprising results are subject to debate, there seems to be some consensus as to why this bizarre behavior occurs: once people are paid enough to take the issue of money off the table, they become motivated by things other than more money.  This certainly explains the behavior of the typical mediocre agent who is comfortable with just meeting expenses.  It’s also consistent with the behavior of the top performer, whose motivation is a complex combination of ego, professional pride, competitiveness, and lifestyle so money remains an important factor. 

 

So how do you motivate the monetarily content?  According to Pink, there are three key motivators – autonomy, mastery, and purpose.  Autonomy is the desire to be self-directed – to have control over one’s time and destiny – and is certainly core to one of the most appealing aspects of insurance sales.  Mastery is simply the desire to continually improve one’s abilities and is reinforced by the occasional inverse relationship between new sales and the number of professional designations an agent has attained.  Purpose is simply the desire to make a contribution – to be a part of something bigger than oneself – and is also occasionally confirmed by the number of mediocre agents who become highly involved in their local professional associations and community groups. 

 

This isn’t to say that successful agents aren’t also motivated by these same factors.  In fact, most top agents relish their independence, avidly pursue professional designations, and are aggressively engaged in their communities as well as in their industry.  Examples abound in other industries as well.  For example, Google allows their employees to spend 20% of their time working on whatever they want to work on.  This gift of autonomy wasn’t just generosity on the part of Google management – half of their new products were created as a result of this freedom.  The emergence of free open source software such as Linux is a good example of how “purpose” drives the very successful.  What else would explain why a highly skilled software programmer would voluntarily commit their very limited free time to do even more programming in order to create a free software package for no remuneration? 

 

 

Another good example of how the highly successful are motivated is the emergence of free and open source software with the Linux Operating System being an excellent example.  It’s difficult to imagine what would motivate a  On the other hand, this behavior is consistent with Pink’s motivating factors. 

 

So what does this mean for the mediocre agent? 

 

In an article titled “Forget Carrots and Sticks, They Don’t Always Work” Dan Pink writes about an unconscionable act committed by the management of Red Gate Software in Cambridge, MA:  they eliminated sales commissions for their sales force — and sales actually increased.  The reason for this drastic step was because their salespeople were constantly finding ways to game the commission structure.  As a result, Red Gate management was spending increasing amounts of time developing more complex compensation structures, and their sales force spent more time finding ways to work the system to their advantage.  Both parties became less focused on their primary purpose – making great software and selling it to customers who needed it. 

 

Pink wasn’t advocating for companies to eliminate commissions, but Red Gate’s difficulties are certainly echoed in the insurance industry.  Red Gate joint CEO Neil Davidson Pink succinctly summed up his decision on his blog:  “Imagine you could construct a sales robot, programmed solely by the rules of any sales structure.  How would it behave?  It would steal deals off other salespeople, sell customers software they didn’t need, argue with its boss over its commission and backstab its colleagues”.  Although his conclusions may be a bit extreme, the challenge of aligning a life insurance company’s persistency, mortality, and quality of business goals with agent activity certainly raises questions about the overall effectiveness of our commission structure.  At the very least, there is much more emphasis placed on new sales over service or quality of business, and there is often a resulting dichotomy between the home office and the field as they each pursue somewhat mutually exclusive objectives.  Red Gate found that once their managers were freed up from policing their sales force and arbitrating disputes, they could focus their activities on more useful activities.  In addition, the arrangement encouraged more teamwork and collaboration between salesmen as well as between the sales force and management.  According to Davidson, “rather than relying on carrots (sell more and you can buy the new car) and sticks (don’t sell enough and you won’t be able to feed your kids), we were compelled to make our salespeople’s work more interesting, to set better goals, and encourage teamwork”. 

 

It will take someone with much more courage than I have to promote the elimination of commissions, especially since our current structure works so well with top performing producers.  However, if Red Gate’s experience is consistent, an argument could be made that replacing commissions with a salary equivalent for mediocre producing agents could result in increased sales, a higher quality of business, and the ability to focus on more important issues for field management. 

 

For the top agents, it’s clear that our current compensation structure works well.  However, there may be better ways to leverage the army of also ran agents who are immune to the motivation of commissions and conventions.  Assuming Pink is correct and these agents are primarily motivated by autonomy, mastery, and purpose – and assuming Red Gate’s commission elimination experience is transferrable to the insurance industry – then there may be an opportunity for enhancement. 

 

Although it may sound crazy, consider the implications of converting your long-term mediocre producing agents from commissions to straight salary.  Freed from the need to produce new sales, the sense of autonomy for these agents increases significantly and they will be able to focus more on mastery and the higher purpose of servicing their clientele and contributing to the greater good of the industry and their company.  And if Red Gate is correct, their production will increase as well. 

 

There’s an inconsistency in our current field management structure where the top agents are also the first ones to take time out of sales in order to participate in a carrier’s top producer panel or advisory committee.  Furthermore, these master prospectors are also the most frequent recipient of company leads and orphans, even though they need them the least.  Meanwhile, mediocre agents are most often left alone, as if their modest business practice requires their undivided attention.  Attention from the Home Office is considered an intrusion or a distraction, or at the very least, as unproductive.  Yet these agents are the first to sign up for a home office new product rollout, or the latest Continuing Ed seminar.  They are also the first to mentor a new agent, volunteer at a local life underwriters meeting, or serve on the board of their favorite charity.  They have plenty to contribute and lots of time to do so – as long as they don’t have to prospect or sell too much. 

 

The disconnect between motivating with a high first year commission and agents who are more interested in maintaining a comfortable rather than a profitable professionalism is obvious – yet we continue to beat these agents with the same impotent stick that rewards new production while ignoring the significant contribution they can make to a carrier – if the right motivation is provided. 

 

For example, consider substituting a portion of commissions for this group of agents with a salary equivalent and enlisting them to work one day a week in partnership with a carrier. 

 

One of the reasons why successfully selling life insurance is so hard is because it requires a wide range of very specialized expertise.  The organizational skills and discipline required to maintain a constant inventory of prospects and a high level of productive activity often runs contrary to the creativity and entrepreneurial spirit that attracts most top sales folks in the first place.  For many top producers, the secret to their success is an effective staff that picks up the slack to supplement a producer’s weaknesses.  In the same way, it’s the rare marketer who possesses equal skills to master creative promotional campaigns, market analytics, strategic planning, product management, sales training, advanced sales, and field management.  Fortunate companies are able to parse out these responsibilities to a staff of specialists, but many small companies require their personnel to do double and triple duty – often well outside of their comfort zone and area of expertise. 

 

The minions of mediocre agents represent an untapped supply of available labor, many of whom possess specialized expertise that can contribute greatly to both the home office as well as top producing agents – the trick is to impose the proper motivation.  However, many of these agents have already made their motivating factors very clear through their involvement in various industry and community organizations as well as their commitment to professional development.  By redirecting their desire for autonomy, mastery, and purpose to a higher purpose of working in partnership with a home office, these highly skilled but ineffective producers can become highly valued home office partners, freeing up marketing staff to focus instead on identifying and developing that next million dollar producer. 

 

When Don Royster was EVP of Georgia Life, he embarked upon a radical restructuring of their field force.  Using LIMRA assessment tools to classify agents as having greater selling skills or service skills, they then reassigned their agents either to the field or to the home office in order to leverage each individual’s greatest strengths.  A similar opportunity exists by changing the emphasis for performance for mediocre agents.  Rather than continuing to beat them with the stick of new first year commissions, smart companies can offer them separate compensation contracts that reward persistency, service, professional development, 

Life Insurance Companies are sitting on a Treasure Trove of Social Media Content – They just don’t know it

Let’s face it: most people don’t “like” their life insurance companies.  Oh sure, they may connect with personalities created by multi-million dollar ad campaigns featuring Flo, or an accented gecko, or even mayhem personified, but the expense  involved is far beyond the reach of all but the biggest companies.  Plus the most recognized insurance brands are generally P&C rather than life companies.

 

What’s to “like” about life insurance?  Not much unless you’re dead.  Consumers view it as a “die to win” proposition and there is an element of truth to that.  We can extol the virtues of living benefits until we’re blue in the face, but the fact remains that our products perform best when they are used for the primary purpose they were intended.

 

For the most part, a consumer’s relationship with their life insurance company is fairly static.  Other than the occasional change of address or bank account, there’s not a lot going on.  Sure, there are plenty of reasons to review and update your policy annually but very few people do and our products still deliver their promises admirably, even if not optimally.  There aren’t a lot of opportunities to engage.

 

There’s also nothing “cool” about life insurance, but  that’s probably a good thing.  Although it would be great to be identified as a fun and hip industry, it’s difficult to reconcile those attributes with the motivation to manage risk and provide stability during traumatic times.  Plus I’ve visited hundreds of home offices and can attest to the fact that, although a fortunate few companies have succeeded in creating a refreshingly casual and creative culture, the fact remains that our industry tends to attract employees who are more risk adverse than reckless.  These folks tend to stay with a company for the majority of their careers resulting in a work force that is decidedly middle aged and as complacent as they are competent, regardless of the number of air hockey tables or popcorn machines installed in the workplace.

 

A lot of people enjoyed the recent Taco Bell Super Bowl ad “We Are Young” featuring a rowdy bunch of seniors sneaking out of their retirement home for a crazy night of drinking, dancing, and tattooing http://www.justjared.com/2013/02/03/taco-bell-super-bowl-commercial-2013-we-are-young-video/ .  This commercial reminded me of most life insurance companies’ social media attempts.   No matter how hard we try to appeal to a younger audience by conveying a fresh and edgy image, we still end up looking as out of place on Facebook as these  elderly folks at a rave club.

 

This doesn’t mean that social media won’t work for our industry.  We just have to remember the two critical elements of any successful social media effort:  authenticity and original, meaningful content.

 

So let’s begin by getting in touch with our inner nerds and admitting that life insurance companies sell the peace of mind that comes from the promise of a future financial payout.  And since that payout occurs when someone dies, we will also inevitably be linked to tragedy and heart break.  Although it may be possible to cleverly turn this into something alluring, amusing, or even avant-garde, do we really want to?  Our products are for people who understand that it’s not “if” but “when” we die – they are not for folks who still believe in their own immortality.  In fact, the people who truly understand the value of our products are usually the ones who have benefited from them.  Making light of that relationship undermines the significance of what they have experienced as well as the importance of our contribution.

 

But how effective is it to use social media to shout “hey, we’re really boring and stodgy but we’re reliable and trustworthy and that’s just the way you like us”?  Or “when you’re thinking about dying, think of us”!  Or “go ahead and laugh at us — we take ourselves seriously so you don’t have to”.

 

There is a better way.

 

Life insurance is a gift for the living from the deceased.  It is universally understood that there’s little motivation to buy our products unless you care about someone.  The generosity required is a testimony to the irrational behavioral economics that define us as humans.  After all, once you’re dead, how much will you really care if your bills are paid and your family is provided for?  Fortunately, our sense of responsibility to fulfill our obligations and also the desire to leave a legacy are strong motivators.  Even in death it seems that we still care very much about what people think of us.  The very least we can do as insurers is make a concerted effort to see that these objectives are met.

 

Sadly, in the majority of cases the amount of life insurance is inadequate to satisfy all financial goals.  In addition, carriers have minimal influence in making sure that what proceeds do exist get used wisely and for the purpose they were intended.  However, when it comes to leaving a legacy, we have plenty of leverage.

 

Anyone with elderly parents or who has spent any time around a nursing home understands that older folks have some pretty interesting stories to tell.  They also have a different perspective and a recollection of the world when it was a very different place.  In fact, when you dig into just about anyone’s life, there is usually an abundance of intriguing twists, coincidences, and insight that make for an engaging and inspiring story.  There are tales of heroism, self-sacrifice, and generosity in all of our pasts.  Unfortunately, barring a famous few, most of these heroics are known only to the closest family members.

 

Obituaries rarely do justice to the lives they are intended to represent.  They are little more than news flashes reporting dates, times, locations, and genealogy.  Our lives are much richer than the mere facts of our existence.  Every now and then, an obituary will hint at a more profound life, tipping off a reporter of the possibility of a human interest story and a chance to share more details.  I’ve often wondered about the reaction of the family members when a total stranger calls them to say “I just read your Aunt Millie’s obituary and she sounded like a remarkable person.  I’d like to write a follow up article about her life if you’d care to provide some more information”.

 

Who wouldn’t be honored and flattered by that request?

 

The next time someone calls your claims department wouldn’t it be great to offer something more meaningful than just your condolences?   Before you drop that claim check in the mail, take a moment to check out the online obituary.  Then call your beneficiary and tell them their Aunt Millie sounded like a remarkable person and you think the rest of your policyholders would be interested in knowing more about her so you’d like to do a follow up piece for your company’s Facebook page.

 

Who wouldn’t be honored and flattered by that request?

 

Your twitter feed now consists of headlines like the following:

• Mary Smith — chance encounter on the subway leads to a successful career in the publishing business
• Bob Jones — war hero regaled family with stories from Pearl Harbor
• Millie Stewart — raising seven grandchildren at seventy years of age
• Bill Beck — master electrician worked on all of city’s biggest jobs – and some of the smallest
• George Johnson — grandchildren cite impact their grandfather had on their lives
• Gertrude Booth — she died doing what she loved best – helping others
• Paul Morris – sacrificed his education so his brother could go to college instead

 

And so on.

 

If you consider how many claims your company pays every day, there is a limitless supply of material to represent your company positively in the eyes of your policyholders and their beneficiaries while contributing original, authentic, interesting, and inspiring content to the social media universe.

 

But who’s going to want to read any of this?

 

Well, you can bet that every one of Aunt Millie’s friends and family are probably going to “like” her Facebook article.  You can also bet that they will probably share it with others.  In fact, it will probably be posted and reposted on their pages, and those of friends and family members.  It will also probably elicit comments and other anecdotes and be added to any of the other online tributes to Aunt Millie’s life that have already been created.  It’s also a good bet that they will appreciate what your company did for her – and for them – and will take that into consideration when they’re ready to buy insurance.  Multiply that by a considerable number of claims each year and you’ve produced a significant amount of highly focused marketing content without spending a lot of money.

 

You don’t need to hire a twenty something social media consultant to scour the internet for content or think up crazy contests or funny anecdotes.  You just need someone with good writing skills and you’re more likely to find that among your current middle aged work force than in someone freshly out of college.  More likely, all you need to do is facilitate an on-going discussion between your marketing department and your claims department and let them work out the details.

 

But there is a much larger audience than just friends and family members.  Consider StoryCorps  http://storycorps.org/ .   According to their website, they are an independent non-profit whose mission is to provide Americans of all backgrounds with the opportunity to record, share, and preserve the stories of their lives.  Since 2003, StoryCorps has collected and archived more than 45,000 interviews with nearly 90,000 participants.  Millions listen to their weekly broadcast on NPR.  Their efforts have produced a number of NY Times bestselling books, CD’s, and DVD’s.

 

Apparently there is a tremendous amount of interest in the extraordinary stories from everyday people living normal lives.

 

There is also a higher purpose.  StoryCorp indicates that they do this “to remind one another of our shared humanity, strengthen and build the connections between people, teach the value of listening, and weave into the fabric of our culture the understanding that every life matters. At the same time, we will create an invaluable archive of American voices and wisdom for future generations.”

 

Life insurance companies can provide the same thing but with a greater urgency.  Since our subjects are deceased they’ve missed their chance to archive their stories unless their beneficiaries do it for them.

 

Perhaps there is something “cool” about our industry after all.  We’re in a unique position to honor the lives of our customers, create a lasting tribute for their friends and family, and share in a public manner the otherwise private successes of ordinary people.  And we can do this while creating authentic inspiring social media content that represents our companies and our industry in a positive manner.

 

If StoryCorps’ experience is any example, people really “like” this.

 

 

 

The Funeral Industry’s Success with Celebrant Services Gives Life Insurance Companies a Reason to Celebrate

My friend Billy died in June of 1996. It wasn’t unexpected as he had been suffering from Hodgkin’s Lymphoma for many years, but it was still difficult. Billy lived next door to me and, although we grew up together, we drifted apart in adulthood. He moved back home to live with his parents when he got sick and I had also moved back and bought my parents’ house so we found ourselves neighbors once again and reconnected. His sister asked me to speak at his funeral and it was one of the hardest things I have ever done.
I’ve done a fair amount of public speaking, but what’s the right way to address a funeral? I had a lot of “Billy” stories about things we had done together as kids, but which were appropriate? The crowd was very diverse, consisting of his family, our neighbors, his friends and co-workers and numerous other people that I didn’t even know. I wanted my tribute to be both heartfelt as well as consoling. I wanted to move the audience with laughter as well as tears, while at the same time leaving his family with the gift of pride. However, at the same time, I had my own mourning to deal with. I wasn’t sure if I could deliver my monologue without choking up completely, and I really hadn’t had the time to process my own grief.
In the end, I think I did okay. I did tear up, but didn’t choke. People laughed. People cried. My “Billy” stories seemed to have been accepted in the spirit that they were intended. And most importantly, the process of preparing my presentation ultimately helped provide me with a different perspective on my own bereavement.
Most of us have probably been to more funerals than we care to remember and none are particularly pleasant. But isn’t it interesting that occasionally we attend one that we thoughtfully pronounce to have been “an especially good one”? And what made it, if not good, distinctly better than the others? Most likely it wasn’t because of an unusually beautiful flower arrangement, or an especially elaborate casket, or even a particularly stirring bagpipe dirge. And although we also tend to measure the “value” of a funeral service by the length of the line at the wake, we also understand that a funeral is not a popularity contest and that timing and circumstances significantly influence attendance. Furthermore, regardless of how skillful the funeral director, all of us hope that even on our worst day, our corpse will not be considered to resemble us identically in life.
So what made those rare funerals so memorable? In virtually every instance, it was the quality of the speakers. Usually it was the Pastor who knew the deceased intimately and was also an experienced and inspiring orator. Or it might be the gifted grandchild who was close enough to the deceased to have a treasure trove of well-told tales yet still removed enough to be able to keep their grief in check. Or better yet, the lifelong best friend who knew the deceased better than anyone, and could address a crowd as casually and intimately as they could a poker game. The best funerals might include all three.
Unfortunately, most of us don’t consider public speaking ability a criterion for choosing our friends. Those most qualified to speak about our life’s experience are those closest to us, and therefore the least emotionally equipped to do so at the time of our demise. So we often turn to “the second stringers” – people who knew us well enough to be able to say something, yet not so well as to be too stricken. The ability to find someone who knows how to construct an articulate, interesting, and moving eulogy is relegated to a hope rather than an expectation.
Funerals are for the living, and the living want to laugh and cry while reliving memory after memory of the many facets that define our lives. We want to learn things about the deceased that we never knew, and surround ourselves with people who share our sense of loss and can help fill the void with new stories or different perspectives. We come away from the best services either wishing we had gotten to know them better, or feeling proud and satisfied because we were one of the fortunate few who did. Yet too often this important task is relegated to the generic ramblings of a religious leader with no personal relationship. Or the meandering mumbling of a well intentioned, but inarticulate relative. Or worst of all, the sob wracked wrenching of a widow bravely attempting to auto-pilot through the day.
Ernie Heffner, Dean of the ICCFA University College of 21st Century Services, clearly understands this dilemma and makes a compelling and persuasive argument in favor of the Celebrant Services certification program offered by the college. His very articulate and thorough discourse is detailed in the May 27, 2010 issue of Memorial Business Journal http://memorialbusinessjournal.files.wordpress.com/2010/06/mbj-01-21-05-27-101.pdf.
Heffner Funeral Services and Crematory in York, PA had been perennially ranked #1 in terms of market share as well as customer satisfaction in a highly competitive market with 23 other competitors. In most instances, maintaining a top position in such a mature market consists of incremental growth in terms of market share as well as volume. Yet when Heffner started offering Celebrant Services, in less than a year his case volume was up 6.3% and his market share was up 16.5% while total deaths in his county actually declined by 9.5%!
What are Celebrant Services? In Heffner’s case, “usually a day after the funeral arrangements are made with the funeral director, the family comes back to the funeral home for what is essentially a story time. It is a wonderful time to not only get stories about the loved one but also it does an awful lot to help them on their journey with their grieving. During the services, “there is an opening introduction, which should be done by the funeral director, who serves as sort of the master of ceremonies before handing off to the celebrant whose role is like a consultant between the family and the funeral director, to make sure all of the family’s wishes are coordinated”.
The genesis for this idea came from some persuasive statistics indicating a decline in the number of people who actively participate in religious services. “Surveys taken 40 – 50 years ago typically revealed that about 80 percent of the population in the United States actively participated in organized religious services on a regular basis. Today, would it surprise you to think that those numbers are nearly reversed, with only slightly more than 20 percent of the population actively participating in religious ceremonies on a regular basis?”
As Heffner wryly points out, “we’re getting the rent-a-pastor. Some of them are nice folks and everybody probably has one or more that they call when a family isn’t formally affiliated with a church. And you are sitting there with your fingers crossed hoping that clergy person doesn’t say ‘Bob’ when the deceased man’s name is ‘Bill’.”
Although I haven’t given a lot of thought yet to exactly how I’d like my own arrangements to be handled, I can confidently state that having some stranger offer generic platitudes while mixing up my name is not the way I want to go!
As if we needed even more potent proof of the power of Celebrant Services, Hefner also shares the results of his marketing efforts – although to call it “marketing” might be generous. Heffner just wanted
to let the community know that they were offering Celebrant Services so they chose a simple, two-sided newspaper insert to get the message out. In Heffner’s words, “we couldn’t have made it more difficult for people to have an idea about preplanning or to take positive action. There is no business reply, there is no mention of preneed and there is no suggestion to contact us. It just says this service is available. Ironically, the insert has attracted more preneed business than some of the firm’s targeted preneed promotions. ‘What we found is that people are coming to us to preplan to get this type of service’.”
I know. It doesn’t usually take me this long to finally bring my articles around to the subject of insurance; but in this case, I hope the lengthy set-up was worth it!
Preneed and final expense companies take note. We often state that life insurance is the type of product that needs to be sold rather than bought, but in Heffernan’s case, it appears as if Celebrant Services merely need to be “introduced” in order to spark interest. The implications of this as respects our prospecting methods are significant.
The foundations of both preneed and final expense lead generation efforts have long focused on the fear of death. It’s no wonder that the primary respondents to our direct mail campaigns are usually the elderly or the ill. But nearly everyone likes to talk about themselves. And Celebrant Services provide a means to shift the conversation away from the dull details of death to a lively discussion about the aspects of life that we most want to be remembered. It also creates an opportunity to bring other family members and loved ones into the conversation and shifts the life insurance purchase decision from a selfless act of generosity, to a means of funding a fitting tribute on the life of the person most often writing the check.
I had a lucky coincidence occur while researching this article. I stumbled across a unique funeral home network called Life Story Funeral Homes and they just happened to have an establishment in Traverse City, MI – and I just happened to have a trip planned to drive my parents to Traverse City to attend a family reunion. The timing couldn’t have been better. Not only was Vaughn Seavolt, owner/manager of the Traverse City Life Story Funeral Home available and willing to meet with me, but I was flush from spending 11 hours alone in the car with my Mom and Dad, pumping them the entire time to take advantage of these precious last few years we have together.
Life Story Funeral Homes are sort of like Celebrant Services on steroids. The funeral director is still specially trained to facilitate what is best characterized as a Celebrant Service, but after meeting with the family, all of the stories and pictures are then passed along to a highly specialized and skilled staff. What makes Life Story so different is that they offer something tangible and permanent in addition to a wonderful ceremony and a personalized eulogy. Life Story employs professional writers and graphic designers who quite literally tell the deceased’s life story from birth to death. This story is then captured and conveyed in a comprehensive multi-media presentation that includes a four-page full color Memory folder, thank you cards, DVD, interactive personal webpage, and life panels.
How good are they at what they do?
Well, their claim to fame is that the Heritage Life Story Funeral Home in Grand Rapids, MI had the opportunity to create the Life Story for former President Gerald Ford. In fact, you can see his “life story” on their website here: http://www.lifestorynet.com/memories/19211/
But although that’s impressive, that’s not the best part. Certainly, President Ford’s life provided a lot of material to work with in order to tell his life story – after all, it’s the stuff of television documentaries and Saturday Night Live skits. But take a look at any other random obituary on their website and you will find the same sense of drama, detail, and accomplishment conveyed for each person. The truth is, when you look deep enough and from the right perspective, all of our lives are presidential to someone, and Life Story does a remarkable job in capturing that.
Now that’s the way I want to be remembered. And that’s the way I want my parents to be remembered. And if there were a Life Story Funeral Home in my town, I would drag my parents down there in a heartbeat and actually enjoy – yes, enjoy – going through the pictures and stories from their lives to make sure we had it right before it was too late. And I would happily prearrange the transaction just so I knew it was taken care of. It’s a heck of a lot easier than spending 11 hours in the car driving to a family reunion and much more effective!
What a refreshingly different perspective than the prospect of picking out caskets and urns in a basement office.
Life Story’s business model turns traditional funeral home pricing on its head. Since the primary product is a professionally produced tribute package, funeral directors are much less dependent upon mark-ups on caskets and other goods and services. In this way, Life Story directors are indifferent as respects cremation or burial, and can readily sidestep the bereaved family’s indignation about spending so much money on something that will ultimately be burned, buried, withered, or forgotten. Instead, their primary focus is on the life celebration, which is the ultimate point of the funeral service to begin with.
The significant advantage of selling something tangible should not be lost on the life insurance industry. Preneed is at least linked to a specific contract for goods and services, but most life insurance sales are intended to fund a well understood but broadly defined future objective with a price tag that can only be estimated at best. Life Story provides a tangible product that is much desired by consumers and readily lends itself to life insurance funding either in a casual manner like final expense or with a firm prearrangement through a Life Story Funeral Home.
Insurance agents often use a financial fact finder as a door opener, as well as a means to best evaluate their customers’ needs. Not surprisingly, many people are reluctant to share such confidential information with someone they’ve just met. On the other hand, most people are happy to talk about their family, their lives, and their accomplishments. In the context of an emotional decision such as the purchase of life insurance, this is exactly the sort of conversation that will have a much greater influence on the decision to buy than the delivery of a personal balance sheet and income statement. Regardless of whether an agent is selling final expense, preneed, or multi-million dollar estate planning policies, the lessons from Celebrant Services and Life Stories are too important to ignore and speak to the heart of what has always been fundamental to the life insurance sale.
It is often said that a life insurance agent is never truly in the business until after they have delivered their first claim check. Perhaps the day will come when our policyholders have an equal expectation that their insurance agent is also the one most qualified to deliver the eulogy. At least when that day comes we won’t have to worry about them forgetting the deceased’s name.
For a short video of my interview with Vaughn Seavolt at the Traverse City, MI Life Story Funeral Home please click here: http://www.youtube.com/watch?v=deRjVJCHs5k

A Plea for Passion — Important Lessons from the Beer Industry

I love beer — but I don’t love the tasteless fizzy yellow beer that is mass produced by the global mega producers who dominate the US’s production. In my youth, I would make pilgrimages to the single store in Syracuse that had a wide selection of over-priced imports that at least provided an alternative of color and flavor, despite the fact that the indelicate treatment inflicted upon these temperamental brews during their trans-Atlantic voyage made every purchase somewhat suspect.

I was thrilled when craft-brewed beers recently became less of a fad and more of a legitimate business. In fact, today the United State arguably enjoys the widest and most diverse beer selection of any country in the world. Most any store offers a decent selection of local favorites and when I’m traveling and have an evening free, the first thing I do is search around my hotel for a brewpub and invariably I am rewarded with a location that is easily within driving distance.

So, with my beer obsession confession out of the way, you can imagine my pleasure when I realized that very valuable lessons for insurance companies flowed quite freely from the frothy confrontations that define the beer industry. And what better excuse to indulge than to seek out inspiration while researching and writing this article? For a truly “multi-media” experience, I highly recommend that you accompany your reading of this article with a generous pint of your preferred peccadillo.

But before we jump into what insurance companies can learn from brewers, it’s helpful to have some understanding of the state of the beer market in the United States. Despite the rosy picture I’ve depicted above, from a connoisseur’s perspective, the state of the beer industry is shameful! According to the Brewers Association website, less than 7% of the $101B in US beer sales in 2009 came from craft brew sales. In the 2009 documentary “Beer Wars”, Anat Baron reports that 90% of the beer consumed in the United States was manufactured by “the big three” – Anheuser Busch, Miller, and Coors. More recently, the “big three” were consolidated into “the big two” as SAB Miller and Molson Coors merged in June 2008 and Anheuser Busch became part of Dutch conglomerate Inbev in November 2008. According to the movie, Budweiser dominated the domestic beer market with an incredible 50% market share. Although the insurance industry has its share of merger created giants, no single brand dominates our industry the way Budweiser does with domestic beer.

Obviously, there’s nothing inherently wrong with well managed large companies dominating their industry. What makes this fact so interesting as respects beer is the virtual “indistinctability” of their products. In the movie, a number of rabid fans are interviewed making impassioned pleas for their allegiance to Bud Light, Miller Light, or Coors Light. Yet in blind taste tests (conducted unscientifically in taverns using brown paper sacks to disguise the bottle – it’s hard to maintain academic protocol with any reasonably extensive test involving alcohol) – none of these opinionated consumers were able to successfully select their suds of choice.

It’s hard to imagine a more compelling tribute to the power of marketing and the dominance of behavioral economics than the concept of millions of consumers stubbornly sticking to a preferred brand that is virtually indistinguishable from its competitors. Yet just try offering a Miller Light to a Bud Light man and see what happens. According to Baron, Bud spent $500 million dollars in advertising to reinforce the fact that their loyal customers chose wisely. Drinking Bud or Miller has less to do with taste than with a statement about the sort of person you are – much the same way that pick-up truck owners differentiate their choices or smokers choose their cigarette brand.

Enter the microbreweries.

Honed in the kitchens and garages of individuals who simply wanted to share the excellent taste of their high quality product with others, they quite literally grew by one bottle and one bar at a time. With little to no marketing budget, no sense of brand, limited resources, and often with no practical business experience, the growth of most microbreweries more closely resembles that of a budding artist than an emerging manufacturer. Obsessed with quality, creativity, and flavor rather than growth, market share, and shareholder value, these small hand-crafted brews are a welcome oasis to the small segment of the population that actually wants to taste their beer. In fact, for those of us who truly love beer, the concept of remaining loyal to a single brand is ludicrous when there is so much selection and so many factors that weigh into deciding which bottle to open. Beer can be matched with food, with the climate, the season, or even with a preference for light, heavy, dark, bitter, full, or fruity. There is no single favorite – there are many favorites – depending on the circumstances. The most defining feature for a favorite is the fact that it’s available!

At the end of 2009, there were nearly 1,600 breweries competing for that tiny left over slice of the US beer market – the most domestic breweries since prohibition. The largest of these is the Boston Brew Company, maker of the Sam Adams brand. In fact, as a result of all of the recent merger activity, Boston Brew Company is now the largest American owned brewery in the country. One would think that this lofty title endows some clout, but in the words of founder Jim Koch, Boston Brew Company’s annual production is so small in comparison to Budweiser that “my passionate life’s work is (equivalent in volume) to their industrial waste”.

Try to imagine the competition in the life insurance industry defined in a similar manner with nearly 95% of sales coming from a few global giants offering virtually identical products differentiated by the effectiveness of vast marketing budgets rather than the product itself. Then try to imagine the remaining crumbs of the market being wrestled over by more than 1,500 small competitors who rely solely on quality and creativity to distinguish their products.

It raises an interesting question: what would quality, creativity, and flavor look like in the life insurance industry? What would a small regional insurer look like if it were started in someone’s kitchen and inspired solely by the desire to share a truly appealing product with the general public?

Interestingly, although the market share breakdown is different, from the consumer’s perspective our products certainly seem to share the same “indistinctability” that defines the major beer brands, albeit without the cool marketing to go along with it. Those of us in the industry may debate the differences in dividend scale or premiums per thousand among competitors, but to the consumer, all whole life contracts are pretty much the same and all types of life insurance are equally confusing. Certainly there are a few unique and even moderately creative life products being offered, but it’s the rare consumer who has even the remotest understanding of these distinctions.

This commoditization of life products certainly puts the small, regional insurers in a difficult position if they can only offer the same product as their highly heeled competition. Smaller companies can’t compete on marketing dollars and will have a hard time winning the case for superior financial stability. Certainly service and responsiveness is one area that smaller companies may have a leg-up, but once a life insurance transaction is completed, there’s not a tremendous amount of urgency for ongoing interaction with the purchaser.

Frankly, most of the differentiation between insurance companies is directed towards their agents rather than consumers – and that brings up another interesting lesson from the beer industry. Although there are 2,850 independent beer distributors in the United States, the vast majority of their business is generated by the largest manufacturers. As a result, the craft breweries have very little influence and even less truck space. Their products are largely carried as an accommodation since they represent such a small portion of a distributor’s total volume. The same holds true once their merchandise gets into the store, where it’s all about shelf space and product placement. Consumers are greeted with a virtual billboard of brands from the large manufacturers, all strategically positioned in the coveted eye level position, while the craft brews get pushed to the bottom, the back, and off to the side of the rack.

This contrasts greatly with the insurance industry. While small companies may have difficulty recruiting the largest IMOs, there is still plenty of distribution to go around. In fact, given the fact that larger companies require such significant volume to increase sales by a meaningful measure, the current state of distribution in the life insurance industry may actually benefit the smaller companies better than their larger competitors.

This brings me to my final point about how smaller life insurance companies can learn from the beer industry. In the movie “Beer Wars”, Sam Calagione, founder of Dogfish Head Brewery, talks about the $9 million dollar loan he and his wife were undertaking personally in order to expand the brewery operations. Sam mentions that he had been approached by a number of venture capitalists who were interested in investing in his company and helping him take it public. Sam resisted their overtures because he didn’t want to grow at a rate that would distract him from their labor of love. He felt that people were choosing to support smaller companies that are on a human scale rather than the big behemoths. How many of us approach our jobs or our companies as a labor of love? How many of us have spent our entire careers in the insurance industry but have never used the words “job” and “passion” in the same sentence? And how many of us would leverage our personal assets in order to fulfill a dream of providing more people with a quality life insurance product?

A striking example of this passion is evident by looking at the history of the Boston Brewing Company. Jim Koch is a fifth generation brewer who recreated in his kitchen the original recipe that was developed by his great (and then some) grandfather Louis Koch in 1860. He was so impressed with the brew that he wanted to share it with the world. This was in 1984 – well ahead of the craft beer revival. He named the beer Sam Adams after the Boston patriot who also inherited a brewing tradition from his father. Further fostering a personal touch, in the mid-nineties, Boston Brewing Company bought the Hudepohl-Schoenling Brewery in Cincinnati – the same brewery where his father apprenticed in the 1940’s. Despite having grown into a fairly large publically traded company, the Boston Brewery still rests upon a foundation of family tradition and integrity.

Contrast this with the experience of August Busch IV, also a fifth generation brewer with the Anheuser Busch company. In April of 2008, IV stated that his company would never be bought under his watch. In June 2008 Inbev made an acquisition offer which was rejected, resulting in a lawsuit in July 2008 to keep Inbev from contacting Anheuser Busch’s shareholders. By November 2008 the acquisition was completed, IV was relegated to board member, and the new owners began undertaking an aggressive series of budget cuts, layoffs, and consolidations.

So, smaller life insurance companies can take heart — by comparison craft breweries have a much more difficult challenge to overcome in their industry. I’d like to propose a toast to the innovative and courageous microbrewers whose lessons from building a business model based upon passion and quality are as practical as they are inspiring. Now if I could just decide which microbrew to do the toast with – thankfully there are so many choices!

Lessons from Pixar — Taking Direction from the Masters of Movie Making

I went to see the movie “Wall-E” with some reluctance last year. After all, how compelling is the story about a trash compacting robot – especially when the first half of the movie was rumored to have no dialogue? I imagine that most people who saw this movie for the first time had similar concerns, but they were quickly extinguished shortly after the story unfolded. I should have known better than to doubt the genius of the people at Pixar, especially since “Wall-E” was their ninth in an unbroken string of blockbuster hits.

Ever since Pixar released “Toy Story” in 1995 — the first full length computer animated film — I have been curious about how this company could be so consistently masterful. In particular, I was intrigued by the challenge of effectively bringing together such diverse personality types as computer programmers and artistic animators, especially given my personal experience with marketers and actuaries. Fortunately, there’s no shortage of articles and books documenting and opining about this remarkable company, although in preparation for this piece the best resource turned out to be a book written by David A. Price titled “The Pixar Touch”. http://www.amazon.com/Pixar-Touch-Vintage-David-Price/dp/0307278298/ref=sr_1_1?ie=UTF8&s=books&qid=1254231882&sr=1-1

It turns out that the Pixar story was remarkable in a variety of different ways – many of which provide insightful lessons for the insurance industry. The origins of Pixar came about in 1975 when Alexander Schure, founder of the New York Institute of Technology, hired Edmund Catmull and Alvy Ray Smith to head up the college’s computer graphics department. In reality, Schure wanted to take on Disney and saw a great future in using computer graphics as a means to replace much of the replication involved in hand drawn animation. Catmull and Smith shared this vision even though the technology in 1975 could barely support even the crudest graphic renderings. Schure hired a team of animators to work with Catmull and Smith in an effort to produce their first animated movie – Tubby the Tuba – which was released in 1977. Price writes in his book that the movie was so horrible that at the initial screening, one of the animators stood up and lamented, “I’ve just wasted two years of my life”!

The failure of Tubby the Tuba turned out to be an epiphany for Catmull and Smith and their realization became the rallying cry for Pixar that persists to this day. They came away from the Tubby trauma with the knowledge that technical execution wasn’t sufficient — the most important thing was the story. This is an especially important reminder to insurance companies since so much of our attention is focused on administrative systems, procedures, regulations, and investment management – it’s easy to forget that our raison d’être is to provide protection and peace of mind to our policyholders. Regardless of how strategic our mergers or acquisitions are, or how slick our commissions systems operate, or how artfully priced our products are, the most important factor for the long term viability of any insurance company is to make sure that we have a compelling story to tell our policyholders about what we do and why we do it, and then to have the entire company standing in support of that story. Without this, we’d have no customers, no focus, and most importantly, no credibility. For Pixar, this became the filter for all of their decisions and is the single factor that they attribute their long string of blockbuster hits. In fact, less they forget, featured prominently throughout their headquarters are signs proclaiming “the story is everything.”

Pixar’s definition of a successful movie is also highly unusual. Although news reports dutifully tally box office receipts every weekend in order to determine the “winner” as measured by most revenue, Pixar was quoted as saying they didn’t make movies in order to make money – they made money in order to continue making the best movies. This convoluted logic that places excellence ahead of profit is common among many of the most successful companies and raises questions regarding how insurance companies may measure the success of their products. What constitutes a blockbuster insurance product? Is it measured by gross premium? By the number of new agents recruited? By statutory profits? Or could we assume that all of these objectives might be met if we focused on developing products that best supported the story we built our companies around? Pixar believes that if they make good movies, people will come to see them and all of the financial success that comes from that result will follow. It’s not unreasonable to apply the same logic to insurance products. This approach is very similar to the Raving Fans methodology that I wrote about in my June 2009 article. http://www.loma.org/LICarticle_June09.asp

Another important lesson for insurance carriers is Pixar’s willingness to take risks. Given that the very foundation of our industry is to protect against risk, this may be the hardest lesson of all to consider. For example, Randy Nelson, dean of Pixar University (more on that later), uses an example from NASA to illustrate the culture for risk taking that permeates Pixar. When NASA first began accepting applications for the first astronauts to walk on the moon, they obviously couldn’t use experience as a qualification since no one had done this before. When they found themselves with piles of resumes from incredibly accomplished individuals, they were hard pressed to determine how to differentiate one particularly successful candidate from another. The differentiating factor turned out to be error recovery versus failure avoidance. In other words, NASA selected candidates who had failed during their career but bounced back rather than those who had played it safe and never failed at all. In fact, if you look at Pixar’s movie selection from this perspective it almost looks as if they were inviting failure. For example, the movie “Cars” came out in 2006 and, although it was ultimately a financial success, it received the worst reviews of any previous Pixar movie. In fact, many wondered if the company had finally peaked. So how did they follow up this critical pancake? With “Ratatouille” – a movie about rats scurrying around in a kitchen making food! And they followed up “Ratatouille” with “Wall-E”, which I already mentioned was an odd choice for a feature film. Furthermore, a quick look at the senior people at Pixar reveals that the vast majority had been fired from previous jobs or had taken chances with somewhat dubious results on other projects.

This acceptance of risk taking in the context of the valuable lessons that can arise from failure is an important reminder for businesses in all industries – but especially for the risk adverse insurance industry where the very nature of our products and our culture supports the antithesis of this sort of thinking. I am not advocating for companies to engage willy-nilly in careless decision making in the interest of intentionally leveraging failure as an academic exercise. On the contrary, rather than attempting to change a company’s risk tolerance, it may be more worthwhile to revise the company’s perception of failure as an opportunity to learn rather than a result to be avoided at all costs.

Regarding the challenge of effectively synergizing the diverse and contrary talents of the technical as well as the creative expertise required for filmmaking, Pixar employs three unique strategies. First is their approach to brainstorming. It is universally accepted that in brainstorming there’s no such thing as a bad idea. Yet in reality, there is always reluctance to share as well as no shortage of judgment and negativity. Pixar addresses this by embracing the two rules of improvisational comedy: always accept every offer, and always make your partner look good. In fact, they even offer a class on improvisation in order to drive this philosophy home to their employees. When people are making things up on the fly in front of a room full of people, there’s a real need to rely on your partners or else you will all collectively suffer the humiliation of a joke falling flat. As a result, new ideas are greeted gratefully rather than reluctantly because the more material you have to work with, the better your chances of success.

Another technique for leveraging rather than limiting the diverse talents of their employees is to embrace and utilize the very traits that make them different. For example, Pixar encourages their very detailed oriented computer graphics personnel to indulge their penchant for perfection. When the company was contracted to create a two minute computer sequence for the Star Trek movie “The Wrath of Khan”, the computer folks researched the actual star maps so that the stars visible during their sequence weren’t random specs of light but were the true configuration of the night sky from that particular perspective. And when they created Sully, the big blue monster in the movie “Monsters, Inc.” they carefully positioned every hair on his body so that the physics reflecting how his hair responded to movement and light would be accurate. In fact, in case anyone is interested, there are exactly 2,320,413 hairs on that character!

Such an extreme attention to detail may seem a little unnecessary, but Pixar rightfully points out that by managing their projects to such minutiae of detail, they are less likely to miss the bigger items that truly can spell the difference between success and failure.

The creative people are equally encouraged to indulge. For example, to prepare for the creation of “Ratatouille”, the senior film team was sent to Paris to intern for a month in a French restaurant. For the creation of “Nemo”, Pixar periodically brought in experts from a variety of universities to lecture on such diverse topics as jelly fish propulsion and underwater luminescence so that the animators could get the movement and the colors correct. And much to the chagrin of their co-workers, they even sent a group to Hawaii for two weeks to certify them to scuba dive so that they would have intimate experience with being underwater.

This approach to detail and research has tremendous application to insurance companies since, for the vast majority of companies, very few home office staff has any actual experience selling an insurance policy. It’s difficult to pursue a detailed analysis or an informed creative response to a particular process or procedure without having any firsthand experience with the ultimate end result.

And lastly – but arguably most importantly – Pixar offers the equivalent of an undergraduate degree in fine arts and film making to all of their employees through their company sponsored Pixar University. All employees are encouraged to partake in any number of the 110 courses offered and are even allowed time away from their work to do so. When asked why it was important for an accountant to study something such as drawing, which is so far removed from their primary duties, Pixar pointed out that drawing helps people see things differently – an incredibly useful skill for an accountant to have. An additional benefit is that by understanding drawing better, the accountant might be able to communicate more effectively with an animator – and the same goes for an animator learning accounting. But most compelling is the summary statement that “ultimately, we all have the same job — we’re all film makers here”. This philosophy truly captures the common focus and unified sense of purpose that drives Pixar to never forget that the story is everything.

This expansive commitment to education raises some interesting questions for insurance carriers. Are all of your company’s employees unified for a common cause? Are there opportunities to expand their knowledge beyond their particular area of expertise? Are they all insurance agents, in one form or another?

Without a doubt, movie making requires different skills than successfully managing an insurance company. However, the ability to focus an entire company around a common cause, or to foster a culture that encourages risk taking, or to successfully synergize diverse personality traits are all valuable skills regardless of the industry. And Pixar does these things better than most.

So the next time your company is developing a new product, consider sending your development team into the field to try to sell it themselves first. Or perhaps you can kick off your next strategic planning session with a class on improvisational comedy? Or maybe it’s time to reinvigorate your company’s commitment to employee education by seriously embracing LOMA education, LIMRA research, and LIC workshops? But most importantly, if you’re considering sending your senior management team to Hawaii to learn how to scuba dive, I’d like to forward you my resume first!

If you’re interested in learning more about Pixar, you may want to check out the following links:

http://www.mckinseyquarterly.com/Innovation_lessons_from_Pixar_An_interview_with_Oscar-winning_director_Brad_Bird_2127

http://discussionleader.hbsp.com/taylor/2008/07/pixars_blockbuster_secrets.html

http://www.nytimes.com/2006/01/29/business/yourmoney/29pixar.html

http://www.edutopia.org/randy-nelson-school-to-career-video

Poor Presentation Skills Lead to More Than Just Bad Meetings

In my position as Executive Director of the LIC, I have had to do a fair amount of public speaking. I also get to attend a number of conferences and have therefore had the opportunity to listen to a variety of different speakers. As a result of this “speaker saturation” or “plethora of presentations” I have come to a couple of conclusions. First, a good professional speaker is still far better than a very good amateur. There is a very specific skill involved in holding a room, capturing the attention of an audience, evoking emotions from a group, and leading meeting participants down a very clear and intentional path.

The value of this ability isn’t limited to professional speakers. Anyone with any leadership responsibilities in an organization would be better served to learn how to communicate effectively to a group whether it’s to agents, policyholders, AM Best, regulators, your Board, or just your peers. Yet how many of us have sat through a company meeting cringing because we’re subjected to a boring, disjointed, and ill conceived presentation?

PowerPoint is often cited as the chief culprit for any barrage of bad babbling, but that’s a bit like blaming the car for the bad driver. That’s not to say that PowerPoint doesn’t contribute to the problem – but I’ll speak more about that later.

Many professional speakers use PowerPoint and use it very effectively, although they follow a few strict rules. First, no more than 10 words on a slide – but even better is no words at all. Most professional speakers use a lot of images to reinforce their message, while most amateurs use lots of busy bullets to help keep their talk on track. This brings up another advantage that professionals have over the rest of us – they practice. A lot. Most of them have coaches and have spent hours perfecting their presentations while continuing to critique and cultivate them incessantly. All of this redundancy gives rise to the oxymoron of “intentional spontaneity” where something as casual as removing a jacket or making a hand gesture becomes as rehearsed and rigid as Dick Clark on New Year’s Eve.

I used to think that the rest of us were doomed to cling to the memory crutches embedded in busy slides simply because we didn’t have the benefit of performing the same presentation hundreds of times a year. However, everywhere I turned, I was reminded of the same cardinal rules of good slides – few words and lots of images – and resolved to try to emulate that same formation in my own speeches. Over time, I found that if I selected my images carefully, I could actually use the detail in the pictures to remind me of the points I would otherwise have made with bullets.

And this brings me to my second point: most of us are fairly conversant with the rules of good presentations but choose to ignore them. Even people who should know better still opt for complex slides that are illegible without a telescope so they can do us all the favor of reciting information we would otherwise just read ourselves In the world of presentation fashion, this has got to be an even bigger faux pas than white pants after Labor Day! We tell ourselves that our message is complicated and therefore requires a deluge of detail but don’t you believe it. If the topic is that dense then a series of simpler slides that supported rather than restated the message would be more effective.

Frankly, I think the truth is that it’s nerve wracking to speak in front of an audience. We would willingly trade the sanctity of good presentation protocol for the comfort of having every aid imaginable to keep us from making a mistake. That’s why so many of us hide behind a podium, read from our notes, use busy slides, convey far more detail than is necessary, and wear a belt with our suspenders. But is fear a reasonable rationalization for poor communication?

And this brings me to my final point: even if executed correctly, how effective is PowerPoint as a tool for transferring ideas? An April 26 2010 NY Times article titled “We Have Met the Enemy and He Is PowerPoint” does a good job of chronicling the military’s obsession and discontent with the ubiquitous software http://www.nytimes.com/2010/04/27/world/27powerpoint.html?hp and contains the succinct summation by Joint Forces commander Gen. James N. Mattis: “PowerPoint makes us stupid”.

Despite the military’s dissatisfaction with PowerPoint, they use it extensively for daily briefings but astutely observe that “some problems in the world are not bullet-izable”. The article states rhetorically, “imagine lawyers presenting arguments before the Supreme Court in slides instead of legal briefs”. In fact, military senior officers conceded that “the program does come in handy when the goal is not imparting information, such as in briefings for reporters”.

Peter Norvig’s website famously boiled Lincoln’s Gettysburg address down to six slides as a satirical example of how limiting PowerPoint’s structure is as a means of communication, especially if the PowerPoint auto content wizard is deployed http://norvig.com/Gettysburg/index.htm. An even more amusing example reduces the close of Martin Luther King Jr’s “I Have a Dream” speech to three slides titled Some of my Dreams, Strategy for Realizing Dreams, and Expectations, with the final bullet dryly advising “Song’s inspirational tagline: Thank God almighty we are free at last”. http://www.aaronsw.com/2002/classicPowerpoint.

For sure, the strict organizational structure of a carefully crafted and well executed PowerPoint presentation can be a useful, practical, and informative means of conveying certain information. In fact, it’s possible that the main reason for the intense dislike of PowerPoint isn’t so much the software’s misuse or limitations but the fact that for many years it has been our only alternative. It’s a good example of the old adage about when your only tool is a hammer, every problem looks like a nail. In the same way, every solution delivered via PowerPoint ultimately has the same structure. Apple’s Keynote software may be slicker and more user-friendly, but in the end, we’re all stuck using the same title, bullet, graph, chart, and photo features to make our points.

Until now. We finally have something so completely different that it has the potential to change the way businesses communicate, process information, and make decisions. Prezi is a new presentation software tool that is available free on their website. http://prezi.com/, or for an incredibly cheap $159/year you can purchase their “professional” version.

What makes Prezi so different? Most of all, it’s completely unstructured. With Prezi, rather than a standard set of prepackaged templates to build your presentation in a uniform manner (i.e. the same as everyone else’s), Prezi begins with what can best be described as a giant whiteboard. You can toss your ideas up in any order, in any configuration, and in any scale. Layout is irrelevant. Size is irrelevant. Orientation and direction is irrelevant. You have complete freedom to create.

Once you’ve laid out your ideas, putting them together into a presentation is a lot like being the director of a movie. You direct the camera to focus on different parts of the white board in a specific order and zoom in or out in order to highlight different aspects of your concepts. When you’re done, a Prezi presentation looks a lot more like a movie than a slide show with the camera panning and zooming to showcase your ideas in the order you’ve predetermined. I know – it’s hard to imagine — but that’s why the Prezi website has a showcase page with numerous presentations that illustrate the best and most creative applications of the software.

I used Prezi for the first time last month in Atlanta for my opening presentation at the LIC’s 100th Annual Meeting. Right from the beginning, I found that I approached my presentation from an entirely different perspective than I ever have in the past. For example, I used a very casual hand-written font that I would never have previously considered for such a formal event. There’s just something about the freedom involved in the creation of a Prezi presentation that makes you want to try new things. I also had a lot of fun playing with the flexibility of scale and orientation that Prezi provides. I intentionally positioned some of my slides upside down as I laid them out in order to indicate contrasting views and I buried images deep within individual words so that they were invisible to my audience until Prezi zoomed in to bring them to life. Bottom line: by using presentation software so completely different from the standard templates we’re all used to with PowerPoint, I actually found myself thinking differently about what I wanted to say and how I wanted to say it.

Could the solution to inspiring creative thinking in your company be as simple as adopting new software? Probably not, but it’s certainly worth taking a look at the tools your company uses to communicate because the same factors that contribute to poor presentations are the same flaws that support faulty decision making. As Clifford Nass stated in The New Yorker, “PowerPoint lifts the floor by allowing some main points to come across even if the speaker mumbles, forgets, or is otherwise grossly incompetent. But it also lowers the ceiling by making it harder to have an open exchange between presenter and audience, to convey ideas that do not neatly fit into outline format, or to have a truly inspiring presentation”.

Is this the foundation you want to build your company’s decision making process upon?

Train your managers to communicate like professionals rather than amateurs. Coach them on the rules of effective presentations and drag them out from behind the metaphorical podiums that encourage timidity rather than tenaciousness. Strip them of the standardized templates that reduce every solution to a series of bullets, graphs, and charts. Encourage them to think differently by imposing entirely new rules for addressing your next corporate initiative such as video, Prezi, or even the restrictive 140 character format of Twitter.

And most importantly, if you still feel that you must use PowerPoint, make sure not to wear white pants after Labor Day when doing your presentations.

Appealing Marketing Ideas for Insurance Companies

Everyone knows that their bologna has a first name and it’s OSCAR, but how many people know that their banana has a last name, and it’s CAVENDISH? That’s right, 99% of all bananas imported to the U.S. and Europe are the familiar Cavendish variety we all know so well.

Bananas are the most popular fruit in the world and the fourth most consumed food. In fact, we eat as many bananas in the U.S. as we do apples and oranges combined. As a result, bananas only cost about half as much per pound as apples. This is especially amazing when you consider that while apples are generally grown within a few hundred miles from where they’re sold and are hearty enough to be stored for months in little more than a basket in a garage, bananas must be shipped by cooled containers from thousands of miles away (Ecuador is the world’s largest exporter), packed carefully in boxes to keep them from bruising, can only survive for about two weeks after they are picked, and require human intervention in order to reproduce since they have no seeds and are sterile.

How in the world did bananas become so popular?

There are a number of books that document the long and controversial history of the banana industry. However, since we’re more interested in life insurance than bananas, we’re only going to focus on the very small slice of the banana industry that has application to the insurance business.

Let’s start with the Cavendish. One would think that this particular banana achieved its exalted status because it was the tastiest, the easiest to grow, and the most prolific of all the other varieties. Unfortunately, that would be the Gros Michel banana (literally, “Big Mike”) – the original “best of the bunch” and the variety that our great-grandparents ate. By comparison, the Cavendish was originally considered extremely bland tasting and far too fragile to ship efficiently. The only thing the Cavendish had going for it was that it was resistant to a blight that rendered the Gros Michel commercially extinct and threatened to wipe out the entire industry. In other words, the Cavendish became the banana standard solely because the industry didn’t really have any other choice.

How many of us have felt the same way about a legacy product we’ve inherited?

Compounding the Cavendish problem was the fact that in order to achieve appropriate economies of scale, banana importers had to focus on a single variety. That way they could control ripening rates and cultivate large volumes efficiently enough to make a profit. As a result, the industry had to rally around a single commoditized version that no one even liked.

However, once the inevitable was accepted, the banana industry honed in on addressing the two biggest hurdles in getting their industry back on track. The first involved the logistical problems related to shipping an extremely fragile fruit and required the development of an entirely new technology and shipping process. The other hurdle involved how to sell an inferior and bland tasting product to a public that had been used to eating a far more flavorful fruit – and therein lie the lessons for the life insurance industry.

Historically, consumer polls have placed life insurance agents somewhere between used car salesmen and attorneys in terms of trust. In addition, a recent Foresters Report indicated that consumer rankings of financial institutions fell to the lowest level in five years – and this was before the recent economic bailout. In fact, in a recent AM Best Review article, Ronald D. Verzone writes that “most everyone who sells life insurance tries to hide it. It seems as if the goal is to do everything possible to camouflage what they really do. We do a disservice to ourselves, our industry, and certainly our customers by hiding behind titles”.

Despite the negative perception, a recent survey by the LIFE Foundation indicated that 93% of Americans think it’s important for most people to have life insurance, yet nearly half of those surveyed say they don’t have enough coverage”.

Certainly the life insurance industry is in need of some help. However, if I had to make a choice between having to solve the banana industry’s challenge of convincing consumers to accept an inferior replacement product, or the life insurance industry’s problem with motivating reluctant agents to sell a product that the majority of consumers acknowledge they need – well, I think our problem pales by comparison. Surprisingly, though, while life insurance sales continue to decline, bananas have bounced back to such an extent that American consumers aren’t even clamoring for any of the tastier bananas that the rest of the world enjoys so much.

How has the banana industry succeeded where the life insurance industry still struggles?

The banana industry is no slouch when it comes to marketing. In fact, they already had a number of coups under their belt in making the Gros Michel a success. For example, many people still remember the 1923 hit song “Yes we have no bananas”. In addition, in 1944 they hired world famous cartoonist Dik Brown to create the Carmen Miranda inspired “Miss Chiquita Banana”. As a result, their marketing muscle was definitely flexed to handle the Cavendish problem,

The winning formula ultimately emerged through forging partnerships with outside entities. For example, they enlisted the aid of numerous physician groups to jointly tout the health benefits of bananas, apparently inspired by the success of the “apple a day keeps the doctor away” nursery rhyme.

They also actively marketed recipes using bananas, and partnered with the Corn Flakes folks to promote the concept of adding bananas to cereal – apparently two blands really can make a right! This joint venture eventually led to the first coupons being featured on Kellogg’s cereal boxes.

In addition, between 1955 and 1962, United Fruit/Chiquita distributed 15 million pieces of literature to schools across the country to promote bananas and their nutritional benefits. This program culminated with an entire curriculum that included lesson plans, filmstrips, wall charts, maps, recipes, and other teaching materials that used the banana industry as the basis for teaching geography, biology, general science, health, nutrition, history, and social studies.

The life insurance industry would be well served to adopt similar practices to help promote our products. This is especially important for companies selling small face life contracts to the modest to middle income market because in most cases this is their only option for insurance and there are limited other resources to rely upon.

For example, establishing working partnerships with interested third parties adds credibility to the value of our products that we just can’t convey on our own. The pre-need industry has been very successful in receiving endorsements from various state funeral home associations – and some health insurance companies have been able to partner with different senior oriented groups such as AARP – but there are numerous additional opportunities.

By focusing dedicated resources directly to the neighborhoods that small face policies are sold, insurance companies are in an ideal position to make a very significant and visible impact, especially since the problems arising from an untimely death with limited resources are consistent and easy to identify. There are a number of community organizations that are placed in the difficult position of cleaning up the messes that result from dying without insurance. These groups recognize the value of our products from first hand experience.

For example, child care, food, shelter, transportation, and education are typically at risk when the primary caregiver or breadwinner in a family passes away. By partnering with community housing agencies, food pantries, schools, day cares, and even bus companies, life insurance companies can garner valuable visibility while at the same time increasing public awareness of the value of our products and the risks of not owning them. Something as simple as providing free bus passes, special grocery store coupons, or day care discounts for qualified beneficiaries of our products could provide both a selling incentive as well as a means to distinguish one company’s products from all of the others. Benefits that are directed specifically to the needs of surviving children would be especially effective and well received by third parties.

On the other end of the age spectrum, I have had a number of clergy tell me that they were in favor of promoting life insurance to their parishioners because of the loss of dignity when the community had to take up a collection in order to bury a respected church elder. Frequently the churches were called upon to reach into their own coffers and were quite vocal in terms of their advocacy for our products. Co-sponsored services in the support of survivors such as limited home health care, Meals on Wheels, or assistance with shopping or chores would be as effective with seniors as the previously mentioned initiatives for youth. Regardless of the age bracket, the credibility for our message when delivered by a respected community leader, politician, or clergyman speaks much clearer than the cleverest media ad or flashiest billboard.

In a similar manner, Chiquita’s development and distribution of educational material to schools was a clever investment in the creation of their next generation of customers. However, the banana industry isn’t alone in having a long and interesting history. Many domestic insurance companies have been around for more than 100 years and the role they have played in both national as well as regional history – especially when combined with our industry’s penchant for record keeping – can add an additional dimension to studying history, economics, or business. Monumental Life recently commemorated their 150th anniversary with a coffee table style book that is as fascinating as it is informative and could easily serve as a pictorial supplement to any history lesson.

And finally, the insurance industry could benefit from cultivating the ultimate end users of our products: the beneficiaries. It’s doubtful whether anyone could have a greater appreciation for a life insurance contract than a beneficiary shortly after receiving a claim check. Small face life companies pride themselves on how quickly they process claims, but the opportunity really resides in reaching out to beneficiaries after the check is cut. In the modest and middle-income market place, even a small life insurance policy is often the largest liquid asset in a person’s estate, and the proceeds help facilitate a death with dignity and also allow the survivors to acknowledge a life well lived. The greater role that a company’s claims department can play in assisting and promoting this process, the greater likelihood that their agents will have a number of new clients to replace the one who passed away.

Funeral homes routinely offer on-line memorials for friends and families to post comments and recollections about their loved ones, and many newspaper obituary sections allow the posting of comments in their on-line editions. In fact, on many occasions the newspapers will expand upon an obituary to feature someone with an especially interesting and unique life. Yet the relationship between a family and an obituary department are often fleeting and opportunistic. By contrast, an insurance company usually has a number of years to get to know their insureds – as well as their beneficiaries – and is in a much better position to help facilitate the celebration and acknowledgement of the passing of a valued customer.

Thanks to the LIFE Foundation and their celebrity spokesmen, most people in our industry know that September is Life Insurance Awareness Month. However, insurance companies can reinforce the value of our products every day by facilitating the opportunity for our policyholders and beneficiaries to memorialize the lives of their loved ones – and just as with pre-need, we don’t necessarily have to wait until they’ve died to do so.

The banana industry had a tough task in foisting a fragile and flavorless fruit upon their previously satiated customers. By comparison, I would argue that the life insurance industry has it easy despite the fact that our customers aren’t particularly receptive and our agents somewhat reticent. However, our products are neither bland nor bruised, and we don’t have to settle upon a single variety to meet the needs of all of our customers. In fact, in many instances there’s something seemingly miraculous about our products when you consider the potentially large benefit in return for such an incrementally small payment – it’s truly something only an actuary can understand but the rest of us can certainly appreciate. At agency conferences – one of the few remaining places where agents freely admit to selling our products – there is a strong sense of pride conveyed regarding the important and unique role they play at such a difficult time in people’s lives. As a result, the challenge for our industry – unlike the banana industry – has nothing to do with our products, but more with our inability to promote them proactively. By learning lessons from successful marketing strategies employed by other industries, and then applying them in the development of unique and creative new initiatives, there’s no reason why people won’t soon be singing catchy jingles about their life insurance policies one day. After all, if it worked for bologna….

I need to start this article with a confession:  I am not a technophile.  I didn’t replace my original StarTac cell phone until last May; I didn’t get my first Blackberry until a month ago; and I only recently joined Facebook and Twitter.  I am completely and utterly unqualified to write anything about emerging technologies.

But that didn’t stop me from having opinions:  social networking sites are for narcissistic kids who think everyone in the world cares about what they’re going to have for breakfast; bloggers share a similar misconception that their opinions about world peace really matter to anyone; and Twitter is an incomprehensible fad that will pass much sooner than the time it will take me to figure out what it’s all about.

And like the reformed smoker, I am also guilty of falling victim to the zealousness of the recently converted.  Specifically, although there is an element of truth embedded in all of my above mentioned biases, upon further research I must concede that these new innovative trends have also drastically enhanced the way business is conducted in a manner that is incredibly exciting.

Skeptical?  So was I.

But consider this:  when Universal Orlando Resorts prepared to roll out their new Harry Potter Theme Park, they made an unlimited budget available to Cindy Gordon, VP of New Media Partnerships.  The company had invested millions into what was expected to be a critical new profit center for the organization.  From a promotional perspective, the sky was the limit — Super Bowl ads, billboards, print, radio, television, Internet – every type of media imaginable.  So what did Cindy do with this unfettered freedom?  Rather than orchestrating a media blitz, she merely spoke to seven people.  She craftily contacted the people who wrote the seven most popular Harry Potter blogs and invited them to a midnight webcast where she gave them a special VIP unveiling of the new park.  Within 24 hours Universal had 1.5 million hits to their website – and it hadn’t cost them a dime.

How did seven individuals voluntarily create a worldwide overnight sensation more effectively than an unlimited advertising budget?  Because more than 350 million people use Facebook all over the world and that software is incredibly intuitive and highly effective at both finding and connecting people with common interests in a variety of languages.  In addition, there are over 200 million blogs and the best ones have become positioned as expert resources for news and information about virtually every topic imaginable.  And lastly, YouTube currently has more than 100 million videos uploaded on their site, making it the second most searched site in the world.

Whether insurance companies choose to capitalize on these resources or not is largely irrelevant because the rest of the world is already taking advantage of them.  In this article, I’d like to discuss some of the reasons why insurance companies may want to pay closer attention.

I learned about the Harry Potter story through a blog written by David Meerman Scott.  http://www.webinknow.com/.  David epitomizes the ease as well as the effectiveness of embracing these new tools and is an inspiring and convincing tutor.  For example, my first introduction to David’s blog was last summer when he wrote a scathing criticism of General Motors.  Within hours, he was contacted by GM and invited to meet with their top people so that they could have the opportunity to better respond to his criticism.  David arrived with a $150 Flip Video camera and recorded his interviews with then-CEO Fritz Henderson and marketing head Bob Lutz, as well as members of GM’s social media team.  David posted the interviews (and his newly changed opinions about GM) on his blog the following day.  http://www.webinknow.com/page/2/.

There are a number of things that really struck me about this experience.  First was how closely GM was monitoring what was being said about their company on the internet, and how quickly they were able to respond.  Second was how GM successfully turned a potential negative into something very positive.  This is a lesson that many companies forget – not every disgruntled customer is a lost cause and often the most vocal critics can also be the most raving fans, depending upon how the company responds.  And third was how incredibly easy it is to create engaging content (for free) with a blog.  Consider how much money your company has spent on developing and maintaining your website – and then think about how much more timely, interactive, and rich the information is on a typical blog.  What a great way to compliment, enhance, and update the information your company website is already conveying.

Do companies need to blog?  Absolutely not – there’s certainly no demand from our customers to expect this sort of communication.  However, companies should keep in mind that their customers, employees, and agents are now able to create richer, more relevant, meaningful, and timely content from the comfort of their kitchen table that reaches a broader audience than the vast majority of the insurance companies they do business with.  It’s worth considering how these same people will view your company’s efforts to inspire them with a sense of trust, professionalism, and security when you’re not even capable of engaging them with the same level of effectiveness that they can effortlessly engage their friends, families, and peers.

In case you’re still thinking that social media is just a fad, here are a couple more examples of how differently the economics and expectations have become for some common business practices.

In Eric Qualman’s book Socialnomics, http://socialnomics.net/the-book/ he writes about how Justin Esch and Dave Lefkow had an idea to develop a powder that made everything taste like bacon.  To research the idea, they used data openly available on MySpace and found 35,000 people who mentioned bacon in their profiles.  They reached out to these people to gauge their interest and not only did they find interest, but they also received orders for a product they hadn’t even invented yet.  Word of mouth took over and they ultimately sold 600,000 bottles of Bacon Salt in their first 18 months.

Marketing and advertising for existing products has also changed drastically.  Television was effective because of its ability to deliver a single show to a million viewers, but with the internet, we now have the ability to bring a million shows to a single viewer.  With so many choices – and so much control – consumers are no longer held captive to the selection offered by a few large companies.  In addition to increased selection, consumers also have increased control.  The Democratic National Convention was streamed live on the DMC website but also allowed viewers to choose the camera angle they wanted to watch from, including off stage views and cameras dedicated to certain individuals.

As a result of so much control over so many options, the standard eight minutes of advertising for every 30 minutes of programming doesn’t work on the internet.  Surprisingly though, researchers have found that the 1 ½ to 2 minutes of advertising during an internet rebroadcast resulted in 22% more recall and 28% more intent to purchase than the traditional eight minute barrage.  In other words, although there is much less time for companies to attract the attention of consumers, there is also an opportunity to do so more effectively for companies who tell their story well.

YouTube has opened up entirely new avenues for marketers.  I recently saw a billboard for a local jeweler that directed consumers to view their YouTube video http://www.youtube.com/watch?v=qlxvgGKrbsQ.  They had worked with an ad agency to develop a series of clever commercials but rather than buy expensive time on TV, they uploaded them for free on YouTube and directed their prospects using less expensive media.  The potential payoff for a clever video on YouTube can be huge.  David Meerman Scott talks about a German toilet company whose hilarious video about their self-cleaning toilet resulted in more than a million views http://www.youtube.com/watch?v=zaHtA89RHUQ.

If a toilet can be perceived so positively, perhaps there is hope for our industry as well?

New media calls for new approaches.  Eric Qualman writes about an advertising campaign initiated by Charles Schwab on a Fantasy Football podcast.  Rather than playing prepared commercials about financial services — which would have distracted the listeners and interrupted the flow of the programming — a decision was made to allow the show’s hosts to incorporate comments about Charles Schwab directly into their commentary.  They adopted a robotic voice that they referred to as “Ask Chuck”.  In this way, they were able to make Charles Schwab an integral (and amusing) part of their show rather than a disruptive advertisement.  The trade-off for Schwab was a loss of control over what was being said since the show hosts would have to make things up on the fly in response to listener questions.  But the benefit was that Schwab became imbedded into the show’s content rather than a temporary sponsor resulting in significantly more engagement with the listeners than if they had run the same ad over and over as many companies do.

This loss of control over the message is something that all companies struggle with.  This is especially important for highly regulated industries like insurance and financial services.  However, regardless of how strictly companies control their own corporate communications, the truth is that they have never had control over how the rest of the world responds to their brand.  Any individual with an opinion now has the ability to communicate it to the rest of the world.  Rather than focusing on the loss of control they face over their message, smart companies will use these same tools to position themselves to better respond to whatever is being said about them just as GM did with David Meerman Scott’s blog.  In a similar manner, just as broker/dealers have implemented tools to monitor registered rep emails, they can now do the same thing via an intermediary platform to monitor their reps’ social media postings as well.  In this way, hopefully insurance and financial services companies and their representatives can take advantage of these new tools while still maintaining the oversight to ensure that compliance rules are being followed.

The fact that companies now have the ability to respond immediately and directly to their customers’ complaints has set up exciting (or terrifying, depending on your perspective) new possibilities as respects customer service.  Eric Qualman provides an example about Comcast, a company notorious for poor customer service.  Comcast assigned a person to monitor on-line conversations for any mention of their company and more important, they also gave that person authority to respond and act to what was being said.  Here is a direct quote from one of their customers:  “last night I made a snide remark about the lackluster quality of my HD picture on Comcast during the Celtics game.  Comcast saw that and tweeted me back minutes later.  This morning, I got a call from their service center.  This afternoon someone came out.  Now my HDTV rocks!  THAT my friends is customer service and how it should work all the time”.

Imagine what this could mean for customer service when consumers begin to expect their companies to respond to complaints BEFORE they even officially register them?

What does all of this mean for insurance companies?  Long term the potential exists for an entirely different business model for life insurance.  In his book The Long Tail, http://www.amazon.com/Long-Tail-Revised-Updated-Business/dp/1401309666 Christopher Anderson asks whether someone setting up a completely new university today would follow the traditional model of expensive buildings to house students and a diverse faculty to deliver content.  Certainly, a much more efficient and cost effective alternative has been presented by the on-line university model.  The same could be said for life insurance companies.  Historically, the actuarial knowledge, investment expertise, and access to distribution have allowed life insurance companies to prosper. However, now that like-minded individuals have the ability to find and communicate with each other, it’s not inconceivable that they could create their own insurance pool and by-pass the insurance company altogether.  In the tradition of the fraternal benefit or Takaful insurance models, social media networks now provide a much more efficient method of bringing together people with common interests and leveraging the advantages of “the law of large numbers” without the expense of distribution commissions or home office overhead.

Does this spell the end of traditional insurance companies?  Of course not.  Just as MIT has nothing to fear from on-line universities and on-line stores haven’t killed the mall, there is a space for multiple business models.  Insurance companies have an added advantage because people aren’t particularly passionate about our products and are not clamoring for more efficient alternatives.  But this could change and smart companies will want to be prepared rather than surprised when new competition is created.  In fact, in a confident nod to the future of their institutions, both MIT and Stamford Universities have begun posting free videos of some their classes on-line http://ocw.mit.edu/OcwWeb/web/home/home/index.htm and http://see.stanford.edu/.

Social media provides a number of opportunities and challenges for insurance companies.  The prospecting potential for agents is mind boggling.  Imagine an agent having access to their best clients’ Facebook pages.  No more asking “who do you know” to get referrals – all of their clients’ friends and family members are readily identifiable.  The same holds true for insurance companies as a means to effortlessly gather detailed demographic information about their customers – all of their interests are easily searched and tracked.  Unfortunately, most people aren’t especially interested in becoming “friends” with their insurance providers on their social media site, and people overtly using the site to further their business is generally considered crass (other than on LinkedIn).

David Meerman Scott summarizes this challenge brilliantly on his blog http://www.webinknow.com/2009/12/social-media-marketing-explained-in-61-words.html:

“You can BUY attention (advertising); you can BEG for attention from the media (PR); you can BUG people one at a time to get attention (sales); or you can EARN attention by creating something interesting and valuable and then publishing it on-line for free”.  This sums-up both the opportunity and the hurdle that insurance companies will need to address in order to take advantage of these new tools.  Fortunately, for smaller companies, this is also the great equalizer.  Corporate blogs, clever videos, improved customer engagement, and sharing messages about the miracle of our products is now an inexpensive option for any company with the desire and discipline to act.  Just as any individual with an idea or opinion has the ability to reach out to the world, so do companies of all sizes.

In the interest of “putting my money where my mouth is”, I have written this article using free blogging software from http://wordpress.com/, have invested in a Flip Video camera and have embarked upon capturing different LIC events on video in the interest of demonstrating how easy and effective these new tools can be.  From the LIC’s perspective, I can easily imagine how much more effective my promotion of LIC events and membership will be if I can supplement my efforts with videos of testimonials from different participants or live action video capturing different events.  Imagine what your company can do to help recruit agents or communicate your brand to your policyholders by doing the same??!!

By way of example, LIMRA has an amazing resource in their info center.  In fact, every time we held an LIC workshop at LIMRA we always included a tour of the info center because it’s probably one of LIMRA’s best kept secrets.  It doesn’t have to be secret any longer – here’s a brief video of the info center tour: 

I also captured parts of my site inspection of The Mill House Hotel in Charleston, SC where we’re holding the 2010 LIC Marketing Conference this September:  http://www.youtube.com/watch?v=bcrBasu7oyU

The world has changed and consumers in this country transact business and communicate with each other differently than they did a mere ten years ago, yet the insurance industry largely operates the same as we always have.  Our customers will not demand that we catch up to them – they will just continue to move further away from us.  With so many inexpensive tools available, there is no excuse for companies of any size to not take advantage of the resources we now have available to us.

For more information, LIMRA members can read a recent research report titled “Testing the Waters: Social Media and the Financial Services Industry: http://www.limra.com/abstracts/abstract.aspx?fid=10175.  There’s also a brilliant four minute video on YouTube by Eric Qualman that graphically conveys similar information that is as awe-inspiring as it is entertaining: http://www.youtube.com/watch?v=sIFYPQjYhv8.

The LIC Link

This is an experimental site to demonstrate the use of blogs for the insurance industry.