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.

Advertisement