Filed Under:Your Practice, Sales Marketing

Why social media is too important to ignore

Of all the challenges faced by the insurance industry, the toughest is the one that is transforming consumer behavior and business models on a daily basis — digital technology. More and more, people are turning to technology or, more specifically, social media, for referrals for everything from a local doctor to a car mechanic to, you guessed it, a trustworthy insurance agent or financial advisor.

Industries such as telecommunications, consumer products and media and entertainment have already harnessed digital to attract and retain new customers. It is time for insurers to evolve and respond. No industry can afford to stand on the sidelines while potential clients, new products and emerging markets whiz by on the way to success and profits. Today, if you stand still, you fall further behind. It’s time the insurance industry made digital technology a top priority. 

One of the most used, most influential and yet least understood forms of digital technology is social media. LinkedIn, Facebook, Twitter and YouTube: all are there for the taking, a blank canvas that you yourself create a distinct message upon. But think carefully, because what you put out on these platforms could forever haunt you, embarrass you or ostracize you. In other cases, it may bring you business.

Every day there is a missed opportunity due to an agent or firm’s lack of interaction with social media. In fact, LeadSift, a software platform that identifies leads in social media conversations, found that the total value of missed sales opportunities for the health insurance industry in October 2013 was $14.6 million on Twitter alone. The report further found that of the 12 billion monthly tweets for that time period, 2.7 million were about insurance and of those conversations, 61 percent indicated intent to buy.

There is clearly a market in social media, one that is asking questions about insurance and relying heavily on social media for referrals from friends. But users are also putting information out there for companies to use. Consumers often take to social media to publicly discuss their buying process, starting with awareness, consideration, evaluation, purchase intent and post purchase reaction. According to LeadSift, this is one of the biggest, yet frequently overlooked, opportunities on social media, as businesses can make more intelligent decisions with this information while also presenting the perfect time to engage.

And some companies are taking the opportunity to do just that. Prudential Financial's career distribution system in the U.S. recently rolled out a company-wide LinkedIn initiative, asking all of their financial professionals to become active participants on the site. By the end of this year they hope to have more than 1,000 financial agents engaging with prospective clients. “Clients want to hear more from us, as we learned in a survey one year ago,” said Anthony Fontano, vice president of strategy and relationship management with Agency Distribution at Prudential Financial. “The more they hear from FPs, we learned, the more likely they are to refer FPs. It’s about being top of mind.”

And with this, Prudential has experienced some impressive results. According to Fontano, the company’s FPs are able to increase their LinkedIn connections by about 150-300 per year. “These numbers are a significant breakthrough for FPs in terms of their outreach,” he said. “From a social media standpoint, it’s critical to keep in touch with clients.” In addition to LinkedIn, Agency Distribution at Pru is planning to “aggressively explore” using Twitter and Facebook, LinkedIn’s less-businesslike-but-still-meaningful cousins. 

Some agents embrace all modes of social media on a daily basis, finding them to be a better way to find prospects, instead of networking or age-old cold calling. In fact, many consumers in the younger generation prefer it. “Certain clients are resistant to traditional methods of marketing but respond kindly to information and tips on social media,” said Aprilyn Geissler, a New Mexico-based agent with Farmers Insurance. “We’ve been able to make connections with potential clients and they are making the move to get quotes from us because they see the information we put out in cyberspace and come to view us as they authority for insurance.”

But social media is not a panacea for low lead generation and lagging sales. It’s oftentimes impersonal and a passive form of advertising. It’s also very time consuming and the chances of someone on the other end misinterpreting your message is high. Oh, and let’s not forget compliance.

Compliance concerns

Like a rabbit in a hole, many traditional agents have been timid in the face of something so big and scary as the public world of social media. And rightly so. This (now not-so-new) form of sharing and communicating comes with its share of ways to get agents and advisors humiliated, fired or even stripped of their securities license.

Due to regulatory constraints from FINRA and the SEC, companies have been forced to be more cautious and thoughtful about social media use by their financial advisors (life insurance representatives, brokers, wealth advisors, etc.). These regulations limit what advisors are able to do on social media and require that all of their interactions be recorded and discoverable. Advisors or agents who do not know the specifics of social media compliance could get themselves (and the firm) in trouble.

Many insurance companies, if they are engaging in social media to benefit the business, have a compliance person and/or legal person on the team who is charged with reviewing all social media posts and discussions, which can prove on the one hand necessary and on the other, the bane of an agent’s social media existence.

“They’ve helped in mitigating the risk and making the initiative work,” said Fontano. “They’ve been very helpful in assisting us to build a social media solution. It’s taken longer up-front, but in the long run, we feel more comfortable with the product we have.”

On the other hand, compliance can be a roadblock to timely communication with prospects and clients. “Because of potential delays to get social media messages compliance-approved, some advisors just won’t do it,” he added.

Social media concierge

Some insurance and financial firms are handing over social media policing, content strategy and other responsibilities to businesses that handle just that. One such company is Hearsay Social, a San Francisco-based social media marketing management platform. Basically, it’s software that allows those familiar with and those new to the social media game to easily adopt social business techniques to attract prospects, retain customers and deepen relationships. 

Insurance agents and financial advisors have long understood the need to be social as a part of their sales process: The best agents have always been those who build strong relationships with customers, inform prospective customers, keep in touch, and ask for referrals. Hearsay works with insurance companies to translate these best practices to a new way of engaging and communicating through social media.

“It complements what they are already doing in the real world by giving them a presence and building their personal brand and credibility online,” said Gary Liu, vice president of marketing at Hearsay Social. For example, through a library of content that can be published or scheduled, agents can easily establish their credibility on the Web while growing a network of clients and prospects with whom they can engage at scale. And through the platform’s “Social Signals,” which are alerts an agent receives whenever an important life event occurs with someone in your network — like the birth of a baby or a new job — agents can now know the best time to reach out to people with the right message.

Say a connection on Facebook just announced his family recently purchased a new home. Maybe it’s time to reach out to that old high school buddy and let him know about the importance of life insurance. Hearsay helps separate the “noise” from the events that could lead to a sale. And it seems to be working.

According to Liu, one of Hearsay’s customers, a Fortune 500 financial services organization, found that the platform helped drive a 22 percent increase in sales, compared against a control group. And at another major insurance company, one insurance agent reported that 62 percent of his business in one year came directly through using Hearsay Social to manage his Facebook presence.

Another player in the social media management game is Socialware, an Austin-based competitor to Hearsay. Bruce Milne, Socialware’s CMO, says every firm has a different tolerance level for risk and different rules for various groups within the firm; however, “All are looking for a reliable and comprehensive way to permit social media engagement, maintain compliance, and equip advisors with the skills to use social media as a business channel.”

Milne points to the overlooked fact that the fastest growing demographic group on social media is late boomers, who are — coincidentally — the largest target market for financial firms. This segment values financial education that they receive through social media and typically are not connected to a financial advisor yet. “This represents a large opportunity for firms who are first to the gate to engage directly with consumers through their advisors, before their competition does,” he said.

At the same time, 40 percent or more of young adults will be financially unprepared for retirement due to a lack of financial education, according to the SEC. “Increasingly, Gen X and Gen Y turn to online sources to research high-consideration products before they purchase,” said Milne. This segment has also come to place a lot of trust on peer reviews and non-corporate online information sources for buying decisions — more so than the trust they put in traditional advertising. Social media combines the aspects of what this demographic wants, and “a skilled advisor can use it to manage relationships in a way that mirrors what they do in the physical world, but at a much higher volume,” Milne added.

There is a huge opportunity that the insurance industry has to leverage social media and digital technology to modernize the classic distribution model to enable their agents to attract new customers, retain existing customers, deepen relationships and grow business at scale. Avoiding digital business means losing out on business. As more and more and more consumers turn to the Web for education and advice, will your firm be the one they see?

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