As I began working on this post on measuring Internet marketing results, I realized I needed to speak to several deeper issues I’ve seen in the over 500 independent insurance agencies I work with. There is a clear marketing divide that is emerging which distinguishes those agencies that are leaders in internet marketing and those agencies that are trailing. So before I dive into measuring an agency’s Internet marketing results, I want to make sure I set the right foundation.
Jump in with Both Feet
The best agencies in the country are not internet marketing “top-dippers”. These agencies understand and embrace the fact that both their current and potential customers are using various Internet channels to research and buy insurance. In other words, just having a website or a Facebook page is not enough. They must employ a blended Internet marketing strategy and dive in with both feet. If you are reading this article and are not convinced that you must employ a comprehensive Internet marketing strategy in your business, talking about measuring results is meaningless (more about why later).
Start Measuring Everything You Can
Once you’ve been fully convinced and have begun implementing a multi-faceted strategy which involves your website, email marketing, SEO, SEM, social media, blogging, Facebook, Twitter etc., you’re going to generate a ton of data. The best agencies know this and have invested in systems which allow them to collect and analyze this data (including accounting systems). If you’re not collecting data, there is no way you’re going to calculate accurately. I’ve seen agencies make hasty decisions regarding their marketing efforts because they used incomplete data. Most of the agencies I speak to don’t know their retention rate or customer satisfaction. They have no idea how much traffic their current website is getting or how many phone calls or leads. It’s always, “I think we’re getting this much”. Just start measuring.
Change to Long-Term Thinking
The final point I’ll make before I dive into the metrics is to define what I mean by the word “marketing”. Most small business I work with have a very short-sighted view of their marketing efforts. Marketing spend can be broken into several categories; branding, customer loyalty, lead generation and infrastructure. In all those areas mentioned, guess where most business spend a majority of their marketing budget? If you guessed lead generation you’re right. Agency principles think, “I need business NOW. I cannot wait or afford to spend money on branding or infrastructure”. This becomes a self-fulfilling prophesy and is very expensive. The challenge is to shift your thinking to more long-term thinking by allocating part of your budget to branding, customer loyalty and infrastructure (lead management tools, analytics etc.). On a recent trip to New York City I noticed a gigantic picture of an Ipad 2 on the side of a building. There was no way to contact Apple, no phone number or website. It was pure branding. If there is any company on the face of the planet that can afford to NOT spend money on banding its Apple. Maybe they know something we don’t know.
Now Let’s Measure Our Results
Now that we’re set the foundation, let’s talk about some specific metrics which you can use to measure your results.
Metric #1 – Brand Awareness
How are you currently measuring your company’s brand awareness? When a potential customer thinks about insurance, do they think about you? Think about it, your current and potential customers are being bombarded on a daily basis with marketing messages from your competitors. This is why you should be thinking about branding. These folks may not be ready to buy right now, but when they are ready, you want them to think about your agency. To measure this you can evaluate the number of eyeballs driven to your website over a period of time. Bigger agencies can conduct surveys. For a smaller company this is difficult to measure, but you should at least be aware of your need to brand your agency.
Metric#3 – Customer Satisfaction (CSAT)
Customer satisfaction is a metric that can be used to signal problems or future sales. Remember I mentioned earlier that the best companies have longer term thinking. They are not just worried about generating business TODAY but are proactive in generating business for tomorrow. Your customers have experience with your product and service that defines their perception of your brand. This has an effect on awareness AND loyalty. This metric is called the “golden” marketing metric. To measure it, survey your customers and ask, “Would you recommend our agency to a friend or colleague”. The survey should ask your customer to rank that question on a scale of 1-10.
Metrics#2– Customer Loyalty – Churn
This metric is related to marketing efforts designed to KEEP customers. Do you measure your retention rate on a regular basis? Do you have specific marketing campaigns designed specifically for retention? If not you should. Churn is calculated as follows:
Churn = 100% – Retention Rate.
Obviously you want your churn to be as low as possible. I suggest measuring your retention rate once a year. This is another area where Internet marketing is than more than just lead generation. Many of the best agencies use techniques like email marketing to keep their customers engaged. You can measure the success of these types of campaigns by using the Churn metric. If you’re not focused on marketing to your current customers and your retention rate is sinking, the best time to start is now.
Metric#4 – Net Present Value
Net present value discounts the future value of money to its present value. This is a very telling metric because, it allows you to make better decisions regarding your marketing efforts.
NPV = -C0 +(Bn – Cn)/(1 +r)n
C is the startup cost of marketing, B is the benefit or revenues from that marketing effort, r is the discount rate. Remember cash in the future must be discounted back to its value today and n is the number of years (this is the average number of years a typical customer stays with your agency).
I know this seems somewhat technical, but it’s an important concept to get, especial in the insurance world. I’ve talked to many insurance agencies who feel a marketing investment is not worth it if it doesn’t “pay for itself” immediately. This calculation allows you to make better long term decisions. Should you walk away from a marketing initiative that allowed you to capture a customer that you were going to keep for the next several years, even if you didn’t make a profit in year one?
The key here is to begin measuring. Start focusing on longer term marketing efforts. Think about marketing to your current customers and priming the pump via branding campaigns. Make sure you have the right marketing infrastructure which is going to allow you to make better decisions and LOWER your marketing costs. It might take you several months to fully understand and nail down a metric like NPV, but it will be worth the insight gained.