A noted insurance industry consultant considered the marketing and advertising challenges that the mega direct writers (Geico, Progressive, Esurance, etc) pose to independent insurance agencies, dubbing it the “Geico Effect”. In 2008, the big boys took credit for nearly 70% of all personal lines (auto, property) written. A lot of this new business owes to the ubiquitousness of their advertising, especially on the web and through search engines, but also TV and radio.
The original article is a long (and wordy) read, but here are the consultant’s main points:
- In order to compete, insurance agencies need to become familiar with a key customer demographic – Gen Y (people born after 1980). They are web savvy and the internet enables them to do what independent agencies have always done – shop around for the best values in insurance, although they typically lack thorough knowledge and understanding of what they are shopping for.
- To reach this demographic, insurance agencies will need to leverage the web and technology more fully. A website that has your business address, hours and telephone number amounts to just hanging out your shingle, and isn’t going to cut it. Websites will need to be engaging, interactive, and provide full service.
- The big direct writers have the advantage nationally, but independent agencies can compete locally by better implementing technology and the web.
I think this holds true for many other service industries where large national corporations compete with smaller, locally-oriented companies. How do you start competing with the big boys at the local level? Taking advantage of a free consultation is probably not a bad idea.