Savvy life insurers sell something more tangible and outcome-oriented than a distant promise

As the traveling salesmen repeat in the opening number of “The Music Man,” to be a good salesperson, “you gotta know the territory.” What does that really mean?

Generally, knowing the territory is about knowing your product, the products your competitors are selling, and the customers to whom you are selling. All true and important. But the play has another message that is often overlooked in the life-insurance world.

While other salesmen were happy selling a few instruments to those who are already taking lessons or playing an instrument, Music Man and Salesman Extraordinaire Prof. Harold Hill went further. He understood the value of creating a need for his product. He showed the people of the town the terrible fate that was about to befall their children in the form of a pool hall, and then he offered the antidote – the vision of their children safely and happily playing in the marching band. All they had to do to protect their children was buy his instruments.

So of course they bought.

This is an extreme example, but the concept is valid and being used by other industries. For example, the pharmaceutical industry’s marketing shift from physicians to consumers takes the form of sophisticated advertising campaigns. These deliver a compelling value proposition that causes customers to act.

Consumers now are bombarded with commercials and print ads of smiling, active people playing with grandchildren, dancing, hiking, swimming, racing and engaged with others in a host of fun activities. These people may have serious or severe health issues, but the commercials suggest that taking this medicine allows them to enjoy happy, social lives. The commercials barely mention the disease or condition for which the drug is prescribed, but keep repeating the product name while lively music and images of happy, fulfilled people fill the screen. By the time an announcer reads the list of side effects “that have happened” while taking the product, viewers are focused on images of joy rather than health issues and product side effects. Clearly, these commercials don’t sell medicine; they sell a lifestyle enabled by medicine. A lucrative strategy.

Like drug manufacturers, life insurers need to change the narrative. Peace of mind is not resonating broadly with consumers the way it used to.

Make no mistake, the industry should not lose its focus on the powerful role that life insurance plays in estate planning. But, most people still don’t understand that human capital (the present value of future earnings), especially in younger years, is often the single largest asset a family has on its balance sheet. Nor do most people realize that human capital has risks that include premature death.

Clearly, life insurance sales have fallen because consumers don’t understand its value to them. Companies can continue to incentivize their agents and improve customer experience, but unless they help consumers understand why life insurance is relevant for them and consider product innovations that offer a more immediately tangible and outcome-oriented benefit, sales will continue to languish.

Next week, I’ll discuss why product innovation is critical to addressing the relevancy challenge.

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