Look at projects as investments, not costs 

I find that far too many agents consider advertising, direct mail and other marketing communication a cost.  Some even see it as a luxury.  At best, most see it as a necessary evil.  These views are causing agents to lose new business and existing customer to more aggressive competitors. 

As marketing consultant Bob Lauterborn puts it in a discussion about setting budgets with business marketers:  “We don’t have budget problems.  We have perception problems.  And it is usually our own fault.”

Lauterborn advocates the use of a task method as the only appropriate way to budget.  We agree.  Here are the basics of the task method. 

1. Set specific objectives 

“We want to generate 100 referrals from our A customers and a minimum of 25 new home-auto accounts from these referrals. We project a minimum total commission income of $3500 in year one of this marketing program.  Since our average account retention rate is 7 years per customer, we project an estimated $25,000 of income as the result of the program.” 

2. Determine a reasonable investment and ROI 

Astute agent marketers know that they make their money on renewals.  They often budget the estimated Year 1 commission income for marketing communications programs. In #1 (above) that figure is $3500. Using this figure,s case, the agent would be looking for a minimum 6.5 to 7.0 times Return on Investment (ROI)---for direct costs related to the project—based on the Lifetime Value of Customers (LVC) generated. 

3. Set up marketing communications tactics, budget 

“How will we generate the 100 referrals?  Which customers will we contact?  Will we contact them by direct mailings?  By telephone contact?  Can we offer a small token of our appreciation for referrals?  What’s the preliminary budget look like? Can we afford to invest more?  Do we need to scale our investment back a bit to stay within our ROI objectives?” 

4.  Measure results every step along the way 

What gets measured gets treasured.  Track results and make adjustments as needed.  At the close of your marketing program, you should know exactly what worked, what didn’t and whether or not you realized the results you wanted.  No overblown success statements.  No unsubstantiated negative conclusions by naysayers.  Just the facts.