Personal Income Statement: A Small Data Approach to Life Insurance Marketing

How each family manages money, what expenses come first and what get dropped tells you a lot about their propensity to buy life insurance.

(Window shopping in Cowbridge, Southern Wales. Photo credit: Jonathan Billinger.)

Life insurance is sold, not bought right? Well, that may be because it is often sold via brute force rather than via nuanced understanding of each target family’s income statement.

Let me explain: every family has an income statement (family income minus family expenses, per given time period) just like a company. How each family manages money, what expenses come first and what get dropped tells you a lot about their propensity to buy life insurance.

Each of these family income statements is unique. Some may spend more of their disposable income on the latest style of Nine West shoes, while others may spend a larger proportion of their income statement on gardening.  More specifically, in lean times, what expenses people pay off first gives a marketer very specific insight into what matters most to consumers.  Perhaps what a given consumer cares most about is not little Dorothy’s college fund, but rather keeping that retirement house on the lake in the family.

Naturally, consumer purchasing and income behavior changes over economic cycles.  For example, when I was leading strategy at a large insurance company, our analysis yielded the counterintuitive insight that consumers ranked paying their cell phone bill over even their auto loan payments.

Thus, life insurance marketers need a deeper, more timely understanding of what items on consumers’ household income statement they will most likely need help with in the event of sudden mortality.

So what can life insurers do?

Step 1: Most importantly, begin a method of connecting with each consumer that you target in a way that connects to the real-world trade-offs they are making.  Once you know the periodic consumption trade-offs, then you know exactly what “line item(s)” on their income statement would get the consumer’s attention.  In other words, connecting to the consumer exactly what is protected/saved in the event of sudden mortality may be the most direct lever to lift premium growth.

Step 2: Throttle down brute force marketing.  Anecdotally and empirically, it can be argued that spending large caches of budget on “carpet bombing” Google, Facebook, and Twitter will be a soft lever for direct premium growth, if it has any effect at all.

Step 3: Ease off on the use of hackneyed images of happy kids or couples walking on the beach themes on digital and hard copy collateral.  While they have been mainstays of insurance marketing and communications since the age of “Mad Men,” they are a circuitous method of showing value prop at best, and at worst potentially wasted real estate.

In summary,  this presents a “small data” approach to selling that you could call a New Age way of door-door selling using information and inferential analytics to position the right value prop to the right consumer. If insurers, brokers and agencies focus on “small data” taking into account psychographic, demographic and income statement behavior of each micro-segment, then this industry will be in a better position to again see organic growth.

 

 

Chirag Pancholi // Chirag Pancholi, CEO of Wisemuv Inc.,  is an experienced chief executive officer, strategy executive and consultant. He founded and grew the first independent automated cross-sell platform in the insurance industry, used by prominent carriers and agencies. Earlier in his career he worked under Chairman Greenspan with the Federal Reserve Board and has worked as an investment banker with Goldman Sachs. A graduate of Harvard and the University of Chicago, he contributes thought-leadership via board positions at a number of organizations.

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