The Actuary's Role in Marketing - Actuary.com
The Actuary's Role in Marketing - Actuary.com
The Actuary's Role in Marketing - Actuary.com
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FSA’s <strong>Role</strong> <strong>in</strong> Distribution<br />
Market<strong>in</strong>g Motivation<br />
1
From FSA<br />
(Fellow – Society of Actuaries)<br />
To FSA<br />
(F<strong>in</strong>est Salesman <strong>in</strong> America)<br />
Transform<strong>in</strong>g the FSA <strong>Role</strong><br />
2
Critical Requirements to Transform<br />
the <strong>Role</strong><br />
•Facilitator or Innovator<br />
•On the Sidel<strong>in</strong>e or on the Field<br />
•Can’t Motivate Someone You Don’t Know<br />
Demand a Presence At the Table<br />
3
Don’t be a Cave Dwell<strong>in</strong>g Mushroom<br />
4
Know <strong>The</strong> Market<strong>in</strong>g Myths<br />
5
MARKETING MYTH #1<br />
▬▬▬▬▬▬▬▬▬▬▬<br />
“Market<strong>in</strong>g = Sell<strong>in</strong>g”<br />
6
Product #1<br />
Service #1<br />
SELLING<br />
Need #1<br />
Want #1<br />
MARKETING<br />
Product #2<br />
Service #2<br />
Need #2<br />
Want #2<br />
Company Shelf<br />
Customer Shelf<br />
7
MARKETING =<br />
SELLING =<br />
any activity that helps to sell a<br />
<strong>com</strong>pany’s products or services<br />
to fulfill a customer’s need or<br />
want<br />
the transaction that<br />
ac<strong>com</strong>plishes the above<br />
objective<br />
8
MARKETING MYTH #2<br />
▬▬▬▬▬▬▬▬▬▬▬<br />
2 Alternatives<br />
→<br />
→<br />
“Product Driven”<br />
“Market Driven”<br />
9
EXAMPLE #1<br />
▬▬▬▬▬▬▬▬▬▬<br />
PRODUCT DRIVEN PHILOSOPHY<br />
10
<strong>The</strong> EDSEL<br />
11
EXAMPLE #2<br />
▬▬▬▬▬▬▬▬▬▬<br />
POST-PRODUCT DESIGN MARKETING<br />
12
EXAMPLE #3<br />
▬▬▬▬▬▬▬▬▬▬<br />
MARKET DRIVEN PHILOSOPHY<br />
14
EXAMPLE #3A<br />
▬▬▬▬▬▬▬▬▬▬<br />
ULTRA-MARKET DRIVEN PHILOSOPHY<br />
(a.k.a. Commodity Sell<strong>in</strong>g)<br />
• Perceived Product Homogeneity<br />
• Fierce Competition<br />
16
PORK BELLIES<br />
17
MARKETING MYTH #3<br />
▬▬▬▬▬▬▬▬▬▬▬<br />
“Customer Focus” SHOULD BE<br />
ONE-STEP DOWN THE<br />
DISTRIBUTION CHAIN<br />
18
BROKERAGE<br />
DISTRIBUTION<br />
SYSTEM<br />
Insurance<br />
Company<br />
↓<br />
General Agent<br />
↓<br />
Broker<br />
↓<br />
Policy owner<br />
MANUFACTURING<br />
ANALOG<br />
Manufacturer<br />
↓<br />
Wholesaler<br />
↓<br />
Retailer<br />
↓<br />
Customer<br />
Who is the “customer” <strong>in</strong> life <strong>in</strong>surance brokerage?<br />
19
MARKETING MYTH #4<br />
▬▬▬▬▬▬▬▬▬▬▬<br />
“FREQUENT CHANGE IN OUR<br />
INDUSTRY MAKES MARKETING<br />
PLANNING IMPOSSIBLE”<br />
20
FORCES OF CHANGE<br />
1. Legislative<br />
2. Economic<br />
3. Demographic<br />
4. Sociological<br />
5. Informational<br />
6. Distributional<br />
7. Medical<br />
→<br />
“NICHE<br />
MARKETING”<br />
21
Know Your Distribution Model<br />
Brokerage<br />
Alternative<br />
Career<br />
Multil<strong>in</strong>e<br />
PPGA<br />
Agency Build<strong>in</strong>g<br />
Compensation Supports the Model<br />
22
Bottom Up Product Design<br />
ART<br />
SCIENCE<br />
GAME<br />
23
Bottom Up Design<br />
• IDEA Driven<br />
• NEED Driven<br />
Develop Solutions – Not Products<br />
24
Rule 1 – Art Before Science<br />
Science is the pric<strong>in</strong>g / assumption sett<strong>in</strong>g<br />
part of Product Development.<br />
If pric<strong>in</strong>g <strong>com</strong>es first, you are creat<strong>in</strong>g<br />
products just to have products.<br />
25
Science of Product Development<br />
Mortality<br />
Interest<br />
Spread<br />
Expense<br />
Cash Value Lapses Commissions<br />
Taxes<br />
Policy<br />
Features<br />
Profit<br />
26
Rule 2<br />
Product Development Science establishes<br />
the fixed and variable assumptions<br />
necessary for profits and establishes the<br />
rules for product games.<br />
27
Product Games<br />
• F<strong>in</strong>e Tun<strong>in</strong>g of Product to meet:<br />
o Competition / Compensation<br />
o Market Needs<br />
o Distribution Model<br />
• Trad<strong>in</strong>g Features and Assumptions<br />
• Trad<strong>in</strong>g Among Variable Assumptions<br />
28
“Let <strong>The</strong> Games Beg<strong>in</strong>”<br />
Lapse<br />
Supported<br />
Target<br />
Premium<br />
Compensation<br />
Interest<br />
Spread<br />
Let’s Make<br />
a Deal<br />
Production<br />
Levels<br />
Marg<strong>in</strong>al Pric<strong>in</strong>g<br />
Wild<br />
Card<br />
Reward<br />
Extras<br />
Product Still Needs Competitive Price<br />
29
<strong>The</strong> Balanc<strong>in</strong>g Act<br />
Agent<br />
Compensation<br />
Policyholder<br />
Price / Value<br />
Company<br />
Return<br />
F<strong>in</strong>d<strong>in</strong>g the Right Reward System<br />
30
Reward Systems<br />
(i.e., Compensation)<br />
• Support Distribution Model<br />
• Motivate the Production Source<br />
• Competitive<br />
Consider All the Elements<br />
31
Reward Elements<br />
• Cash Commissions<br />
• Management Overrides<br />
• Benefits for Career<br />
• Independent Models<br />
• Conventions / Trips / Prizes<br />
• Bonus Systems Competitive<br />
How to Divide the Distribution Cost Pie<br />
32
Conventions / Trips / Prizes<br />
• Do they Motivate?<br />
• How Do You Measure?<br />
• Marg<strong>in</strong>al Production Increase<br />
It’s a Relationship Bus<strong>in</strong>ess<br />
33
Production Bonus Models<br />
• Design to Reward Increased Production<br />
• Built On <strong>The</strong> Averages<br />
• Incorporates One Production Source Sav<strong>in</strong>gs<br />
• What Happens at the Cap?<br />
• Comb<strong>in</strong>e for Bonus Purposes is the Killer<br />
Don’t Do Th<strong>in</strong>gs That Break the Average<br />
Price is Still K<strong>in</strong>g<br />
34
Solutions For Motivation<br />
• Br<strong>in</strong>g Value to the Equation<br />
• Lead Generation<br />
• Packaged Sales<br />
Ideas and Solutions Motivate<br />
35
Formula For Success<br />
• Know Your Distribution Model<br />
• Use a Bottom Up Model<br />
• Assume the <strong>Role</strong> of the Architect<br />
• F<strong>in</strong>d the Hot Buttons<br />
• Get to Know the Distribution<br />
• Br<strong>in</strong>g Value With Solutions<br />
F S A<br />
F<strong>in</strong>est Salesman <strong>in</strong> America<br />
36
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