Home » Five Questions to Ask Before Niche Marketing
August 18, 2022
Mark Zeehandelar

Five Questions to Ask Before Niche Marketing

Niche marketing in the insurance space can be somewhat tricky business. It can also be immensely profitable. Niche marketing generally allows agencies to enjoy deeper market penetration, stronger retention in the niche segment, a more predictable flow of referrals, and stronger rate negotiation leverage with carriers.

Some agencies are fortunate enough to “fall into” a niche market. For most, however, developing this strategy requires significant planning and execution. Generally speaking, there are two ways to niche in the insurance industry, product and/or prospect. As the name implies, an agency pursues a product niche by developing extraordinary expertise in a particular product line (e.g. bonds, EPLI, cyber liability). A prospect niche, on the other hand, focuses on a particular risk class (e.g. gas stations, HVAC contractors, attorneys)

As with all worthy objectives, as an agency leader, you must ask yourself and your agency fundamental questions to determine whether niche marketing is right for you. These questions come from a book called “Moments of Impact: How to Design Strategic Conversations That Accelerate Change,” written by Chris Ertel and Lisa Kay Solomon:

  1. What is our winning aspiration?
    In other words, what does success look like for us? You may know other agencies who have been successful and wish to emulate them. Ultimately, your decision needs to fit you and your agency. Define this with your team.
  2. Where will we play (e.g. what customers will we serve)?
    Perhaps you, or one of your producers, has work experience in another industry. You may also have a passion for a particular industry. A common mistake is to narrow your thinking around what you currently know. Operate under the premise that you can make yourself an expert in whatever you choose. It’s okay to spend time becoming an expert in something you later decide you don’t care for. You never know when that expertise will be valuable later.
  3. How will we win (e.g. how will we deliver a unique value proposition to the market)?
    According to sales consulting firm Rain Group, a value proposition has to accomplish three things. It has to Resonate, Differentiate, and Substantiate. Start from what you will actually do for this niche market, then determine how you will sell it. Read industry publications for the niche markets under consideration. Develop insights into unique challenges that you can solve in addition to writing policies.To be clear, “we’ve been in business for 100 years,” and “we have great carriers” will not resonate or differentiate. Think critically about what you’re prepared to do to be different.
  4. What capabilities must be in place?
    Based on your answers to number three, consider what changes you must enact to deliver on your unique value proposition. Recognize that most agencies are structured for buyer generated demand (e.g. responding to requests for quotes). To get off that hamster wheel, you need to develop methods for seller-generated demand. Niche marketing enables you to customize your content and prospecting efforts to deliver specialized insight to win more business. Your knowledge and expertise is your differentiator, so sell it.
  5. What systems are required for success?
    Success will require advanced technology and processes that will enable you to deliver on your promises. How will you deliver the insights? How will you track engagement? How will you deliver services, beyond coverage analysis, economically? Be prepared to make smart investments in your agency infrastructure to develop a winning formula.

Finally, have fun! Insurance is a great business with lots of exciting people to meet. Enjoy the process of becoming an expert. Ultimately, enjoy the success this hard work will bring you!

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