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by Pinney Insurance on Oct 24, 2018 9:15:00 AM

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4 Lessons Learned from Tech Startups

The insurance industry isn’t known for thinking outside the box. Here’s how to inspire a little more big-picture thinking with lessons learned from tech startups.

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Entrepreneurs and tech startups create things – software, products, tools, or experiences. In the insurance industry, we’re selling products we don’t create. So why should we pay attention to the way tech startups run their companies? Because sometimes we need to think outside the box when it comes to organization, marketing, and prioritizing what’s most important.

Find Your Focus

Are you struggling to grow your agency? Not sure what to focus on…so you end up spinning your wheels and focusing on nothing?

Keith Rabois helped multiple start-ups join the billion-dollar club, including PayPal, LinkedIn, and Square. In a recent interview with AngelList, Rabois described his philosophy for making (and keeping) a company profitable: focus on one metric and find ways for every process, department, or employee to improve it.

For example, the team at Square focused on the cost per customer. Think about how many different processes affected that metric: customer service, fraud resolution, operating costs, partnership opportunities, and more. When the company started out, they lost money on every customer. Over time, that metric improved to the point where they had a 36.5% margin per customer. That kind of turnaround doesn’t happen without laser-focus applied to every step of the process.

But what does that mean for an insurance agent? What’s your metric?

  • Digital agents: Your metric might be the percentage of website conversions, or your average cost per lead.
  • Traditional agents: Your metric might also be the cost per lead, generated by more traditional marketing approaches (direct mail, speaking engagements, etc.). Or you might track client retention over a one-year or five-year period.
  • Hybrid agents: You could use any of the above metrics – conversions, cost per lead, or client retention.

Fail Fast

In the startup world, every new company faces the same dilemma: should we write a business plan and go after funding, or just get started and see what happens? The business plan convinces investors you’re worth backing, but what if the market has moved on by the time you’re done writing the business plan?

In many cases, the best advice is to forego the extensive prep work and just see what happens. If the product isn’t viable, you don’t want to waste six months writing a business plan anyway.

Bernie Schroeder is an entrepreneur and marketer who’s worked with Apple, Nike, Yahoo!, and more. Now he’s the Director of Programs at the Lavin Entrepreneurship Center at San Diego State University. He talks about this dilemma in his book, Fail Fast or Win Big. According to Schroeder, “You are much better off launching a minimally viable product or service, one that satisfies your core customers’ needs, and adjusting it on the fly after you see what’s attractive about it and what isn’t.”

We can apply the same lesson to our own businesses, especially in terms of marketing.

  • Wondering if paid ads are a good idea? Pick a network and try it. Let the data tell you whether it’s a good idea or not.
  • Should you add a new network to your social media repertoire? Just do it. If it works, you’ll get followers and maybe a few leads. If not, you can always delete your profile at the end of the experiment.
  • Thinking of starting a new niche website to bring in more leads? Stop thinking about it and just do it. Don’t pay a designer for a fancy new site. Just set up a WordPress site with budget hosting. Then Sign up for the Insureio marketing package, embed the quoter on your new site, and see what happens.
Move fast and break things. Unless you are breaking stuff, you are not moving fast enough.

Whatever your idea is, embrace the startup mentality and go for it!

Spend a little time figuring out what you need, how much it might cost, and how to measure success. But don’t spend six months researching, because you’ll lose steam and the moment will pass.

Give yourself a deadline for research and prep work (one week, two weeks, etc.). Then dive in and see what happens. Give yourself a similar deadline for evaluating results, but be aware that some strategies take longer to pay off than others. New websites can take 3-6 months to begin bringing in visitors, while paid ads often reveal results (or lack thereof) in just a few days.

Listen to Your Audience

If your startup has a problem with the product, funding or marketing – you can fix it. If customers don’t want what you’re developing for them, then nothing will change that.

Startups live and die based on one simple question: are they producing something the consumer wants?

We aren’t creating insurance products, but we still need to know what consumers want – and what they don’t. We can apply this to everything from marketing to communication techniques.

Bernhard Schroeder’s suggestion? Use the product the way your consumer would. It’s the only way we can see our products and services like they do. For us, this means owning life insurance. It also means using social media the way our consumers do, especially if we’re going to advertise there.

We need to pay attention to the way other vendors (insurers and otherwise) treat their customers. This means looking at how other merchants shape the consumer’s buying experience (online and otherwise).

We can’t afford to isolate ourselves in a bubble where we only know how we do things in our industry.

As Schroeder writes in Fail Fast or Win Big, “How many of you make and exceed a customer promise every day? How many of you ask your customers what makes them happy?”

Find an Industry Mentor

You know how to sell life insurance. But in today’s business environment, you also have to be a marketer, an entrepreneur, and a customer service superstar. It’s not natural – or expected – to be able to do all these things right off the bat. In other words, you’re probably going to need to ask for help at some point.

Look for a mentor in an industry organization like MDRT or NAIFA. You may think you can ask your friends, parents, spouse, kids, or even other business owners. You can, of course, but their advice isn’t going to be specific to our industry – and it may not be the “tough love” kind of advice you really need.

Seek out at least one mentor from the insurance industry and approach them with an honest compliment. Don’t ask for anything (yet). Just get to know them, tell them what you like about the way they run their business, and develop the relationship. By asking small questions, you’ll get a better sense of how they feel about major issues facing our industry. If your viewpoints are compatible, you can then think about asking them to take a look at something specific you’re doing and offer their feedback.

Not convinced mentoring can work?

MicroMentor’s Business Outcomes Survey paired respondents with mentors to see how it affected their desire to become an entrepreneur. Turns out, mentored businesses increased their revenue by 83%, while non-mentored businesses only increased theirs by 16%. This doesn’t have to be a time-intensive partnership, either; this program included an average of just 10 hours of mentoring!

 

This article appeared in Pinney Insurance.