• Selling Insurance by Not Selling Insurance?

    Posted on July 20th, 2011 by and currently 8 commenting.

    If you haven’t heard about  State Farm’s plans to test a totally new approach to their business, you should take a look. It seems like they’re going to sell insurance by NOT selling insurance.

    Here’s a description from the Chicago Brander (1):

    State Farm Next Door opens August 1st and the concept is a more open, casual community space that offers free Wi-Fi and coffee (via its Next Door Cafe) as well as personalized coaching/small group classes on financial matters that range from paying off student loans to learning how to budget your finances.

    And guess what? It’s all free. Even more crazy? They’re not going to sell insurance policies at these locations.

    An article on Families.com says it well (2): “This is either a fantastically innovative idea, or a disaster waiting to happen.” I happen to think that it’s a great idea, and here’s why: State Farm is forgoing the classic insurance price-war and focusing on living up to what they say they are, a ‘Good Neighbor.’

    I’ve only been out of school for a handful of years, but I’ve switched insurance providers 3 times for lower rates. It’s a crowded market, and for the big players, comparison is the name of the game. But it’s not the best way to be a good neighbor. A neighbor doesn’t present you a buffet of commodities, they go out of their way to really help you, and it seems like that is what State Farm is aiming for. (A timely move as well – budgets and student loans are a hot topic and a big need for many recent grads.)  Chicago Brander hits the nail on the head:

    For a long time, State Farm talked about the fact that their agents live in the same community as their customers. Which is normal. But even though you can continuously say, “We live where you live,” there’s nothing quite like actually demonstrating it visibly by being more of a central hub.

    There are a number of factors that will contribute to the success of Next Door, and I’m interested to see how things turn out. What I do know is that not playing the same game as competition and “actually demonstrating” your promise to customers is one of the best foundations to build on.

    • (1) – You can read the Chicago Brander’s article here.
    • (2) – You can read the Families.com article here.
  • http://twitter.com/miguelggarcia Miguel Gomez

    That is just great, a huge company thinking outside the box. I really hope it plays well for them.
    Car insurance had become a “see I’m cheaper”, “no, it’s me” game where each company throwing “hundreds of savings” over the other. It was just insanity.
    On the other hand, I’ve stayed with my insurance company for five years. My rates have stayed about the same and I haven’t switched because I don’t see a compelling reason to do it. I haven’t even met my agent or had any contact with him other than canned letters with my name misspelled.
    Probably I would get a quote from State Farm, not because of the Wifi or the seminars, but because they’re trying to change the status quo, and a company like that (at least to me) deserves attention.

  • http://www.facebook.com/bttalbot Braden Talbot

    This is what my insurance guy does. He is more of a coach or mentor on finance and business, but also sells many forms of insurance.

    He has never sold me anything I couldn’t easily afford, nor tried to upsell me anything I didn’t need. He understands these ideas and that’s why he does well.

  • http://brainsonfire.com/individuals/view/eric_dodds/ Eric Dodds

    Isn’t it interesting that we really don’t want much contact with so many insurance providers? It’s easier if they just provide service and leave us alone. Great point – thanks for sharing! 

  • http://brainsonfire.com/individuals/view/eric_dodds/ Eric Dodds

    Great example, Braden. I think it goes back to actually helping. He’s a mentor, and gives you products you need as a part of that process. Good stuff.

  • http://twitter.com/DanOnBranding Dan Gershenson

    Thanks for the mention of my blog at Chicago Brander and the kind words, Eric. Here’s hoping Next Door is the success we both see it being.

  • http://brainsonfire.com/individuals/view/eric_dodds/ Eric Dodds

    Thank you for the story and the insight! Keep us posted on the launch. We’d love to have feedback from the front lines. 

  • http://kcslim.posterous.com Jamie Plesser

    I love to see them testing in such a different way.  Good find Dodds.

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