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Annuity Agents Try Out Psychographic Marketing


How can agents and financial advisors get in touch with ideal fixed annuity prospect?

Many rely on marketing systems built around demographics assumed to belong to such individuals —marketing to ZIP codes with a sizable proportion of individuals in a certain categories such as age, household income, home ownership, marital status, etc.

But Jeremy Rettich thinks there is a better way. “You can use psychographic marketing,” the president of Virtue Advisors, a Nashville insurance marketing organization, said in an interview.

Psychographic marketing refers to identifying prospects by lifestyle, values, attitudes, interests and other personal characteristics, then combining that information with basic demographics to generate a “probability” score, Rettich said. The score highlights the likelihood that particular households or individuals will do business with the agent during the coming year.

The agents then can focus attention on reaching out to the households most likely to buy, he said. That can help increase efficiency. It also could save some money, because the agents no longer would need to, say, market to everyone in a particular ZIP code just because some middle-aged people who might happen to be interested in annuities reside in that community.

Big data

The approach is an outgrowth of big data, which entails storing massive amounts of consumer information in huge databases. The data comes from various repositories, such as Web search and traffic, business transactions, rewards programs or social media. Data experts analyze the data to identify buying tendencies of certain types or “clusters” of consumers based on psychographic identifiers (lifestyle, values, etc.) and hone the information to meet the needs of specific markets.

Agents who have not already heard of marketing based on such data and analysis will likely run into the approach soon. A number of insurance carriers are using it already or are looking into leveraging data for life and annuity strategies. Some are sharing what they have learned from psychographic research with their distributors, too.

Less usual is to find an independent marketing organization that is moving ahead in this area. Rettich’s firm is one such company. Formerly called Covenant Reliance Producers, the firm recently rebranded as Virtue Advisors to align its name with its sister company, Virtue Capital Management , a Nashville registered investment advisor.

Virtue Advisors started digging into data analytics and psychographic marketing two years ago, according to Rettich. To do that, “we partnered with an experienced data analytics firm, and started buying “annuity power categories” (top annuity buying clusters) from that firm.

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The impetus came from agents who were telling the IMO that they were not getting the same response rates to their annuity advertising as previously. “Upon researching this, we found that, regardless of the state where they operated, the agents who were using demographics alone to identify where to advertise were getting lower responses in the last four to five years than before.”

After studying psychographic marketing, he became convinced him that “the market has it all wrong.” That is, using demographics to identify customers is a shotgun approach. “It’s not targeted enough” to make the expense worth the cost, he said.

Oversaturation is a problem too. There has been “just too much direct mail targeting retirees” going to households in the same ZIP code, he said. Many of those households do not have individuals who are inclined to buy annuities, he said.

The data firm that Virtue worked with “had never been in our space,” Rettich recalled. But he moved forward on working with the firm anyway, to test out claims that businesses could save from 20 to 50 percent on direct mail costs by using psychographics-identified buying clusters.

What he learned is that savings are achievable because “you are not mailing advertising to people who aren’t interested. You are sending out fewer mailers.” The proportionate response rate is higher too, he said.


To illustrate, he told of one agent who sent out two mailings using the system Virtue has established. The first mailing went out the usual way. “He sent the mailing to 2.3 percent of his total mailing list,” Rettich said. “The names were selected based on demographics (age, income and homeownership) and the response rate was 1.65 percent. The agent had a negative return on investment (ROI) on that mailing of over $500.”

Then, the agent ordered a second mailing. This one went to just 0.63 percent of same list but targeted “the best cluster” (most likely to buy names). The names selected were based on psychographics (hobbies, activities, interests, buying habits, discretionary income, degree of urban orientation, use of banking facilities, etc.).

And the results? “The response rate on the second mailing was 2.31 percent, and the agent’s ROI was positive by more than $600,” Rettich said.

An approach like this can make a big difference for an annuity advisor, he contended, pointing especially to producers who already are spending money on direct marketing. “The bigger the marketing budget, the bigger the savings,” Rettich said. But smaller practices can benefit from leveraging psychographic marketing, too, he said, even if their lists are not as long or they have a smaller budget.

Some producers do wonder about how it all works. Others push back at the very idea of data firms collecting psychographic information about people, Rettich allowed.

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But the approach has the attention of others who already are paying for direct mail campaigns. “One agent told me, ‘direct mail is very expensive, so if you can give me a quality alternative that is less expensive, I’m all ears.’”

, MBA, is a contributing editor to AnnuityNews, specializing in life insurance, annuities and income planning. Linda may be reached at [email protected].

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Leave trial and error behind with this powerful tried and true presentation.