Independent Agents Are Getting "Riches are in Niches" Wrong

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Consider subscribing, rating, and reviewing the show this holiday season. It really helps the show grow. From all of us at Believe, have a merry Christmas, everyone, and a happy holiday If you focus solely on one niche, uh, y- you can only scale so far. Th- those markets are only so big. Now, sure, and depending on the size of the niche and depending on how many actual opportunities are out there, can you make a lot of money?

Sure you can. But I feel like we have to expand our mindset and our ideas around what a niche actually is and what it takes to capture the maximum amount of opportunity inside that niche. In a crude laboratory in the basement of his home. Are independent insurance agents doing the riches are in the niches in the wrong way? Today we're gonna talk about that because this is an idea that I have fought my entire career.

Not because I necessarily think that niches are bad. I don't. I'm a firm believer in niches. But I feel like we've made the idea of a niche far too small, and we're not thinking about the modern consumer, we're not thinking about how people buy, the customer experience they're looking for in 2024, and what a niche actually is. So, uh, that's what we're gonna dive into today.

That's what the show is gonna be about. Before we get there, guys, if you love this show and you're listening to it and you're not subscribed, whether it's on YouTube or on whatever podcast network you listen to, if you're listening to Auto Only, please subscribe. And if you're on You- YouTube or watching somewhere on video, would love for you to like this video. And if you have comments about what you hear here, share in the comments. I respond to every comment that I get and, uh, or at least try to, and I use those comments as basically, uh, filters or lead gen for new questions, new ideas, new, uh, uh, points of interest that you may have to answer on this show.

I love you for listening to this show, and I love doing this work, and, uh, I'm very proud and happy and excited to be focused specifically on teaching independent insurance agents and this independent insurance industry on how to grow. Um, so with that, let's talk about niches. All right. Now, I know some of you are going, "Why the hell are you pronouncing it that way?" I don't know why the word niche comes out of my face in that way.

I know some of you are saying niches, niches, and I don't know, just my, my face does not wanna make the expression to say niche. It wants to say niche, and I have no idea why. But that's what it is. Uh, Jason Cass loves to make fun of me for saying it that way, and so do others. Uh, w- I don't necessarily care.

Uh, hopefully you can understand when I say the riches are in the niches, you understand what I'm saying, and because I'm not saying niche, niche, uh, which feels like an inappropriate way of pronouncing that word. Uh, all that being said, guys, I, I have for a long time fought this idea that you have to operate in a niche to be successful. Not because I don't believe that niches are important. I do. I do believe that having an expertise, having an industry class that you know inside and out is absolutely a great way to rapidly grow your business.

However, I think that when you grow your business on a specific niche that possibly is geographically, uh, constrained, say f- a certain type of business, uh, plumbing contractors within 50 miles of your agency location, you have drastically narrowed your ability to scale your business. So, uh, if you're just single-person shop or you're just a one producer show, can you make enough money to be happy? Sure you can. So if your goal is just to get to, to a number that allows you to pay your bills and go on a couple vacations and stuff, I think a narrowly focused geographic niche is the cleanest, easiest, and fastest way to get there. However, if you're looking to scale your business, if you're looking to scale, uh, whether it's growing a book of business as an individual producer or as an agency owner, or if you're a executive in a, in a larger regional or super regional, even national brokerage, if you focus solely on one niche, uh, y- you can only scale so far.

Th- those markets are only so big. Now, sure, and depending on the size of the niche and depending on how many actual opportunities are out there, can you make a lot of money? Sure you can. But I feel like we have to expand our mindset and our ideas around what a niche actually is and what it takes to capture the maximum amount of opportunity inside that niche. Now, before we get there, I just wanna give you a few stats on niches, because I don't want you to think that somehow I don't- Actually believe in niches, I do, right?

So niche websites spend-- This is coming from a website called wecantrack.com. Uh, this is a survey that they did. Niche websites spend 25% less on advertising due to a more focused target audience. So you spend less because you don't have to push. When the message is targeted and leans on the experience and pain points and expertise of a certain niche, then you don't have to spend as much because you don't have to hit them as many times to get them to convert because they can sense that you understand their problems.

That makes a lot of sense. Uh, visitors spend 40% more time on niche websites than general websites. Obviously, that makes sense. Uh, if you are, uh, let's say, a, a Buffalo Bills football fan like I am, you could go s- to ESPN and get some generic contrived, uh, uh, kind of take on what's going on with the Bills, or you could go to someone who follows their every move, goes to every practice, has insiders inside of the clubhouse and the organization, and get kind of the, uh, a deeper understanding of what's actually going on in that organization if you're that nerdy about sports. Makes complete sense, and it's that way for everything.

No matter what your interest or take is, uh, that makes a lot of sense as well. I think we can buy that. Uh, some more stats here. Uh, email subscription rates on niche websites 55% higher because of the tailored content. Obviously, if someone's a generalist, uh, and is talking about a broad range of topics, you are less likely to subscribe than if you are going to get the exact information that you want every single time.

Makes sense. Products sold on niche websites see a 30% higher average order value. So, uh, I am not a huge advocate of selling insurance directly online, uh, certainly not in the way that most of us view it. And but if we did, th- what this is saying is you could average, uh, and this is probably speaking more towards like products, retail, consumer goods, et cetera. However, what you're seeing from these four statistics is that across the board, having a niche is better for your business.

That is not the argument that I'm making. What I am, what I'm-- The argument that I'm gonna make and the theory that I'm gonna put in front of you, uh, over the remainder of our time together is we need to broaden our scope both, both in the way we view niches and how we approach the niches that we choose to target. So, uh, it was actually, and I, and I did a bunch of research on this because I couldn't believe it. It was, uh, Pat Flynn, who was an internet marketer that was coming into prominence around 2009 and 2012. I used to follow him pretty closely, uh, back in the day when I was first getting started with digital marketing.

Pat Flynn, uh, is actually credited with saying, "The riches are in the niches, but fortune is in the follow-up." That's a portion that most people forget, it seems. Um, so, you know, Pat was basically saying, uh, understand that targeting your content to a specific group, 'cause, 'cause he was a digital marketer. Uh, targeting your content, uh, and your advertising, et cetera, to a specific group is going to be the best way to get, um, to get rich. But you're not gonna actually build that kind of flywheel which leads to a fortune without a proper follow-up sequence, which is what he was talking about.

So we t- we often hear the first part, we don't hear the second part. I agree with him. F-follow-up and process systems is really the rub to setting yourself apart and creating, um... We'll talk about, like, the insurance flywheel in, in future episodes of the show. But creating that flywheel effect where your prospects become clients who then become bigger clients, who then refer clients, who then drive more client, who more prospects in, who then-- And that perpetual cycle that just keeps going on and on and on, which allows you to really scale.

Again, uh, things you don't need if you just need to hit a certain number and then you're just gonna coast. But if growth, scaling is what you're interested in, these are some of the, some of the concepts that we need to wrap our head around. So give Pat Flynn credit for, "The riches are in the niches, uh, but the fortune is in the follow-up." Very, very interesting. And then, you know, just kinda putting a capstone on what I'm about to tell you, um, I found this stat from, uh, let's see.

This was from-- The source is LSA. Uh, it's on the, it's on a website that I found, uh, the Invoca blog, which looks like a call tracking website, uh, call tracking software website. But 78%-- I've heard similar numbers, so this makes sense. 78% of insurance consumers call a business after running a search. And this speaks exact- exactly to what I am, uh, advocating for in this video and how we think about our business.

So when we think about the riches are in the niches, oftentimes what you're thinking about is going out, going to insuranceexstates.com or Zywave or, uh, uh, f- what's that? Uh, one of those information, one of those information sites, and pulling a list and having that list be tailored exactly to pump-- plumbing contractors and 50 miles from our business, and we start emailing them or calling them and, um, you know, we create information for them, maybe on our website, maybe we do some videos specific to them, and I think that's great. What we miss is mindset. When we're building out a niche, we oftentimes, and I see this just over and over again, which is why I'm creating this video, is that we think, "How do I like to prospect this niche? How do I, the producer, the agency owner, how do I like to prospect this niche?

How do I like to service this niche?" And that's great, except what if that prospect does not want to be marketed to that way? What if they don't want your customer experience? You could be the best plumbing contractor, uh, insurance agent in the country, but if you are not also aligning your, uh, prospecting process, your customer experience, your sales process, your onboarding process, your rating, review, retention process, if you're not also aligning with the mindset of your particular customer, then you are leaving a tremendous amount on the table. And the reason that I'm able to say this with absolute certainty and confidence is because in my previous work, this is what we did.

So I have, uh, all the agencies that I've built, all the agencies that I've worked with, uh, in a capacity where I was actually working there, not my, not my c- my clients, my consulting clients, 'cause this is a decision that they all make independently. Uh, and if you're interested in the consulting side of what I do, uh, go to masterclass.insure. There'll be a link in the description, whether you're listening audio or, uh, on the YouTube channel. You can go to masterclass, M-A-S-T-E-R-C-L-A-S-S.insure, I-N-S-U-R-E, masterclass.insure, and, uh, depending when you're watching this video, you can either sign up, uh, for the wait list, uh, if we haven't launched yet, which we'll be launching in February, and after we launch, you'll be able to-- That'll take you right to where you need to go to learn more. So what I've always done is I've always preferred to be a master generalist, and my niche was a mindset versus a particular industry class.

And here's why. We're currently in a hard market as of January 16th of 2024. We're currently in a hard market in the property casualty insurance space. Rates have been consistently going up, a little, maybe a little less, uh, so much on the commercial side, but certainly on the personal line side as well, although commercial has felt it. Um, certainly geographically, commercial has felt it, and across different industries, et cetera.

But let's take-- Before we get to the hard market piece, let's take a, a more prime example, which is COVID. During COVID, every restaurant in the country essentially was shut down, and if your niche as an independent insurance agent was restaurants, bars, and taverns, you were screwed, absolutely, positively. And I know agencies that had to sell. I know agencies What's up, guys? Sorry to take you away from the episode, but as you know, we do not run ads on this show, and in exchange for that, I need your help.

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I'm out of here. Peace. Let's get back to the episode. That basically went out of business because such a large portion of their revenue came from this one single niche that, you know, when something, a black swan event like COVID happens, they are completely unable to handle that because they're so over-indexed on that one niche. So if you only write one type of business and regulation changes or the government steps in or a disruptor comes in and puts that type of business, you know, uh, drastically reduces, say, how much revenue those companies are making or th-those companies have to downsize, et cetera, those changes impact your business substantially, right?

Maybe you're slightly down market from that. It might take you six months, a year, et cetera, to feel the impact on your revenue, but you're creating opportunities for black swan events to put you out of business or drastically impact your growth, right? A big part of my just philosophy on life is that, um, success isn't so much driven by our wins but by our ability to s-s-sustain losses. And what I'm advocating for in this particular video, and particularly how we address this idea of niche marketing and having a niche, is that, one, I think most classes of business in the, we'll just call it the entire small business segment, maybe even some of the smaller middle market businesses, but we'll say the entire small business segment, 'cause I know some of your middle market guys will get your, get your, uh, your underwear all bunched to that idea, uh, is that they're basically all the same. The difference in the questions that you have to ask from a plumbing contractor to a warehouse to a wholesaler to a bakery, the difference in questions are so minute.

It's like, I mean, how m- how many actual questions that are gonna impact underwriting between a plumber and a warehouse and a bakery do you actually have to ask, right? You gotta ask about property. You gotta ask certain liability. There's gonna be a few unique questions to each individual class, but otherwise you're just, you're basically rolling out either a package or a BOP with workers' comp that's gonna be basically the same, uh, just different class codes, and commercial auto, which will be basically the same, just maybe different class codes, et cetera, different drivers and different maybe driving exposures. But essentially, y-you know, we're not talking about these huge swings in difference.

So if you-- And in personal lines, everything's exactly the same. So my point in saying that is we can niche down to, you know, young affluent and personal lines or whatever, or we can go after, uh, homeowners only or, you know, homeowners built after a certain range, families with multiple cars, package policies if we're going personal lines. Commercial, we can go after whatever. You can pick plumbers, contractors. You can pick wholesalers.

You can pick a specific, uh, type of professional class or whatever. But are you targeting mindset? And my point is, if you're gonna target one specific niche, then you-- understanding their mindset opens the entire niche up to you. And I would advocate that we don't limit ourselves to a particular niche, that we limit ourselves to a type of mindset, the mindset that aligns with how you like to do business. Because let's say we go back to our example about the hard market, right?

So, so if we're in a hard market, that means prices are going up. It means what if all of a sudden every carrier in, in your state decides that contracting classes are just killing them, and they just slam up rates on the contracting classes, and now all of a sudden you have people leaving left and right, people going out of business, people just dropping their insurance, telling you that they'll get back to you in three months. They're just gonna operate without insurance for a while. I mean, these are all the crazy things that people do during hard markets. And if that happens, and you're relegated to one particular industry class niche or maybe a couple industry class niches that are of similar ilk, you are again putting yourself in a position where your revenue can be drastically impacted, where instead, if we open ourselves up and make our niche a mindset, such as what we did in my previous agency with the, with the human optimized model, is we wanted people who were unhappy with both the local, traditional, face-to-face, hand-to-hand combat, kinda slow, methodical method, and were unhappy and dissatisfied with the do it yourself, no one to call and, and, and answer my questions, feeling like I'm all alone model. 'Cause that's really the two options that we have in our industry right now, this very traditional model and the DIY model that's kind of online.

And what, what I was doing at my previous agency and what the, you know, one of the core concepts behind the human optimized model was our niche was a mindset. It wasn't an industry class. Our niche was you wanted the ease of business of DIY, but you wanted to make sure that you had an agent that you could call if things got squirrely. It was a mindset. We sold, we marketed to, our niche was a customer experience.

It was a customer mindset. Because my belief is with the right set of triggers, right set of forms, right, right processes and systems, you can write a plumber just as easy as you can write a warehouse, just as easy as you can write a bakery, just as easy as you can write, uh, an attorney, if they have the mindset. If, if that's the way that you wanna market. If you want people who are okay with remote employees, who are okay with text messaging, who are okay with using a self-service portal, uh, for downloading certs, et cetera, like that type of, of customer experience that I, is what I actually think the vast majority of people who purchase commercial insurance and personal insurance in the United States, this is what I actually believe they want. That mindset becomes your niche, and then you can maybe dial in from a geographic standpoint and, a- and increase your hit ratio even more, even though you will be reducing your pool when you limit your geography, the more you limit your geography.

If you're marketing on mindset, you're not closing yourself down to a particular niche and opening your agency up to the whims of carrier pricing, carrier appetite, et cetera. I mean, I know, you know, right before, um, you know, I exited my last agency, we were starting to see, you know, certain carriers who had had a wide open appetite for certain types of risks start to really narrow down. And now if, if tho- if all of a sudden your, your market access or the appetite of a particular carrier or a set of carriers is closed down to you, that niche no longer exists for you. You can't write it, right? Now you're going through wholesalers and doing all kinds of stuff, and it's...

So m- my point is, a- and many of you will disagree with me, and there's been so much written. You know, you, you Google these things and see how many articles have been written. I know that the vast majority of you who are listening to this will not and do not necessarily agree, nor will you adopt this process. However, for those of you who can kinda see beyond the traditional mentality of, "I have to pick one specific industry class and become the absolute best at it so I understand their concerns," right? Which I think is valid but limiting, that if we think about niches through mindsets, right?

If you think through-- 'Cause, 'cause oftentimes people don't care that you know, you know, the cost per pallet for, you know, a, a, a wood pallet contracting business, and y- you know, I mean, they get it and, and it does add, you know, it adds validation and it, it, it adds professionalism to what you do, sure. But, but is that really why they buy? Or do they buy because they believe you're gonna solve their problem? I think that a better niche, or at least a niche to consider, or maybe this is just another tool in your tool belt. You know, have your two, three, uh, niches over here that you do very traditionally, and then think about adding a n- a niche that is, that is broader, that opens you up to more opportunities, that allows you to be more flexible with the accounts that you bring in.

Think about creating a niche around mindset, around the type of person, the type of belief structure, the type of customer experience that they want, that, that matches what you and your people and your agency are able to deliver, that's gonna make you feel good, that's gonna make them feel good. You will connect, one, on a deeper level, and two, you don't have to be this industry expert. Right? You don't have to be this deep industry expert. You can be an insurance expert and an experience and problem-solving expert, which I believe creates a broader set of sustainability to both your agency and ultimately to the industry as a whole.

Guys, I know that this is kind of a radical take. I am very interested in your thoughts. If you're listening to this in audio, come to the YouTube channel, leave your comments, or find me on social media. Would love to hear from you guys. You can DM me if you want it to be private or, or just post something on, on, uh, one of the channels about, you know, how crazy I am for this idea, if I'm completely wrong.

If you're watching on YouTube, would love your comments. Would love to know what you think. Uh, where did I go wrong? What am I missing in thinking through this idea of niche as a mindset versus niche as an industry class or, or even a type of, a type of- A policy type, right? I mean, policy type might be even worse because you could be a cyber liability expert and then all of a sudden cyber goes up 300% in a year and it becomes very, very difficult for you to manage that.

Now, granted, uh, the initial premium increase is gonna make you money, but, um, it does create a lot of holes and gaps that people can then, that disruptors or other agents can come in and fill and now all of a sudden you're battling to keep your clients. Uh, for me and, and, and my business philosophy is, is do the things really well which create sustainability so then you can take your moonshots on radical scaled growth, right? That's the philosophy that I practice in our industry because I think our model, our, uh, compensation structure, uh, how our business works, the fact that we are really just, you know, the distribution arm of a set of suppliers, that we have to think through sustainability in our business across the board first and make sure that we have that rock solid foundation upon which we can build the programs that allow us to scale. Would love to hear your thoughts. I love you for listening to this show.

If you wanna get on the newsletter list and be the first to know about the launch of my coaching program, Finding Peak, go to masterclass.insure. I love you for watching. I'm outta here. Peace. I'm going to Shaboom.

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