The power of great business acumen
Sound business judgment gives you the power to be a peer—not a subordinate
By Larry Linne
Picture one of your producers sitting in front of the decision maker of a middle market account. He has just presented a proposal that includes a comprehensive coverage overview with complete backup to protect your E&O exposure. The proposal has a coverage comparison and a thorough gap analysis of the incumbent agent’s program. Your producer feels confident about this proposal because it includes in-depth value-added services, competitive pricing and cutting-edge services. In addition to your agency’s outstanding reputation, the producer has a solid closing ratio history.
At the same time, your producer wonders what the prospect will think of his product choice and pricing, and how it stacks up against other agents’ proposals. In other words, he is focused on what he is offering and his products.
Then he gets some unexpected news when the prospect says, “This is a very impressive presentation. You did a good job with the coverage and pricing, and your services look very attractive. But I’ve decided to go with someone else. I can’t tell you how much I appreciate all your effort on this excellent presentation, and maybe next year we’ll take another look and give you another shot.”
The producer is in shock. How could he lose this deal if his presentation was so good and his price was so great?
I’ll tell you—because I was the prospect.
Some consultants say you should never hire a consultant unless he or she has been very successful doing what he or she is consulting about. I agree. But that would be the second most important attribute of a consultant I would hire. More important would be to find someone who has been in my client’s seat. That’s because understanding the insurance buyer is far more important than understanding your agency and its sales process.
Unfortunately, our producer in the story above understood only his product and his agency, and what it could offer and do for my company. He didn’t understand what I needed as a business owner and lacked the business acumen to provide it. By acumen, I mean “good business judgment.” Understanding why someone makes the decisions he makes is integral to successful sales.
In this case, the agent who won my business:
• Reassured me that he understood my industry. He spoke in a familiar language, using statements that connected us, such as “you and I know that…” and “when we have to…in our industry…” These statements convinced me that he grasped the nature of my industry.
• Asked about my business—not my current agent. When people ask questions about my current agent relationship, what they’re really saying is, “I do the same thing as your agent, but I do it better.” Inquiring about my business allowed this agent to identify new opportunities to prevent loss and improve how we looked to the insurance marketplace.
• Inquired about my personal objectives. Furthermore, the way he framed those questions indicated that he had empathy for a business owner. He understood the issues I faced and what I was trying to accomplish as a business owner and operator.
• Broadened his definition of risk management to include risks not covered by insurance. He didn’t pretend to have all the solutions, but he was able to give me insight and challenge me to look at broader areas of risk to be managed. This was invaluable and set him apart as a trusted advisor vs. a salesperson.
• Discussed politics, our industry and issues in the economy. He demonstrated that he knew more than just “insurance sales,” which is something I expect from my trusted financial advisors. I want them to be my peers and be able to help me anticipate trends and potential problems.
The agent I chose had higher-priced insurance than the others, but his “product” was better. Besides the insurance coverage, he offered superior, custom service and business acumen. Because of all he had to offer, I knew he would save us money in our total cost of risk.
Two other agents were competing for my company’s insurance and risk management program. (We did only agency beauty contests and didn’t make decisions just on price.) The two who lost acted, looked, sounded and sold like subordinates. The winning agent was perceived as a peer because he projected strong business acumen.
As the vice president of sales at Manuel Lujan Agency, I observed and enjoyed many sales successes because of our perceived business acumen. Here are some examples of how we brought business our way:
• We took it personally. Before we made our final presentation, we understood the personal goals of the president and the vice president of human resources. We were told that we won the account because we understood how our insurance, benefits and risk management strategies fit into their business and how they could help these executives personally.
• We offered solutions. Sometimes writing new business hinges on solving problems that really have little to do with actual insurance. For example, a construction prospect once told us that his number-one risk was selling to future clients. We saw that as a sales and marketing problem, which we could solve. We gave them consulting advice on a sales and marketing strategy that helped them grow their business. The fact that we were 15% higher in premium was irrelevant.
• We examined culture. A large contractor moved his business to us because we demonstrated how his culture’s priority system had cost him more than $900,000 over the previous three-year period. Because he had developed a culture driven by productivity, decisions were being made on speed vs. safety. His losses were out of control. All of the other agents identified the losses; we explained why he was experiencing those losses.
These positive results were achieved because of our sales consultants’ strong business acumen. Going forward, business acumen is a skill that will be crucial to the success, if not survival, of every sales consultant. Some key points to keep in mind:
• It doesn’t take a lot of effort to create the perception of having strong business acumen. We have seen 25-year-old producers create trusted advisor positions with prospects after being in the business for fewer than six months. Those with the greatest business acumen typically read a variety of periodicals, newspapers and trade publications and initiate purposeful discussions with industry specialists.
• Business acumen is easier to lose than to develop. When producers become lazy and think they know it all, they become irrelevant to clients. We have seen 30-year veteran producers become ineffective in the market because they lost perspective on current business acumen. Unfortunately, many successful producers lose their business acumen when they fail to stay on top of current trends, technology and needs of decision makers. Without ongoing development and use, business acumen will stagnate and evaporate.
• Your agency should have a formal plan to develop business acumen. Agencies that integrate the development of business acumen into their culture typically enjoy greater success than those that do not. One way to do this is to invite clients, attorneys, CPAs and others to speak on current issues and future trends. Some agency CEOs conduct a monthly training session to help producers understand how they make decisions. Other agencies organize group book reviews, providing a forum for agents to discuss the latest business best sellers. Often these discussions give producers greater business acumen than the books themselves!
One of the greatest experiences our producer team ever had was when we “renewed” the relationship with our own agency. I was the salesperson and, in front of the producers, I interviewed the owners. After identifying their cost-of-risk and benefits issues, I presented a plan to help them reduce risk and enhance their appeal to insurance markets. In the process, we all learned a lot from the agency’s owners about how they thought and why they made certain decisions.
• Everyone must be committed to developing personal business acumen. You can’t force business acumen on a group; every individual has to be truly committed to developing it. A purposeful plan will speed the development. Start with a topic of interest or focal point, then set goals and establish a plan of reading, mentoring, observing and learning. Focused development will move a producer toward becoming a true trusted advisor.
• Asking great questions gives the perception of high-level business acumen. The smartest people I know are the ones who ask the best questions. Accordingly, the best salespeople I know ask questions that transcend what might appear on the insurance application. They also adhere to adages such as, “They don’t care how much you know until they know how much you care,” and “You can be silent and thought a fool or you can open your mouth and remove all doubt.”
When you ask the right questions, others will perceive that you care about them. More important, great questions yield useful answers—after all, the prospects will be doing the talking. However, excellent questioning skills aren’t something you can acquire from a book or a class. They must be learned and practiced frequently.
Now, picture one of your producers sitting in front of a prospect after presenting a plan to make the prospect more attractive to the insurance marketplace. To develop an appropriate plan, the producer asked probing, creative questions and established a peer-to-peer relationship with the company owner. As he waits for the prospect’s decision, the producer is thinking about the positive impact his proposal will have on the client’s balance sheet and personal goals, today and in the future.
He’s not surprised to get the order. He has great business acumen.
Larry G. Linne is president of Sitkins Group, Inc., which offers The Vertical Growth Experience™ exclusively to its membership known as Sitkins International.