Changing the conversation
Avoid the commercial commodity trap: sell value, not price
By Roger Sitkins
Although I've discussed this idea many times before, I cannot overstate how important it is that you move from being a vendor of a commodity to becoming a trusted advisor who provides more than just insurance. To do so, it's critical that you have a unique process for introducing prospects to your agency's products and services.
We all know that insurance has become totally commoditized—the decisions are almost always price driven. Today's consumers are absolutely inundated with broadcast and print ads, e-mails, phone solicitations and other tools used by GEICO, Allstate, State Farm and Progressive, among other direct writing insurers. Understandably, the consumer could assume that if it's that easy to get a quote for personal insurance, why not shop around the same way for commercial coverage? Consequently, competition in the commercial arena is escalating and price continues to drive sales.
This increased competition is also prompting agents to be more aggressive about marketing to potential clients, particularly the biggest and most desirable ones. The good news is that most agents are no longer sitting around, waiting for the roast duck to fly into their mouths! The bad news is that their approach alienates the very customers they're trying to reach—business people who are sick of fielding dozens of daily solicitations for insurance. With that in mind, it's critical to start changing the conversation and the way prospects view insurance.
Traditional vs. non-traditional
There's a big difference between the traditional approach and the non-traditional one. Most agents employ the traditional Look, Copy, Quote and Pray approach. They'll call prospects and say they have a special program and great markets, and offer to provide a free quote that can probably save them money on their insurance. The conversation is focused exclusively on price.
The non-traditional conversation explains the agency's unique process and the things that differentiate it from other agencies. The conversation is focused on bringing more value to the client and not just selling insurance.
So what is your unique process, and how do you broach the topic with your prospects? If I were to ask one of your producers that question, what would that producer say?
Recently I was talking to an agency owner who wanted to become a member of Sitkins, so I asked him to describe his agency's unique selling system. This was a nice-sized agency with about 60 employees, seven of whom were producers, yet the principal was at a total loss for words when it came to explaining their selling system!
Years ago, a consultant friend told me that he'd spent 20 years examining the independent agency selling system, only to discover that there wasn't one. That's because the "system" at most agencies is nothing more than hysterical activity based on the Look, Copy, Quote and Pray approach.
Beyond having a unique process, what is your Unique Selling Proposition (USP)? We define USP as "the unique and compelling ideas and behaviors that separate you from all other 'me too' competitors." The key to the unique process is to do something that your competition doesn't do. What are you doing that is totally unique in your marketplace? What separates you from your competition?
Have you ever heard the following?
"You insurance guys are all the same."
"Sure, you can give me a quote; we put our insurance out to bid every couple of years."
"I want an apples-to-apples quote."
If you're hearing any of those things, you're traditional because you're doing everything your competition is doing.
Another way to gauge whether or not you're traditional is the way you answer questions about your USP. When asked what distinguishes you from your competitors, we hope you don't say, "We give great service," or "We have the best people." Really??!! You're trying to tell me that of all the other agencies in the entire world, none of them has even one employee who's better than yours? You might have an outstanding team, but I don't see how one agency could possibly corner the market on extraordinary employees. It's equally disingenuous to make claims about having "the most markets" or "the most competitive prices."
If that sounds all too familiar, it's because you're having the same conversation that your prospects are hearing from every other traditional agent they've met with. That's why I truly believe it's time to change the conversation!
Creating the non-traditional conversation
The conversation should start with your unique process. This must be a named and branded process that brings value to your clients and prospects and that loudly proclaims that you are different from other agencies! You'll know by your prospects' reactions whether you've succeeded. If you don't hear them say things like, "Wow!" or, "No one has ever asked me those questions before," or, "No one has ever demonstrated how I could influence my total cost of risk," you're just like everybody else—traditional.
The non-traditional conversation should not only focus on the needs of your prospect and how your process will benefit them, it also should incorporate the following points.
The Cost of Doing Nothing. When you talk with prospects about their risk management program, they need to understand that there's a cost involved in doing nothing. The best producers will quantify that cost. They know the right questions to ask to put dollar values on potential losses to the insured.
Take employee wellness as an example. If the prospect opts to ignore this issue rather than deal it, it will cost them a quantifiable amount based on lost productivity and other factors. There's also a cost if they choose not to plan for disaster recovery or if they fail to implement effective safety and loss control training. The best producers will quantify the cost of doing nothing because they realize that dollars and cents speak louder than words.
Non-Insurance Solutions. Your conversation with prospects and clients should emphasize that insurance is one of the solutions you offer, but not the only one. Other than the risk transfer vehicle known as insurance, how many other options do you offer? The conversation needs to address how you provide plans that reduce your client's exposure to risk.
Total Cost of Risk. Because insurance premiums are usually less than half the total cost of risk for most commercial clients, the conversation should uncover your prospect's total cost of risk. Typically it has nothing to do with the actual coverage or pricing. Other than the premium, these costs include: deductibles (if applicable); uninsured/self-insured losses; the administration of the insurance program; and lost productivity caused by the lack of an employee wellness program and/or employee engagement. In fact, according to one study I read, the payroll productivity of the average professional services firm is 63%. That means that every $1 million spent on payroll yields just $630,000 worth of productivity, mainly because employees are not engaged in what they're doing.
Full-Time Clients Only. We've often discussed the benefits of having a full-time client vs. a part-time client, but is the prospect aware of these benefits? Probably not. Therefore, part of the conversation should explain why the prospect should have all of its coverages with one agency—yours. For example, in addition to the pricing advantage of bundled services, full-time clients are far less likely to have gaps in their coverage.
Evidence Binders. The conversation should also be bolstered by materials that lend credibility to your story. To me, evidence binders (either digital or printed) are the best way to compile and save your most pertinent pieces. For example, if you're explaining how an employee wellness program helped one of your clients achieve a higher return on human capital, having the evidence to prove it will make your claim all the more convincing.
Your evidence might include a testimonial letter from a client, an outline of a program, or graphics pertaining to safety and loss control. However, be judicious about what you include as evidence. You want to make sure that your binder isn't filled with a bunch of random stuff, such as lists of products and services. Those are the kinds of props that everyone uses and that traditional agents rely on.
Communicating vs. Presenting. Remember, it's about conversations, not presentations! Traditional agents make presentations in which they recite all of the products and services they provide (to everyone). Non-traditional agents understand that it's better to show the wrapper, not the candy! They listen more than they talk, and in the course of conversation they discover how they can help prospects improve their business and lower their cost of risk.
You can either become a Trusted Advisor who actually advises or you can remain a Commodity Broker. I firmly believe that someone is going to change the conversation in your marketplace. Will it be your agency?
As always, it's your choice.
Roger Sitkins is founder and chairman of Sitkins International, a private client group and membership program for some of the top independent insurance agencies and brokerages in the United States, Canada, and Latin America. Members participate in training, advising and networking opportunities focused on innovation, sales, growth, profitability and value. Sitkins International is inventing the future of the independent agency system by providing intellectual property that empowers agents and brokers to become the innovators.