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Do you sell a commodinity known as insurance, or do you have a unique process that you take prospects through?

Winning Strategies

Distinguishing yourself from the competition

Be a consultant, not a commodity

By Roger Sitkins

If you are a traditional agency operating in a traditional manner, getting traditional results, you've got a ton of competition. How much? Well, just Google the words "Property and Casualty Insurance" and the name of your town, and see how many hits you get. I just did that for my hometown—Fort Myers, Florida—and received 27 pages of hits! In round numbers, that translates to a minimum of several hundred listings.

Insurance is becoming more and more commoditized, driven by billions of dollars in advertising by companies such as GEICO, Progressive, State Farm, Allstate and others. In fact, GEICO now spends more than $1 billion a year for its gecko pitchman to reach the consumer! Regardless of the brand, the overall message is: "Call us or go online and save money!" I have no argument with saving money, but at what cost?

The problem with selling only on price is the lack of consideration for coverages, limits or risk management. In case of a loss, is the consumer covered to the extent that they think they are? Most people assume that as long as they pay their premiums, they'll be compensated in the event of a claim. As we all know, that's not necessarily the case.

Although the vast majority of the insurance advertising we see is for personal lines, consumer attitudes (and practices) carry over to small and mid-sized commercial lines clients, who also are coming to think of insurance as a commodity. Hence, the growing number of Web sites where business owners can get a quote on their insurance.

If you're going to be in the commodity business, you've really got to be in it in order to compete. Several of our Sitkins International members do a phenomenal job in personal lines and actually, as a percentage of revenue, it's the most profitable part of their agency overall. That's because they do it right! They understand what they're up against and know how to profitably sell, place and service personal lines. They simply perform better than their competition.

With that in mind, let's review some of the strategies that will distinguish you from the competition.

Value-added services: We all know about the advent of "value-added services" as a means of separating us from our competitors. However, I believe the term has become an absolute cliché, similar to "We give great service," "We have the best people," etc.

What most agencies offer as value-added services are little more than what their clients expect to receive in the first place. Can you articulate your value-added services?

Previously I've discussed Dipping and Dumping, using two buckets to illustrate this risk transfer concept. One bucket is the client's; the other is the insurance company's. A traditional agency dips into the client bucket, scoops up the risk and dumps it into the insurance company's bucket, thereby transferring the client's risk to the insurance company's balance sheet. For that, the agent is paid a commission.

The problem with dipping and dumping is this: What we're paid a commission for today (the purchase and placement of insurance and reactive service), we may have to do for free in the future or not even be part of. Conversely, what we currently do for free (add value well beyond the purchase and placement of insurance and reactive service) may be the only way we get paid in the future.

With today's predictive modeling and high-tech tools to assess risk, the role of the independent agent is changing dramatically. If their value lies strictly in the purchase and placement of insurance and reactive service, as the distribution model changes, insurance carriers are increasingly apt to question whether agents are needed.

What does the future hold for you/your agency? The future continues to say there will be fewer agencies, but they will be larger and much more successful. Think about what's happened to travel agents.

Unique selling proposition (USP): These are the unique and appealing ideas and behaviors that separate you from all of the "me too" competitors. I know we've talked about this in the past, but I think it's important here. Do a competitive analysis. What is your toughest and fastest-growing competition doing that you don't do? Why are they great competitors? Whatever their USP is, they're using it against you. Do you have a USP? If it's "I'm in the insurance business," the answer is no.

Identify critical success factors: Critical success factors are the few basic things we do exceedingly well all the time. However, if you were to ambush your producers and ask them to name a handful of things your agency does consistently well, what would they say? Most either won't know or will say something like, "We give good service."

One of the easiest ways to get employees to buy in to this concept is to identify and establish the basic areas of performance that can be measured. Some examples:

• We account sell. We work with full-time clients only—no part-time clients.

• We are relentlessly prepared. Rehearsals and practice are non-optional behaviors. (Note: I've never seen a great movie or play that didn't have scripted dialogue, which the actors usually adapt during a production. Although some of the words may vary each time the actors say their lines, the plot doesn't change. The same is true of sales presentations. While I'm against scripted selling per se, I'll admit that an outline with bullet points can be extremely helpful, particularly when agents are just starting out or are presenting an unfamiliar product. After sufficient practice, agents should know the outlined ideas by heart and be able to comfortably communicate them and sound natural.)

• We help our clients and prospects control their Total Cost of Risk. We realize that insurance is one of our solutions, but not the only one.

• We maximize productivity and employee engagement.

• We communicate. We are clear about our goals and results.

You'll be able to develop your own list of Critical Success Factors once you identify your agency's unique abilities and strengths.

Point of comparison: As a point of comparison, you set the standard by which all others are measured. It's one of the most powerful things an agency can do, but most don't because they aren't confident enough in their abilities to invite comparisons with their competitors.

To establish yourself as a Point of Comparison with prospective clients, present a side-by-side comparison of your agency vs. the competition. We position this as a "decision-making tool." As such, our conversation with a prospect would sound something like this: "We realize that changing agencies is not an easy decision. Even though 78% of the business owners we deal with have chosen us—that's our closing ratio—we still appreciate how difficult it is to make a decision. After all, you've been with your agent for a number of years and they've done an adequate, traditional job for you. So we've developed a decision-making tool that may be of help to you."

We then show them a simple form with three columns. The left column has all of the services you'll be providing, including any gaps in coverage you found on the account, any services you're offering that they're currently not receiving, etc. The middle column is for your agency, and the right column is for the incumbent agency. As you go down your agency's column, you check off everything you listed in the left column and then ask the prospect what services they're receiving from their current agent. Invariably, they'll admit that they aren't getting any of the services you checked off. It's an incomparable way to differentiate yourself!

Named/branded selling process: Exclusivity is a major selling point, no matter what the product. So what is it that your clients and prospects can get only from your agency? Do you sell a commodity known as insurance, or do you have a unique process that you take prospects through? For Sitkins International members, it's The Risk Reduction Approach™.

Ask yourself or your producers "What is our unique process?" If the only thing your clients and prospects can get from you is a quote on their insurance, your agency is no different from the countless others you'll find on Google.

The bottom line

You either fear the competition or become the competition that is feared. What do your competitors think, feel or say when they realize they're competing against you and your agency? Do they give up once they discover they're working against you on one of your existing accounts? Or do they laugh when you attempt to land one of their accounts? It all comes down to your ability to differentiate.

Are you the agency that is feared and revered, or are you a walkover?

As always, it's your choice.

The author

Roger Sitkins is the founder and chairman of Sitkins International, a private client group and membership program for some of the top independent 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 innovators.

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