Posted on 01 Sep 09
In this issue we are discussing agency sales and what producers need to do to effectively sell in tougher economic times. We spoke with Bill Hoos, president of Agency Sales Pro, LLC, an outsourced sales management firm exclusively serving the insurance industry. Bill has more than 35 years experience as an insurance company executive, sales manager, coach, trainer and business owner.
Annie George (AG): When selling insurance do we have to look at the market, whether it’s hard or soft?
Bill Hoos (BH): “Using an effective sales process is just as important during a hard or soft market. The challenges are different, but its importance and the fundamental principles behind how you go about effective prospecting and sales are the same. What we will look at is what is needed to successfully sell insurance in a downturned economy.
“There is a confluence of several issues that have taken place over the last year or so…the economy is contracting, companies are going out of business, layoffs are at record highs…all of which impact insurance and limit opportunities for selling new products or expanded services. We have to ask ourselves how do we go about selling effectively in this environment?”
Bill explains that 82% of salespeople sell on price and treat the product as a commodity. “It’s a no-win game, as 92% of the time, a client remains with the incumbent because the price is matched. What’s more, if you sell on price, then you are doing exactly what 82% of your competitors are doing. If you sell on value, then you’re only competing with18%,” says Bill. “If you’re in the 82% club, then your service is the same, and there is nothing to point to that rivals your competition around town.”
Bill also says that many producers spend too much time whining and making excuses for why they are not selling or meeting goals. When the market is too soft, price-cutting is the excuse; when it’s hard the lack of product availability and high prices become the culprits.
The challenge ultimately becomes to provide value so that insurance is not sold as a commodity. “We have to change the paradigm here, our mindset. Begin to view ourselves as advisors,” says Bill. To illustrate the point, he related an anecdote from a client who spoke at recent conference. The speaker who was a producer opened his discussion by saying that he was just advised he had a heart disorder and asked the audience if anyone knew of a good cardiologist. He went on to explain that money was an issue, and that price was the deciding factor in determining whom he would use to undergo his operation. The audience just looked at him perplexed. Then he laughed….
“That’s how many people buy insurance, they look at the cheapest price,” says Bill. “But that is also how many producers are selling insurance, instead of looking at it as a value proposition. We don’t go to a CPA or an attorney and ask for four quotes, so why do we perpetuate this when it comes to protecting someone’s business or personal assets?”
AG: How do you break the cycle of selling based on price?
BH: “Look at why people buy from you. They like you; they trust you. They also buy from you if they perceive you as an expert and that you can help them. They need to feel that your service exceeds that of your competitors and that your products address their needs and that your price is fair. The key is then to emphasize these factors.”
Bill explains that there are actions that should be implemented to move the sales process forward in this environment. “As in any climate, an agency needs to establish sales objectives – as simple as this may seem, many just don’t. You need to know where you are going and what needs to be done to get there. Additionally, be sure to attach time constraints to each objective for accountability and to track success. Focus on priorities, and implement a time management system to make sure that your producers are doing what has been outlined.”
When establishing these objectives, be sure to use successful prospecting techniques. “I am not a fan of cold-calling,” says Bill. “It’s more effective to establish a prospecting process based on referrals, networking and developing a reputation of being an expert and resource in a targeted industry. Based on your overall marketing strategy, agency resources and your carrier niches, determine which industries make sense for your producers to become experts in. Have them join trade associations and become an integral part of that industry’s community. Do not have a general approach to selling.”
Focus on more than the coverages. Producers need to tap into buying motivation, determine what a client needs, what he/she is looking for, and shift the discussion from price to value. “If your client, for example, says that his/her primary need is to protect the company’s assets and continue to have a thriving business, then your producer needs to focus on ways to accomplish this and present a plan that helps avoid unintended losses that would interrupt the business. The producer should capitalize on opportunities discovered during the information-gathering or diagnostic phase of the sales process.
AG: How do you communicate the message of value to prospects?
BH: “Implement what I call a ‘killer value proposition’ approach whereby a producer answers all the questions that went unanswered in the diagnostic phase of the sales process. Do an assessment of the client’s needs and go back with an analysis that demonstrates your value. Provide risk management and safety services for loss prevention. Conduct a claims review – look at what has been happening and do a brief on how you can avoid future claims. During economic downturns such as the one we’re in, present a long-term cost containment program that is solid and illustrates benefits for the long haul, not just for today but for next year, the following and so on.
Value is the only way to effectively distinguish yourself from the competition. You are building a proposition that inherently says to your clients that they are buying more than an insurance policy. They are getting the expert advice of a risk management and insurance advisor.”
Bill stresses that it is necessary to be committed to the entire process - that it will take about two years to see significant results. “If you don’t adhere to a solid the sales process, you can expect about a 57% wash-out rate among producers who won’t survive in the business. Of those who do survive about 40% will not be achieving their goals after five years.
If you approach sales with a quote-bidding mentality, you will have much fewer opportunities, especially in this economy. If you approach sales in terms of value, you will have greater success. People surviving and thriving in this economy are those that are offering real value to their clients.”
About Bill Hoos
Prior to founding Agency Sales Pro, Bill spent much of his career with two large regional insurance companies, serving in various capacities including: Distribution Development Manager, National Sales Manager, Director of Personal Lines Sales and Branch Manager. Bill is also known for his sales training and coaching accomplishments, having worked with two nationally known sales training organizations throughout his career.
For more information about Agency Sales Pro, visit www.agencysalespro.com. You can contact Bill at 1-866-274-6279 or via email at firstname.lastname@example.org.