Qualifying accounts

Webster's Dictionary defines qualification as “a condition or standard that must be met for the attainment of a benefit.” The word “standard” is an important part of this definition for agencies. Qualifying accounts means not just examining information about a prospect, but first having qualification standards by which a prospect can be measured.

The underwriting department has standards, but producers need them too. A producer uses standards to ask, “Will this prospect ever hire me?” Before you invest your resources in preparing a proposal, you can use the following “qualification reference points” to determine if a prospect meets your qualification standards:

o Relationships: Your relationship with a prospect-and the prospect's relationships with other players-are key factors in winning and keeping accounts.
Are you meeting with all the decision makers, just one of them, or with someone who has little involvement in the final decision? Will the prospect ever let you talk to the decision makers? Especially when you're courting a larger account, a good strategy is to ask, “Who else on your team is involved in this process?” If there are other people involved, you can follow up by asking, “When can we meet with them?” If you find out that you're not going to be able to meet with all the decision makers, it's probably not worth your time to prepare a proposal.
What kind of relationship does a prospect have with its current agent and carrier? For example, if a prospect tells you, “My agent is the soccer coach for my son's team” or “My agent was my college roommate,” move on to the next account. Loyalty to a carrier is another potential roadblock. One of our prospects had experienced a large property loss 12 years earlier. Their existing carrier had settled the claim and treated them well. The prospect felt loyal to their carrier, and would be reluctant to leave them. Since bringing in a different carrier wouldn't work, we realized we had to use a different sales strategy.

o Technical ability: How much does the prospect value the technical and service ability of the current agent and underwriter? Does everybody involved on your end have the technical ability to service the prospect's business? If they don't, you are working on an unqualified account, and you will be “found out.”

o Situation: Why is a prospect letting you prepare a quote? Is there a problem to be solved? Is there any pain with the current agent or the carrier? The answer to this question might indicate whether your investment of time and effort is likely to bear fruit. There must be a problem, a new or newly discovered issue, that you can help the prospect solve. A prospect who says, “I just want to check the price and keep my agent honest” or, “I don't know, I just do this from time to time” is giving you a clear “no-buy” warning signal.

o General issues: How many other agents or carriers are involved in preparing quotes? You'll almost always be competing with the incumbent agent and underwriter, but decide before you start working on a proposal how much competition you will tolerate. We once experienced an extreme example of this issue: When we visited a prospect, we were told, “There's a pile of specs for you in the next room. Just pick up a stack and send in your quote.” That's not a good sign. Such a prospect is probably doing the same for a lot of other agents.

Are such factors as the time until expiration date, the timing of your proposal and decision deadlines to your advantage or disadvantage? You might miss the “proper” timing of an expiration date with 50% of the prospects you visit. Some prospects will tell you that their expiration is just days away or that they have just renewed. In the past, this made me think, “I've lost that one.” Now, however, whatever a prospect says about its expiration date, I respond, “That's perfect.” Most prospects aren't used to hearing that kind of response, so it can be a good conversation starter. You can use the moment to your advantage. Get a head start on next year's renewal process or a risk analysis and objective-setting, for instance, or offer to review the renewal policies when they arrive-which will help you learn how the prospect made its renewal decisions.

Will the prospect give you the details of its current insurance program, including the price? This is a big “no-buy” signal if they won't. This is a sensitive issue, but one you must confront. Explain to prospects that you and they are competing for the time and effort of the carriers, and that without full information the underwriters will likely decline the prospect. A lack of information also hinders your ability to obtain the best possible terms, service and premium for a prospect. Prospects that are unwilling to share this information don't really want to hire you, and likely are just using you to keep the current agent honest.

o Gut feeling: We're in the business of analyzing and quantifying risk, but we believe there's still a role for gut feeling. Sometimes after you start to work on an account and meet with a prospect, the opportunity looks promising, but you leave the meeting thinking that something just isn't right. You can't quantify it. You should trust your gut and consider walking away from these accounts. After all, even if you keep working on a proposal, that lingering doubt is likely to affect your effort, and you may not win the account anyway.

o Subtle signals: Even when everything has gone well and it looks like you're getting the account, keep your eyes and ears open for signs that something may be going wrong-subtle no-buy signals. The prospect doesn't return phone calls or misses appointments, for instance. Or perhaps the prospect returns phone calls, but after business hours, or sends e-mails in response to your calls-all signs that the client doesn't want to talk to you, and may be planning not to buy.

Stay in touch with prospects and make sure nothing has changed while you work on their quotes. After meeting with one prospect, for instance, we were in what I call the “cha-ching” mode. But when we called the prospect for an appointment to present our proposal, he said, “We already made our decision.” It turns out that since our last visit, the prospect's bank had requested a revision of their line of credit, creating a crisis at the business. In the midst of dealing with it, the prospect had decided, “Just tell our current agent to renew us, so we can get one more issue off our plate.” During the process of preparing our proposal, we hadn't stayed in touch enough to know this, so we wound up wasting our time.

When it seems hard to heed these signals and walk away from a prospect, remind yourself of the effectively unlimited supply of prospective accounts-you can't get to them all, anyway. In other words, determine how much premium volume there is within your market area. Then subtract the amount of premium volume you write. For instance, say there's $1.4 billion in premium within your area, and your agency writes $20 million in annual premium. That means there's $1.38 billion on the table for you to go after. When you look at it that way, it's easier to walk away from a single account.

How to get the order

Getting an order from a qualified prospect starts with identifying, quantifying and defining the prospect's objectives. This is a powerful strategy for winning a prospect over, and it's generally a weakness in agencies' selling processes. Ask prospects up-front to help you identify their objectives and to keep you updated if the objectives change. Your results improve when your proposal focuses on how you can help a prospect achieve its objectives, and when you ask the following questions:

- If we achieve these objectives, do we have an order? You shouldn't read the question verbatim, as if it were a script, but you should definitely get this question across early in the conversation with a prospect. Find out how committed the prospect is to solving problems and achieving objectives with you.

- Who determines if we've achieved these objectives with our proposal? A neighbor of ours gave us a terrific referral to the CEO of a prospect. We made our presentation to the CEO, and it went great. We left thinking, “This one is ours.” Back at the office, we were getting everything ready to close the deal when the CEO called and said they had decided not to hire us. He explained, “You did a nice job, but our HR manager in Columbus, Ohio, would rather stay with our current agent.” We had been so confident with our CEO referral that we had forgotten to ask about who would make the final decision.

- Are there any other reasons you could not do business with us, with me or with our carrier? All prospects have a history with agents, individuals and carriers. There are many reasons why a prospect ultimately might not do business with you. Do not overlook adverse relationships with previous carriers that you may be representing. Don't overlook the history of your agency with the prospect or the individual decision maker(s).

- Are you psychologically prepared to fire your existing agent and hire us? Without using those exact words, you must find out if the prospect can “go through with it” when it's time to fire the incumbent agent. There has been a movement to use softer language when asking this question-”Will you terminate your relationship with your existing agent?”-but I recommend using the word “fire,” because that's what the client must be ready to do.
You can often bring this up by saying, “You know, we're talking about firing your current agent.” Leave some “dead air,” to give the idea time to sink in, before asking, “Can you do that?” If you feel the need to ask the question more softly, perhaps say something like, “What about your current carrier? I know they paid a big loss for you a few years ago. Do you think you can fire them after that?”

When you get the right answers to these questions, ask for the order often. Let the prospect know in advance that when you next visit, you will be asking for a commitment: “I'd like to stop by on Thursday, and I'm going to ask you for an order when I visit. I can't wait to welcome you to our company.” You're still moving toward the prospect, helping the prospect keep you in mind after you've presented the quote. If you just stand still-do nothing and wait for the decision-you're really moving away.

A skillful transition

Your clients and prospects have many skills, but hiring you is not one of them. After all, how often do they hire and fire insurance agents? It's just not what they do. So give them help.

We give our prospects and clients a one-page chart we've developed that details the timeline for making the transition from their former insurance program to us. This chart might include all the steps from the beginning of the process: agency solicitation of insured, engaging with company and preparing specs, meeting with alternative markets, updating information, negotiation with markets, preliminary proposals, binding coverage and notifying the incumbent agent, for instance. We include information on how and when we'll issue the policies, certificates, ID cards and billing statements. This relieves prospects of some of their anxiety and makes that transition more likely, as well as easier.

Every agency has a limited amount of time and other resources. Unless your agency has the capacity to handle every last piece of business in your market area, you have a virtually unlimited supply of potential customers. Walking away from no-buy accounts and helping willing prospects close the deal ensures that your limited resources won't be wasted. You'll be successful at this if you put these methods into practice-and stop practice quoting.