Insurance distribution dominates conversations about the marketplace. We talk about enormous advertising budgets, overwhelming messaging to the audience, a focus on price and saving money, and conducting business in a nanosecond. Independent agents ask, “How are we to compete in this ever-changing and increasingly 'noisy' space?” The answer may very well be, “We shouldn't!”
It's amazing how many agencies are prospecting and approaching sales today the same as in the pre-Internet era.
If you're trying to compete in that space, rather than being a trusted adviser managing insurance programs (not selling policies) and providing valued advice to your clients, then there are obstacles before you. Let's explore five ways agencies shoot themselves in the foot when trying to compete with direct writers:
We try to get noticed in an environment where our competitors spend $6 billion to advertise: Watching agencies go after their least attractive customer leaves room for those discriminating clients and prospects. The discriminating prospects value advice, have assets, equity and a high regard for the professionals in their life that provide direction. These types of prospects have received easier to access, as companies pursue them.
We try to appeal to a buyer who sees little or no value in what we offer: It's time we look for clients that value what the independent agent is all about—relationships. They will spend more for the advice and counsel, they have more lines of business to insure, they spend more hard-earned cash to protect what they have accumulated and they are more loyal and less price sensitive.
We allow our competitor to set the rules of engagement with little dialogue, a focus on savings and a “free, no obligations quote” in seven minutes or less: The average agency spends as much as $300 on a small account in acquisition costs. Just how many free quotes can we afford? If you want to be viewed as the least valuable and lowest common denominator in the consumer sales chain, just keep that up. Of course, there is an obligation and an expectation of doing business together when you evolve into customized insurance solutions for specific client problems and concerns. Set a new rule of engagement that provides solutions and added value to those you serve.
We become players of the commoditized insurance game: Agencies focused only on speed and price provide little value. Most agencies spend time in dialogue learning about the prospect, their needs, their problems and building relationships. Then they fall flat by “taking” the lines or coverage given to them, rather than having a holistic approach to insurance solutions. We cannot afford to invest this time unless we're selling every possible line or business. Focus on being less inefficient.
We accept an order for the desired request from the buyer, rather than truly selling the products we have available: The days of a counter with the gals taking orders of those who fell through the front door are long gone. Today's successful agency sells multiple lines of coverage to all members of the family. Understand that we must generate every possible dollar of income from every account. You've heard me say it before: “Deeper with fewer,” which equates to maximizing the revenues from each relationship.
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