Selling on price can put your business out of business.
I was speaking recently to one of my broker friends and was surprised at his remarks. “It’s really tough out there,” he bemoaned. “Buyers don’t have big ears anymore.” Upon further discussion, he defined “big ears” as a buyer’s concern about saving money on premiums. “It’s just not right,” he continued. “In past years, they had them. Now they all know the premiums are dropping. I’m just not getting their interest anymore.”
I didn’t know how to tell him that his value proposition had a fatal flaw. He was basing his sales model on an outdated business strategy. Selling on price went out the window in the late 90s. Now, he was sailing into the wind.
The marketplace is eroding on price. So now’s the time to align your sales strategy with those of your clients and prospects. Show them how you and your organization help buyers reduce costs. This is an entirely different discussion: One that will stand the test of time. If you keep selling on price, you’ll place yourself and your firm out of business. Here’s why:
- Your clients will ruin your business. Not only will these buyers leave you eventually on price — but each year they’ll beat you down into the ground, never invest in loss control, and continue to have their experience deteriorate. Ultimately their account will become so bad that no one will take the risk.
- Your carriers will abandon you. Some of the more astute carriers are beginning to understand what their value proposition actually is. Remember, there are only seven national multi-line carriers that license agencies. Those of you who keep the carriers on the lowest price merry-go-round will eventually find yourself without a chair when the music stops.
- Your health and family life will suffer. This is a tough business. We make it tougher on ourselves than it needs to be. Understanding your value and knowing that you won’t always be the cheapest, will go a long way in boosting your confidence with clients and prospects. Start telling them so now, before you pay a higher price. The stress of always needing to be the “fastest gun in the West” will kill you.
- You’ll be searching for scraps. When you sell the lowest price, your firm won’t be able to invest in loss control, claims management, or any of the other resources that differentiate a highly successful brokerage. This means that successful brokers will attract all the quality clients, leaving you with the dregs of the insurance barrel.
Those of you who are chasing the market down are sailing against the wind. You must turn the ship around immediately, before it’s too late. Learn your firm’s value proposition, understand how to discuss business with your clients, and be able to demonstrate how you have reduced their costs. Have the skills necessary to develop clients through conceptual presentations. Otherwise, you’ll be left adrift, as the wind continues to blow against you.