Open the way to sales success with these three keys to interacting with prospects.
In a Tillinghast-Towers Perrin survey, 76% of the Property/Casualty CEOs surveyed identified “distribution effectiveness and productivity” as their most crucial strategic issue. A broader group of CEOs from the overall financial services industry named distribution effectiveness and productivity as one of their top three issues from among 10 choices.
Many insurers are addressing this issue by exploring different methods of distribution. Companies that have distributed exclusively through independent agents are establishing captive agents, direct writers are appointing independent agents, and nearly everyone is looking at the Internet and direct response.
This raises a question: What’s the real problem — the means of distribution or how we approach the customer? Companies and agents usually try to differentiate themselves from the competition on price, product, or service. They often do this before they truly understand the customer’s needs or business issues. They assume that their products and services already address the customer’s needs and proudly tout their advantages and benefits.
Let’s take a moment to consider price and product as possible differentiators. If we drop our price to become more competitive, how lasting is the advantage? If our competitors care to, they can quickly match our price. Not only does this eliminate our advantage, but we’ve reinforced the customer’s perception of insurance as a commodity. By dropping the price without first determining the customer’s primary needs, we’ve indicated that price is an important issue.
By the same token, how lasting is the advantage when we introduce a unique product feature (such as a special coverage or limit)? Filings are generally public information, so this advantage is also elusive; and again we’ve focused the customer’s attention on a characteristic of the product that we’ve determined to be important.
Of course, price and product are important. However, if you think about it, how long can you use them to differentiate your agency in a competitive marketplace? When a company lowers its price or enhances its product, usually its competitors can do the same — and there goes your advantage.
Unfortunately, as companies examine other means of distribution, they make these very errors: differentiating themselves through features that might not address their customers’ true needs. They do the same with their Web sites. As I review sites aimed at generating direct sales, I find that most are merely quoting facilities. In effect, they lead with price.
If price, product, and even service are all short-lived differentiators, how can we improve the effectiveness and productivity of distribution channels and more consistently achieve our growth objectives? We can gain a real, lasting competitive advantage only by the way we sell our products and services.
What do I mean by that? People buy products and services from people — people they like, but more importantly, people they trust. You gain trust by being sincere and demonstrating competence. In other words, customers want to know that you care about their needs and understand their situation. You have to intelligently discuss with them how they can use your products and services. You need to address their needs, not make canned presentations; solve problems, not just push products.
To do this consistently and effectively, you must establish a process. First, let’s define “salesperson.” To me, a salesperson is anyone who comes into contact with an insurance consumer and has an opportunity to influence buying behavior-this includes producers and customer service representatives.
The 80/20 rule was devised to describe accounts, but it also applies to the salespeople in most organizations: 20% of them deliver 80% of the results. These are the masters. They intuitively know how to talk with customers, and most of the time, they succeed. Ask them to explain to the other 80% (the journeymen) how they do it, though, and they’re at a loss. To improve the journeymen’s performance, you need to document the process that the masters follow intuitively. This will not only help the journeymen but also ensure that the masters perform more consistently. (Even masters have a bad day now and then!)
The process of interaction with a customer has three distinct stages:
- Identify the customer’s problem.
- Determine the reasons for the problem.
- Demonstrate how your capabilities (products and services) address the reasons and eliminate the problem.
It’s essential to proceed through these stages in order. Don’t discuss products until the final stage —salespeople have earned the privilege of bringing up products and services only when they fully understand the customer’s problem and have determined, jointly with the customer, the reasons for the problem.
Let’s examine each of these stages in more detail.
IDENTIFY THE CUSTOMER’S PROLEM
Insurance customers fall into one of two categories: They’re either satisfied or dissatisfied with their current insurance program.
Research has shown that about 90% of the purchasers of any particular product aren’t looking for a replacement for what they already have. Are they satisfied? Not necessarily. They might not know there are improvements, or they might have rationalized that their problem can’t be solved and pushed it to the back of their mind. They can’t see how your products and services can help them because they haven’t admitted to a problem.
What about the dissatisfied customers? Unlike the unsatisfied group, they acknowledge their problem and are actively seeking a solution. They might even have a vision of how to do it. In all likelihood, this vision was created by one of your competitors.
The difference between dissatisfied and satisfied customers is significant, so factor it into the design of your sales process. The first step with unsatisfied customers is to get them to realize their problem by asking situational questions — and hope your products and services can address the problems you uncover. If they can’t, practice “honorable selling:” Thank the customer for their time and move on to another customer.
The dissatisfied customer recognizes a problem and is trying to solve it. Your task here is to understand how this customer sees the products and services of other potential providers of solutions. Only then can you differentiate yourself by introducing additional capabilities that you know the competition doesn’t have.
DETERMINE THE REASONS FOR THE PROBLEM
Assume you’ve gotten the customer to admit to the problem of rising Workers Compensation premiums due to the frequency of workplace accidents.
Once you understand the problem, you need to determine the reasons for it. Think for a minute: How would you feel if your doctor prescribed medication or surgery without first diagnosing your ailment? Often insurance professionals do the same kind of thing, offering solutions (pushing products) before completely understanding the reasons for the customer’s problem.
Ask the customer why they think the problem exists, and be prepared with a list of possible reasons to discuss. Your list needs to position you to present your products and services as their solution in the final stage. Again, if your capabilities can’t address the reasons for their problem, practice “honorable selling.”
DEMONSTRATE HOW YOUR CAPABILITIES ADDRESS THE REASONS AND ELIMINATE THE PROBLEM
Continuing with the example, suppose that during the determination process you discover that the primary reason for the frequency of workplace accidents is the lack of a workplace safety program. Only at this point, when the customer’s problem and the underlying reasons are clear, should you introduce your capabilities.
It’s vital to introduce your products and services one at a time as benefit statements. Give the customer the opportunity to tell you which ones offer them value. By aligning each of your capabilities with a reason for the customer’s problem, you can develop a “buying vision” for the customer that eliminates the reasons for their problem and ultimately the problem itself!
Let’s say your capability is agency experience and company resources for developing workplace safety programs. You might say, “You said that frequency of workplace accidents due to the lack of a safety program was driving up your Workers Compensation premiums. Would it help you to have a team of safety experts composed of agency staff and company engineers to design and implement a workplace safety program?” If they say yes, you’ve gained their agreement that this capability will eliminate their problem by effectively addressing its causes.
This process focuses on how the salesperson should interact with customers to be more successful. This approach also should be part of every agency Web site that offers customer interaction. Web sites don’t have to be limited to merely offering quotes and listing product features-they can be designed to enable intelligent conversations with prospective customers.
So is an agency’s success or failure determined by the distribution system it chooses? I hope I’ve shown that it’s the way we approach the customer that matters. You can only achieve lasting differentiation can following a process that builds rapport and demonstrates competence.