The title of a popular book is “Swimming with the Sharks.” It teaches you how to get along in the world of “sharks” – the voracious salespeople of industry. Well there’s a group of people who welcome circling sharks – The Shark Hunters.
We at Agency Consulting Group, Inc. can teach you how to compete and to beat the price-shoppers and quoters of the marketplace, our version of Sales Sharks.
Sales Sharks come after your customers (and everyone else’s) with the same message: “Insurance is all the same and we can get it for you cheaper.”
Is Insurance, “all the same”?
Unfortunately, we in the insurance industry have spent 25 years indoctrinating the insurance buying public with that same message, from direct writers touting shopping comparisons for quote-seekers to commercial lines agents who market solely with the concept of lowest price products.
Most good agents know the subtle differences between the low price products with no agent service or with service from a captive agent or from a pure carrier employee and the products and services of an independent agent dedicated to the well-being of the client. And the difference IS subtle.
Many captive agents and carrier service center employees try hard to properly serve and represent their customers. But the fact remains that in both Personal and Commercial Lines those agents and service personnel work for the same carrier that pays losses. The carrier’s obligation is to pay the least amount to “properly” settle claims in order to create profit potential for the company. For the most part, claims are settled properly and fairly. But which of your clients wants to be left with no representation in the case of the unusual, questionable or serious loss?
But the independent agents who used to be the professionals and counselors of the industry have succumbed to the same sales tactics as the direct writers who only had lower prices to sell when they were competing for market share.
What To Do About Price-Quoting Sharks Circling Your Clients
At one point or another we have all experience clients who boldly tell you (or send you all the indications) that they are shopping their insurance programs. The first question to ask yourself is –Why?
Why Do They Shop?
Most people got to a doctor when they feel PAIN. What pain did your clients feel that prompted them to seek other agents’ quotes? The first and foremost answer to that question is a lack of involvement by the agent or by the agency in the case of personal lines.
If you are, in fact, the client’s insurance counselor you are in touch with him confirming that he has no “pains” associated with his insurance programs or solving those pains if they exist. Even the pain associated with increasing insurance costs can be addressed by doing what the client expects in the first place – shopping his insurance products with a variety of carriers and products. Most clients experiencing rising insurance costs, an inevitability for both direct writers and our own carriers, simply want to confirm that we are doing what they are paying us for – looking out for their best interests and their pocketbooks.
But how many agencies actually review renewals before the clients see them to determine if rates and/or premiums have changed, and then addresses those issues before the client can do so?
We have gotten lazy. That’s why rising prices influences customers to shop. They realize that we are generally renewing “as is” with the current carrier regardless of the changes experienced. And many of us wait for the insured’s “pain” to display itself in phone calls and complaints before we do something about it. If you were a customer and experienced the same complacency in your agent you, too, would try to protect yourself by shopping your program with a variety of agents to ‘test the waters’.
But what about those clients that feel no compunction about shopping with multiple agents or carriers every year, using you as only one of many price-competitive providers?
He Who Lives By Price…
Did you get the client by offering to quote him??
Did you tell him that he was probably paying too much and you would be happy to provide him a “free” quote?
What message were you sending to that prospect? You were telling him that the value of your services was the availability of a free quote. You tempted him with price and had no expectation of getting his business if your quote was equal to or higher than his incumbent program.
He probably learned that lesson well from you and other Price Sharks. So next year you should expect him, as a good student, to continue to do his “homework” and shop his insurance again. If he is lazy and no agent approaches him, inertia may work in your favor to keep your client from shopping. But if another agent solicits him, the client sees absolutely nothing wrong with giving him the same chance that the client gave you last year.
Solving the Price Shopper Problem
The best way to convert a Price Shopper into a loyal client is to PROVE YOUR WORTH. This means that you must provide service after the sale that adds more value to your participation in his insurance program than simply having the lowest price. This also means that, minimally, you as the agent or your staff in the case of smaller accounts and personal lines must contact the client several times each year to make sure that his insurance needs haven’t changed and that he knows and remembers your name – or your agency’s name!
If you want to convert the Price Shopper from a “customer” into a “client” you must go beyond the “minimum” and provide him services that he hasn’t or can’t get from his prior agent, or from any direct writer. That grade of service depends on the product you are selling to the client, the revenue that you are getting for the sale and the types of services you have within your agency that add value for your clients.
Claims assistance and analysis, Workers Comp Mod audits, cross-analyzing all forms of personal, commercial and life and health lines, and even federal regulation compliance are examples of ‘value-added’ services. We encounter dozens of services being provided by counseling agencies to defend against incursions by the Price Sharks in our industry.
When your client retention is above 95% you have won the battle and have become a virtual Shark Hunter. If your retention is between 90% and 95% of your clients, you are doing an average job – or your competitors are not marketing aggressively yet. If your client retention is below 90% you are working very hard to maintain revenue levels, marketing to new prospects to replace those lost to competitive pressures.
Hard or soft market, low retention of clients tells the tale of your ability to serve your clients beyond simple price. Call Agency Consulting Group, Inc. 800-779-2430 to get an analysis of agency retention, a measurement of Client Retention, Policy Retention, Premium Retention and Commission Retention to enhance productivity and profitability by retaining more customers.