Negotiate Personal Lines Insurance #4

This should be it for a while.  The last post based Ed Brodow’s negotiation book.

8.  Acceptance.  The example Brodow gives on this is utilities companies warning of a rate increase far in advance.  Then when it hits, the customers expects it and is not bothered by it.  To be honest, I would love to see some experiments to see how this might work in an agency.  Here’s some suggested scripts.  Often you will quote a customer and will blow their current rate away.  You do everything you can not to leave to much money on the table such as increase coverages, add an umbrella, a term policy, or even remove discounts, but you are still dramatically cheaper than their current carrier.  Usually this means that your current rate is really underpriced.  The company will figure this out and will probably increase it dramatically over the next couple years.  It may be helpful to alert the customer up front, that this rate is unusually good and don’t be surprised if the company increases the rate next year.

9. Change sales people.  You have been working on a multi-line account that stands to generate 5-8000 in wp for the agency.  The customer has been working with you and things look good, but then for some reason they turn sour.  It may be time to hand it off to someone else in the agency and play the good cop/bad cop game.

10.  Humor.  Pepper your sales strategies with humor.  Diffusing an objection with humor is sometimes a great way to lighten it up and get the customer to accept and like you.

Customers for the most part think personal lines insurance is negotiable like most products.  If they are business owners, they may have experienced this with commercial insurance.  As we know, prices are fixed; and you have more negotiating power than you think if you are an independent agent.  Never start with your lowest.  Don’t give away the store the first time out.  Don’t panic at objections, they are probably just negotiating tactics.

Comments on this one are welcome.

Negotiate Personal Lines Insurance #3

Negotiate your way to greater PL sales.  We’ve discussed the need to negotiate in your sales and use the power of multiple price points and companies.  We’ve given a handful of tips that buyers use and sellers can use.  This post will give further tips on becoming better at negotiating with your customers.

4.  The Nibble.  The buyer’s tactic on this would be to ask for more, if the price is not negotiable.  A good example is when you go to a mechanic to have tires changed and after you and he agree to terms you ask him to throw in a free oil change.  As a seller this is a helpful tactic that you can use if you can not find any lower price.  Give other options that don’t cost you anything such as bill plans, help with house inventories, free analysis of other risk areas.  It is a good idea to come up with other features that the agency can do for customers that you can through into the negotiation to create value without costing the agency much money.

5.  Deadlines.  This works great for sellers.  Create a deadline.  This quote is only good for a limited time (which is true for most companies).  Most carriers only honor a quote for 30 days.  Others give advanced quoting discounts which can disappear if the customer does not act.

6.  Walkout.  When a customer keeps pushing for lower premiums or other concessions, you may need to say: “I am sorry, I would like you as a customer but it appears it is not the right time.”  If the customer really walks away, you did not burn any bridges and you can resolicit without any hard feelings.  It may put an end to the back and forth and force a commitment.

7.  Assumptive close.  We all do this.  “Here’s the rate, do you want to may this effective on the 15th or 30th?”  “Here’s the rate, are you more comfortable paying in full or EFT?”  Assume they are buying and close it.  Years ago when working for Progressive, we did mystery shopping where we would call our agents and ask for a quote.  Primarily we were looking to understand how they positioned Progressive in the agency, but we learned a lot more.  Soon we developed a checklist of sales tactics and strategies the quoter used.  After thousands of calls made over several years, only 1% ever asked for the sale.  As an insurance person, just doing this will make you better than most of your competitors.

There’s more to come. Look for part #4 soon.  For more detail check out the source for these thoughts: Negotiation Boot Camp: How to Resolve Conflict, Satisfy Customers, and Make Better Deals

Negotiate Personal Lines Insurance #2

Negotiating Tips for Personal Lines sales people.

In part 1, we discussed the basics of negotiating and the need for salespeople to sale on value and not merely price. I mentioned some tips on negotiating and this post will give details about those methods.

1. The Flinch: you’ve done this before. Someone mentions a price and you grunt, shrug, or exclaim, “What?!” This is usually a buyers tactic and you probably have heard it. The best response to a buyer who flinches is: “Is that cheaper than you expected?” Reverse it. As a salesperson, you can use it by being confident when you deliver the rate. I have never spoken with an agent who didn’t quote a piece of business, and feel the rate was too expensive. However, they delivered it anyways and the customer thought they were getting a bargain.

2. Emotional Barrage/Sob Story: These are forms of the flinch and they are a buyers tactic. Several years in the nonstandard arena made me very aware of this. After a while, the stories become the same and you realize that they are negotiation tactic for little coverage and a low down pay. You may need to pass on this customer, unless they are willing to come to terms.

3. The Squeeze: this is the power of competition. The buyer says, “My company only costs x.” First, unless you have the policy, this may not be true and it may be the prior term and not renewing price. Also, this is where knowing your competition matters. As a seller, you have to move the focus from who’s got the best price to whose product does the best job. Remember as a seller, you are part of the product. Are you better than your competition? I hope you think so.

Another strategy on this is to “tie a string”. Hopefully, you have not given your lowest quote at this point, so you have price room without lowering coverage. Lower your price by choosing another one of your companies, but require something of the buyer. For example say: “I will try to get this lower, but if I can get close to your number, are you ready to buy (or fire your agent)?” If they say, yes, then respond with the new offer, but say we can do this but I will need you to: pay in full, go eft, give me a referral, etc.

There’s more, but let’s save for another post. What’s been your experience?

For more detail check out:Negotiation Boot Camp: How to Resolve Conflict, Satisfy Customers, and Make Better Deals

How to Manage Change So Your Staff Gets Excited

managing change
What your insurance agency staff thinks of your ideas

Managing change in your business may feel like walking through a minefield, but here’s a solution.

First remember, you are creative. You are a risk taker. 

If not, you would not be a business owner or agency manager. It’s part of the job description. In the midst of the administrative management jungle you may have forgotten this exciting part of your person.

Here’s a way to get it back, create excitement in your agency, and find new ways to grow.

Over the years, I have heard staff complain that their owners and managers are always coming up with new ideas and upsetting their applecart. This is fine and good, but can be unsettling if done so often that no momentum or traction is being created before changes are made.

Rather than radically implementing new procedures and ideas throughout the organization–

Experiment!

Here’s what I mean. Grab a volunteer among your staff or pick one that fits best what you want done. Tell them your new idea, and what you want to accomplish. Have them track everything they do and give them a timeframe such as 30 days. If your idea works, then implement it agencywide and your guinea pig will become the idea cheerleader for the whole office.

Here’s some ideas:

1. Pick a staff for the next 30 days to only offer EFT or Paid in Full to all their new business customers. Then see if it was a deterrent to new business. What other issues did it cause? What kind of benefits did it bring? How did you handle objections? Were there any objections?

2. Offer your highest priced quote to all customers in 30 days. Compare total new written premium between this staff person and the others in this time period. Any objections? How did they handle? Did their sales skills improve? Did you find any staff weaknesses? What else did you learn about this person and process?

3. Offer everyone an umbrella.

4. Sell higher limits than the rest of the office. If the standard is 100/300 or 50/100, have this person offer the next step higher. What effect did it have?

5. Try a marketing idea. Different postcards. Spread over different weeks and different amounts.

You are creative and can come up with multiple other ideas. If you have some you decide to do, report the results back to us. Don’t be confined to 30 days. 60 or 90 would work as well, but I think the shelf life is probably 90 days.

Be creative. Put on your lab coat and your best evil scientist smirk, and go to work.

 

Theron Mathis

Postcard Marketing

Next to mining and managing referrals, direct mail may be the best form of marketing for local business, especially insurance agents. A friend passed on this following article on postcard marketing. He did not write it either, and I apologize for not knowing the source, but it is a concise, helpful start to designing your own direct mail program. Enjoy.

“Six things I know about postcards that you don’t In my plethora of experience tucked away between these ears, I have managed to cull out for you what I consider the “best of the best” – in other words, I took the most proven details about postcards that were significant to you starting a postcard campaign and really winning at it. So here goes the most incisive highlights about postcards.

1) I know that a postcard is better than something in an envelope.For many reasons, the main one being, in an envelope you can’t make your potential customer see your message.People are fast. We see and read very quickly – actually much more quickly than we even realize.. Think about yourself – how fast do you go through your mail and process out what you want to keep and what you don’t want to keep? Pretty darn fast. It takes fractions of seconds to go through and process in your mind “bill, bill, advertisement, bill, advertisement, letter…” And it also takes fractions of seconds to decide whether you are even going to bother giving more attention to the pieces that you designated as advertisements.With a postcard, even if they throw it away, they already saw your message regardless of whether they think they did or not. They saw it enough to throw it away, didn’t they?And the next time they get that same postcard in the mail, they see it again as they throw it in the trash.Let’s face it – junk mail gets thrown away. And postcards are junk mail to a lot of people.Although they may be junk mail, postcards get read no matter what – even if thrown away without reading them, they get seen. It’s like the phoenix rising up from the ashes.

2) I know that if you are not doing repeat mail with your postcards you are flushing your money down the toilet.Repeat mailings cannot be repeated enough. DO REPEAT MAILINGS! DO REPEAT MAILINGS! DO REPEAT MAILINGS! A one shot in the dark postcard mailing is not going to change your business, your bottom line, your life or your anything.The long and the short of it is, if you are not up to confronting that you need to do a campaign then don’t bother being in business. Sorry if I sound a bit harsh!

3) I know that the best price is not best necessarily the best postcard.The cheapest is not necessarily the best. The old adage “you get what you pay for” applies here. Get whatever potential postcard company you interview to send you samples. Make sure the postcard is a very good, quality, stiff card that catches your attention. Get them to give you customer references. Call those references and find out what they think of that company’s service, product, etc.There is a lot of behind-the-scenes work that goes into getting your postcard done right. If they screw up printing, if they don’t get your mailing out on deadline, etc. – doing it dirt cheap might not mean getting the quality service you need or want.

4) I know that although most people, if surveyed, say they like full color on both sides, the truth is black on white on the back of the postcard gets a better response. Why? Because full color on both sides is confusing. On the other hand, if you have a very aesthetic, pleasing-to-the-eye front – with a great headline – you just want to turn that postcard over and simply get the message on the back. You want good eye trail.Eye trail is where your eye goes when you look at the postcard. You can have good eye trail with full color on both sides – but it has to be done correctly. Usually when you give people a choice to do full color on both sides they go overboard and the creative juices start flying, not flowing, flying with, “WOW!!! full color on both sides?!!” And they make it too busy. You don’t want it to be dispersing – you want it to go like a trail. Have a start, a middle and an end.

Example:        Did YOU Notice this Postcard?
Your Customers Will Notice Yours Too!
5000 Full Color
Super-glossy
postcards
for only
$389

Look at it from the customer viewpoint – really look at it from their viewpoint and you can see what I mean by eye trail.

5) I know that you should promote only one thing at a time on your postcard.Even if you sell lots of different products, you only promote one of them. It is fine to mention them on the back of the postcard bullet pointed. But your main focus on the front of your postcard needs to be one product, service, item, what have you – just one thing.Say you have a flooring store and a furniture showroom in the back. Your postcard should only talk about flooring. It is not that people who are looking for flooring are not also looking for furniture – it’s just too much information on the front of postcard.The purpose of a postcard is to get your prospect interested with one thing. You can put on the back as just a mention: “We also have a giant showroom full of furniture.”But on the front – one item! ONE ITEM!If a company sells hot tubs, above-ground pools and jungle gyms they need to pick the one that gives them the most income and make their postcard about that.

6) And I know that a person could grow a company with no other marketing media.With postcards alone, one could take a company from zero to over a million bucks in revenue or more. How do I know? Because I did it.We mailed postcards every single week, and the more postcards we mailed out, the more we grew. Yes, it is good to diversify and as we grew and became more successful and had more money to try other media, we did. Some we kept and some we nixed.

Postcards are a staple that works no matter what.These six points of postcard marketing data are proven techniques of making your postcards WOW your prospective clients while at the same time being faithful to the time-honored methods that have proven to get more bang for your buck. These tips are what will put your postcard in a class all by itself.”

 

Here is a Method That is Helping Insurance Agents to Negotiate Personal Lines Insurance

Recently I read an excellent book on negotiating by author and speaker, Ed Brodow, the book is titled Negotiation Boot Camp: How to Resolve Conflict, Satisfy Customers, and Make Better Deals.  Even if you can not apply it to your insurance sales career, there is a lot in here that should help negotiate others things in life.  If nothing else, it has helped me to question price whenever I buy something.  The book was not just about buyers, but about how sellers can improve their negotiating skills.  This is where power for sales people comes into play.

In the insurance industry, the negotiators are often found in commercial lines.  The reason is that the premiums are a lot more flexible.  Over the years, smart cl producers don’t sell their rock bottom price; and there are bigger reasons for this than just increased revenue. They know that they may need some wiggle room next renewal, and if they are at the bottom on new business pricing there will be nowhere to go next year.

Once I walked into an agency and the producer bragged to me about saving a customer $4000 on his homeowners insurance.  I looked at him and asked, “Why?  Couldn’t you have only saved him $1000?  You just lost $400 in commissions.”  He looked at me and said, “The customer really needed the money.”  As you can probably guess from the premium this was a multi-million dollar home.  Not only did he lose a lot of revenue, but what will happen next year when the customer wants a lower premium again?  There will be no where to go on the price.

Because of the economy, I hear agents tell me that insurance is all about the price these days.  If price is all that matters then why do people buy Starbucks coffee rather than the local gas station variety?  I also know agents who regularly are selling at or greater than the customer’s current premium.  In personal lines, this is a minority but it does happen.  Even shops that sell solely on price are often selling more expensive products than they realize.  I have seen agents sell an uncompetitive product but they did not realize it because they had so few carriers or forgot to quote some of the more competitive players in their office.  This is not to say that price is not a factor but it is not the only factor, nor is it the most important.  Value is what customers want–not price.

It takes skills to sell value over price.  Again this is where we could learn from our CL counterparts, and Brodow gives several tips that can be used, and several will be discussed in the next post with implications for the personal lines producer.

Be Productive,

Theron Mathis

Here are the lists of Posts:  #2, #3, #4

 

The 2 Biggest Secrets to Successful Agencies

Last week I stopped into one of my favorite agency. I love going in because I always feel like I gain more than I offer. He tolerates me and continues to us my service, so hopefully the feeling is mutual. We talked about marketing, sales training, and business management. He then said it looked like his growth was going to be 16% this year. The phone was going crazy and sales people roamed around the office making deals on their headsets. This only added to the energy and excitement.

Within minutes of leaving his office I crossed the street to another client. This second agency has been in business a couple of years longer but is 5 to 6 times smaller. The agent complained to me about the recession and how slow business was. No phones were ringing and only one non-standard auto was written while I was there (and that was a rewrite). There was no marketing plans and no energy. Everything was gloom and doom.

The agencies used the same carriers and were in the same zip code, but the results were dramatically different. What were the differences?

1. Attitude
2. Action

No matter the circumstances or obstacles these two things are always under our control. Be positive and do something. These are the two biggest secrets to successful agencies. They may be simple, but often hard to implement.

How To Maximize Your Agency Management System – 6 Critical Reports You Need

Rather than addressing the topic of whether you need an agency management system or not, let’s talk about what you should be doing with one.  Other than storing and retrieving client/prospect data the biggest benefit of a management system is the ability to run reports that help manage your agency more efficiently.  Here’s a list that are critical to marketing and management success.

1.  Customer count:  This might sound simple but I have worked with many agents over the years who could not give an accurate estimate on this one.  This one is basic and can help with retention and account rounding.  It also can help determine staff capacity and whether your staff is overwhelmed or there is more room to grow.

2.  Policies per customer.  The more policies that each customer has with you, the greater the revenue and the greater the retention.  This is a great metric to set goals around, because it has such a huge payoff in other parts of the business.

3.  Account Rounding percentage.  In personal lines, this is basically how much monoline business do you have or how many of your customers have both their home and auto with you.  In agency discussions, it is not uncommon for managers to dramatically overestimate this percentage.  By knowing this number, you can generate a lot of new revenue within your shop that will not cost a lot of marketing money.  In commercial, there are more ways to slice this one.  You could see how many accounts have a BOP/CPP along with workers comp, auto, inland marine, etc.  Another way to run this report is to look at cross-sells across departments.  How many commercial customers have their personal lines in the agency?  How many PL customers have life and health?  How many benefit customers have commercial or personal?  Running this on a regular basis could help find revenue.

4.  Retention/Lost Business reports.  This is important because it finds potential holes in the agency where customers could be drifting away.  Run this report off of policy or customer count.  Once this is determined, you could further analyze the profile of customers who are leaving and stop future run-off.   If you could improve this metric by a point or two through the data you collect, you would be able to write less new and still see growth.

6.  Source to Sale.  Where is your business coming from?  This one is a little harder to run, because it is determined on the data that personnel enters when setting up accounts.  The best advice is to set up various codes for your sources such as int (internet), ref (referral), radio, etc.  This would help decide where to spend marketing money.  You could also use it in connection with other reports and may find that certain sources tend  to retain less or be less profitable.  Then it would be easy to cut off those sources if need be.

If you do not know how to run these today, make sure you contact your vendors or even company partners, and get some training or templates.

Are there other agency management system reports that you like to use and find beneficial?

 

Theron Mathis