In every commercial insurance transaction, there is a buyer and a seller working towards the common goal of protection for a risk. Too often this transaction is flawed. Here's some reasons why.
“Wait for me, I'm your leader!"
This often-referenced saying speaks to a truth in sales, which is that buyers too frequently are the leaders in the sales process. You may be asking yourself: how can a buyer lead the sales process? The answer: When the seller abdicates their responsibility and power to lead the buyer.
In every commercial insurance transaction, there is a buyer and a seller. Seemingly, goals are in alignment—both are pursuing the same outcome: a relationship where the business is protected from risk. Protection is provided either through risk transfer, risk avoidance or through an informed and deliberate intention to assume the risk where the agent is appropriately compensated for helping the buyer identify risks, procure an adequate and accurate insurance policy, and implement effective risk management strategies.
It sounds logical, right? Yet, it rarely occurs. Let's explore why.
A Flawed Buying Process
Buyers often engage in what I refer to as a flawed and dangerous buying process. Every year or two the buyer invites a few new agents in and gives them the opportunity to quote their insurance program. In many instances, this is done to satisfy an internal business requirement or to maintain confidence in the current insurance program and agent relationship.
This approach, often referred to as “bidding and quoting," does little if anything to address inaccuracies or inadequacies in the business' insurance program or highlight the differences between agents. In reality, it only reinforces the status quo, resulting in the incumbent keeping the account.
Buyers aren't completely responsible for this approach. As a whole, the insurance industry has reinforced this tactic through marketing and action. Commercials and websites suggest that buyers can name their price, pay only for what they need, and discreetly imply that an agent is a means to an end and, in some cases, not necessary at all.
A Failure to Provide an Alternative Approach
While the buying process may be flawed, too often producers have a poor approach to engaging with buyers.
Frequently, producers follow the buyer's process assuming they can turn things around at presentation. This is a common belief, even though industry statistics tell us that buyers stay with the incumbent agent 87-92% of the time.
It is not surprising that producers are frustrated with the buying process. However, they rarely offer a more efficient and effective one. To offer an alternative approach, sellers must have an alternative process and have the confidence and ability to assert why it is more effective.
To move prospects off a flawed approach to making insurance buying and risk management decisions, producers must have the belief that their approach is more effective and efficient, and gumption to push back with humility, empathy and a genuine desire to protect the buyer's business.
It's been my experience that for a host of reasons—whether it's poor pipelines, lack of training or fear—many producers simply follow the lead of the buyer and hope against all odds that they will prevail.
Sellers Must Be Leaders
Disrupting the status quo can be both scary and exhilarating, but it is imperative in order to achieve mutual success and alignment.
Buyers often push back when producers try to lead and position an alternative approach. Why? Because buyers have become disillusioned by unkept promises. Knowing this provides producers with an opportunity to be empathetic and demonstrate an understanding of buyer frustrations.
To lead, producers must first help buyers understand the risk they assume in following the bid and quote process. Second, they must demonstrate the contrast between the buyer's current process and the alternative approach being positioned.
Third, they must provide a clear path forward, outlining the process, barriers that may be encountered and convey assurances that they have the capabilities to navigate and address challenges as they arise. To do this, producers must possess belief and competency in their approach.
Finally, producers must be willing to walk away from buyers who choose to dismiss the risks of bidding and quoting.
Here's where having gumption comes into play. My business partner, Frank Pennachio, often says that producers, again and again, allow the scent of the premium to outweigh the stench of the process. In other words, true gumption requires walking away from a buyer who refuses to acknowledge the risk associated with a flawed buying process.
Leadership is the missing ingredient in sales. For producers who embrace it as part of their role, rewards will follow. For those who acquiesce and instead follow, the journey to building rewarding and lasting relationships will remain a challenge.
Susan Toussaint is a practice leader at Oceanus Partners, a ReSource Pro company. Oceanus Partners is a firm dedicated to helping insurance professionals working in all lines of business insurance improve sales and client retention.