The holidays are approaching. The time for sales, door busters, and insane pricing is upon us. It reminds me of last year when I wanted a new TV. Holiday discounted prices finally caused me to act and get rid of my old TV.
I ventured down to my local electronics store and started checking out the deeply discounted TV mentioned in an ad. Right next to it was an even better TV for just a few dollars more. The salesperson helpfully explained to me why it was better than the cheaper TV: better picture, better sound and able to connect to the Internet. 'Wrap it up,' I tell him. He continues to tell me that if I want that awesome picture I would need the gold plated HDMI cables. Fine; throw it in the cart.
Now I am happy that I have an even better TV than I originally was looking at and am walking out the door with what I consider to be a great deal. Wait. There's more.
The girl behind the register notices that I am loading up in style and mentions the extended warranty. 'Of course!' I said. 'I need this awesome TV covered as long as possible.' At this point, the excitement of a new toy has blurred the line between want and need. I NEED that latest and greatest TV. By the time I realize that I was upsold and paid quite a bit more than I originally anticipated, my new score has been loaded into my car.
This is a prime example when price can cause a customer to act, yet sensibility and desire to have that product takes over.
How does this apply to insurance?
Insurance is very different from my TV (which by the way has an awesome picture). You cannot offer door buster pricing. There are no this week only sales. There is only cold, hard pricing based upon underwriting guidelines and complicated risk based algorithms. Only a differentiation in carrier, coverage, limits, and deductibles create a more or less expensive pricing option.
I hear it all the time. 'I don't sell on price; I sell on value. That is what makes me different.' This is fine, but offering what people need will not get people in the door. Consumers want a low price. However, their coverage needs do not often call for that lower price offering. This means you need to have diversity: a low price to get them in the door and better options that fit their actual needs.
The direct writers know this all too well. Every commercial you see from the direct writers talks about saving money on insurance... save this, discount that, cheaper rates and so on. They are engaging the consumer using price. With that said, give one of them a call about that low price offering. You will be quickly upsold to the plan that better fits your needs. They will expertly explain to you why lower coverages are a poor choice and how this other plan is what you need to protect you financially. If the consumer is persistent about the lower price offering, the direct writer will still sell the product to the customer.
Choice in upselling
Choice. This is what makes being an independent agent unique. You have a choice in carriers and plan offerings. This choice gives you a distinct advantage against the direct writers. Advertise both a low price as well as your ability to offer a complete coverage package.
After getting a lead into your door (via, web, phone or actually walking in), it is time to sell him the plan that meets his needs, not his low price wants. Ask about his family, his financial position, and what is important to him. Engage and educate. Take the time to explain why the coverages he needs might cost more than he wants, yet is the better choice for him and his family. This is where salesmanship, training, and product knowledge will pay off.
Keeping the value selling agency model
This is where I differ from the direct writers above. Selling a low-end product while promising a high-end experience is a good way to upset a customer. If you are a very large company with a PR firm and a 'the little guy does not matter' mentality then sell that low price product until you are blue in the face. However, you are not. You care about your customer. You care about your image. You care about YOUR financial livelihood.
There is no shame in turning away a sale. If the customer's continued expectation is complete coverage at liability only pricing, you might have to tell him that you cannot meet his insurance needs. This might force him to take a second look at your needs-based offering. If you, the professional insurance agent, who has taken the time to listen and educate is willing to lose a sale versus seeing them get a bad deal... you might just earn a customer for life.
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