Is Price Important?

December 4, 2014 Don Hobdy Jr.

red dollar sign attached to metal chains

Since Black Friday was last week, we saw many news stories of people suffering from Black Friday fever - up at 3 a.m. to get the best price. Agents deal with prospects daily who question price. It seems everyone is shopping for the best price. Really, the best price compared to what?

A. What they have in their budget?

B. What the agent down the street is saying?

C. To nothing--were they just negotiating?


Price resistance will happen, but if you ask the right questions, build rapport and establish value, it is less likely to happen. Most agents are vulnerable to price challenges because we...

  • Want the sale.

    • We love the release of those endorphins when we see the signature on the application.
  • Focus on defending prices rather than providing better coverage or a better company.

    • We incorrectly assume price is the only concern every time. Price is always a concern but rarely is it the only concern. Asking more questions can allow your value to become a differentiator.
  • Don't establish value upfront.

    • During the sales process, you need to communicate to the prospect why she should do business with you, like your user-friendly insurance agency website, friendly email reminders, your involvement in the community, etc.
  • Dislike discussing prices.

    • Don't be afraid of the confrontation. This will give you the opportunity to discuss why the prices are where they are. You can even use your comparative rater to show the small differences in price.

Our prospects on the other hand will challenge price for at least one of the following reasons:

  • They lose nothing if they ask for a lower price.

    • Consumers feel it is their right to get the best price. As Wayne Gretzky famously said, 'You miss all of the shots you don't take.'
  • They believe the prices are flexible.

    • Consumers may not understand that you don't create the rates out of thin air. Most don't know what an actuary is and what rates are based on. Take a few minutes, and educate them.

  • They think it is their responsibility.

    • They are conditioned to view insurance as a commodity and feel they need to get the best deal available to them. As their agent communicate you are using the latest technology to shop for them and find the best coverage for their needs.

  • Sales people often give in on price.

    • Their buying history has shown them they won't get the best value if they don't ask. Some agents will offer an inferior product (at a lower price).

  • Value has not been created up front.

    • The consumer doesn't see why this policy is worth the extra premium.

Take price off the table, and see if it is an issue. Ask, 'If my policy is the same premium as Joe Blow Insurance down the street, how would you choose between us?' There are other reasons besides price a consumer decides to purchase from you. Remember if they come to you for a dollar, they will leave you for a dollar. They will stay if they see that was a dollar well spent, and you won't need open your agency at 3 a.m. for those early bird insurance shoppers.

 

About the Author

Don Hobdy Jr.

As Vice President of Sales, Don Hobdy Jr. is responsible for ITC's revenue growth through product sales and strategic partnerships. While he doesn't promote any one sales philosophy to his team, he does incorporate a range of techniques from Sandler to Challenger in his methodology. Don, a licensed P&C agent, travels the country speaking to agents on digital marketing and agency efficiency as well as teaching continuing education classes. When he's not on the road, he enjoys firing up his smoker to cook amazing bar-b-que, watching his Dallas Cowboys, writing, and taking his three kids to amusement parks around the country.

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