Winning Strategies

Distinguished or deluded?

Are you on the road to success or following a path to nowhere?

By Roger Sitkins

As we've often discussed, differentiating yourself from the competition is critical to succeeding in our industry. What we haven't discussed is how to know if you've actually succeeded (other than through sales). Sometimes the best measure of success is what your prospects don't say. Conversely, you have failed to differentiate yourself if you hear any of these comments from a prospect:

"You insurance guys are all the same." If you've ever heard this from a prospect, it's obvious you've never differentiated. Either that, or the prospect is so used to the game most agents play (using the Look, Copy, Quote and Pray playbook) that to the prospect, you're just a vendor selling a commodity. You're not even close to being in the same league as a trusted advisor.

"We'd like you to give us an apples-to-apples quote." Most agents are happy to comply, which is a huge mistake. Why? Because there are at least 57 different varieties of apples! Therefore, trying to offer an apples-to-apples quote is not only a waste of time, it encourages the prospect to make a decision based only on price. What's worse, if your quote is based strictly on what the previous agent wrote and you end up getting the account, you're exposing yourself to a possible E&O claim.

"We're just trying to keep our current agent honest" or "Sure, you can give us a quote if you want to." While this may sound enticing to the young, inexperienced producer hoping to get lucky, there is zero chance the prospect is going to change agents. The reality is, he's using you for leverage. Your quote simply forces the current agent to meet or beat your price, while retaining the client.

Frequently a prospect actually tells producers that he quotes his account every year. But just as the prospect has no idea what it costs his company to go through the bidding process, the average producer is clueless about the cost of working on an account he doesn't get. Believe me, it isn't cheap!

Based on the studies we've conducted, it costs at least $1,500 to quote an account that might garner only a $5,000 commission. What's more, if your closing ratio is 25%, your actual cost to get that one account would exceed the commission! In other words, if you write one out of four accounts, the cost to quote would be $1,500 x 4 = $6,000 vs. the $5,000 commission. But even with a higher closing ratio, quotes are costly. When you consider that the agency must also pay the producer 40% of the $5,000 ($2,000) plus the 50% annual servicing cost (an additional $2,500), you've lost money on the account!

"You were really close." Close to what? The highest quote they've ever received? What does that phrase even mean? Regardless of intended meaning, it is usually followed by: "However, we're going to stay with our current agent."

"No one ever worked so hard to get our account." Unfortunately, you don't get paid for working hard. You get paid when you get the account. Let's guess why they're applauding your hard work. They're staying with their current agent, aren't they?

"You were the most professional," "You gave the best presentation," "Everyone on the committee was truly impressed with what you offered," and "Your recommendations really closed some huge gaps we didn't even know existed" are a few more of the phrases commonly uttered by prospects and dreaded by producers. They're always followed by "However . . ." and they rarely, if ever, result in business.

The worst part is that the average producer will cheerfully assure the prospect that he'll be back next year! These producers are confusing activity with results, rather than differentiating themselves and establishing the rules of the game with the prospect up front.

The art of differentiation

So what is differentiation? We define it as the ability to show or prove that you are not the traditional agency or agent; therefore, you don't do the things that most agencies do (namely Look, Copy, Quote and Pray). If you don't differentiate yourself from the other agencies in your marketplace, you're going to have a tremendous amount of competition! Further, if you're playing the game the way they do, you'll find yourself competing solely on price.

Traditional agencies operate in the "This is how we've always done it" mode, as if there's only one way to play the game. Typically, they do a lot of smiling and dialing: "Hi, this is Joe Agent from ABC Insurance Agency. We have a special program for your type of business that I know will save you money on your insurance. When do your policies renew?"

Obviously, prospects have heard this opening line a thousand times because most will immediately say they just renewed and tell the producer to call back next year. (They're so well versed it makes me think that someone must be running a Prospect School!) Rookies and average producers will readily agree to call back in nine months.

Most traditional agencies and producers still focus everything around the X date and usually try to get in front of the prospect for the first time about 90 days before the renewal. How many calls do you think your best prospects receive 90 days prior to their renewal date? That's not how you differentiate yourself. That's how you blend in with the crowd!

If you are going to differentiate yourself in your marketplace, you must first put these essential elements in place:

1. A unique selling process. This must be an approach the prospect has never seen before—not another unprepared producer carrying a yellow legal pad, taking copious notes and asking for copies of policies. You should hear the prospect say something like: "Wow, I've never seen a process like this before," or "I've never been asked these kinds of questions about my business." If the prospect isn't expressing how impressed he is with you, chances are he sees you as a traditional agent. You're just one of "them."

2. Your first appointment six months prior to renewal. Your initial appointment with the prospect should be at the six-month anniversary of the policy year. If it's a January renewal, you'll want to call in June or July. Setting this "off-season" appointment isn't easy. It's something you have to learn. You have to learn to provide value to the prospect during the process and prove to him that getting together with you six months in advance is to his advantage.

3. The ability to educate the business owner about his total cost of risk. Most business owners think of their insurance costs strictly in terms of premiums. They don't realize there's a lot more to it. By educating them, you differentiate yourself. In addition to the premiums paid, the total cost of risk includes deductibles paid, self-insured or uninsured losses, and other factors. For instance, if the business has a problem with absenteeism and no wellness program, what is that costing the company?

4. Value exceeding the insurance products and premiums you offer. Most agents are simply pass-through middlemen who provide a risk transfer mechanism. After that, all they do is provide traditional, reactive service (such as policy changes and claims). Conversely, the guiding principle of the best agencies is that insurance is just one of the solutions it provides its clients, not the only one.

5. A bona fide plan. At Sitkins International, we call it The Risk Reduction Approach™. It defines where the prospect is today, identifies where he wants to be, and provides a specific action plan detailing how to get there. If you're just delivering policies, you're not providing a plan to the prospect. You're just a vendor, not a trusted advisor.

The bottom line

If you don't differentiate, you will never reach the pinnacle of success in our industry. You'll plateau at an average, acceptable level and make good money, but you'll never enjoy true financial freedom. Have you mastered the art of differentiation, or are you content to blend in with all the other traditional agents?

As always, it's your choice.

The author

Roger Sitkins is founder and chairman of Sitkins International, a private client group and membership program for some of the top independent insurance agencies and brokerages in the United States, Canada, and Latin America. Members participate in training, consulting, and networking opportunities focused on innovation, sales, growth, profitability and value. Sitkins International is inventing the future of the independent agency system by providing intellectual property that empowers agents and brokers to become the innovators.