Selling value: Don’t get caught in the price trap
“Statistics show that more than two-thirds of clients are willing to pay a higher price for maximum protection.”
— Josh Stirpe, director of Safeco Licensed Sales
Insurance sales conversations frequently start with an apples-to-apples price comparison. If that describes the approach you take, Josh Stirpe, director of Safeco’s Licensed Sales department, wants you to tip the proverbial cart over and use a more effective approach.
“Once you start a conversation with price as the focal point, it becomes difficult to engage the client in a conversation about the value of a particular insurance policy, even if it costs a little more than their current policy,” explains Stirpe, whose background in the industry includes a stint as an agent. “It’s imperative to present a total package of benefits to them. Agents first must sell value, explaining what coverages and services the client will get.”
He recommends that you:
- Avoid falling into the “price trap” by positioning yourself as a way to save the client money.
- Find out why the client is shopping. Uncover the catalyst for the quote inquiry.
- Take the time to understand all the risks in the household (not just those that are covered in the requested quote).
- Tailor the presentation to the overall risk exposure.
- Above all else, invest time in educating the client by providing examples he or she can relate to … Insurance is more than the lowest price; it is something that can protect the client’s way of life in the event of a tragedy.
Value-selling policies results in loyal, long-term clients — boosting your retention. But that’s not all your agency will gain.
“Producers also are more satisfied because they get away from being ‘quote generators’ and instead are doing what they got into this business for in the first place, to educate their clients and protect people,” he says.
Benefits vs. price While many consumers certainly look to save money wherever possible, research shows that price is seldom the primary reason people make a buying decision. According to comScore’s Auto Insurance Survey, when offered a choice between low-cost/minimum coverage and high-cost/maximum coverage, the majority of consumers fall in the middle to upper-middle range. What that indicates is exactly what value-selling is all about: People are more interested in feeling protected than in saving a few dollars.
“Statistics show that more than two-thirds of clients are willing to pay a higher price for maximum protection,” Stirpe notes. “A high percentage of clients will go that road with their agents who value-sell the protection.”
The value-sell approach involves bringing to the forefront what you as an independent agent can provide that insurance consumers can’t get elsewhere:
- Expert advice
- The ability to identify coverage gaps and overlaps
- A knowledge of industry trends that affect consumers
- The ability to customize a plan that meets each individual’s protection needs
- A variety of policy choices
“When insurance consumers initially meet with an independent agent, they may start out with a desire to see how they can save money, but quickly become ecstatic if an agent first educates them on benefits,” says Stirpe.
He says price should be the last resort in the sales process. At the point that price does enter the equation (and of course it will for many people), you can remind customers that Safeco offers a variety of cost-cutting solutions, such as discounts when they purchase multiple policies, including Home, Auto and Specialty policies. Eighty-five percent of insurance consumers will consider hearing how bundling their coverages can translate into a discount.
“Clients will be less likely to shop elsewhere – including online – when agents value-sell and show that they are looking out for their clients’ future.”