Or Why Do Buyers Buy From Other Agents
I received a great question the other day. One that very few agents are willing to ask. I am hoping all of you will read this answer and keeping sending me your thoughts. You can reach me at firstname.lastname@example.org
Bill, emailed me the following:
“I have often gone into an account thinking I have the best possible quote I can’t miss this deal, only to get a phone call saying that another agent beat my price. This has happened recently on three separate occasions this month alone and I am getting battle scars. I know I have the best deal for them but I can’t seem to get that across effectively. Are insurance buyers just dumb or is our product just too complicated? What can I do to change the result and win some of these accounts?”
At first glance this appears to be a pretty straight forward question with a fairly straight forward answer.
I would be willing to bet that this agent sells on price most likely spreadsheets competing quotes and uses a proposal system that is very complicated. My guess is you’ve concluded that already.
But as I read the question again started to think about alternative questions ““Why do Buyers Buy?” and “Why do they buy from certain agents?” This might be a far more valuable question to answer.
Anthony Robbins, the life coach guru, will tell you that there are three powerful motivators for people to buy:
1. Pain – When I experience pain and realize I need relief; I need to get away from my pain.
2. Fear – I can visualize a pain that I don’t want to experience and I fantasize about how bad that future experience might be. I become fearful about the potential pain and take action based on my fear. I become willing to buy a product or service that will help me avoid my fantasized pain.
3. Gain – A future state that I see as better and that I want to attain. This can be mental, financial or physical future state.
Pain is the most powerful buying motivation because you will sacrifice and make investments based on the idea that it will remove pain. An example of an industry that sells based on the PAIN motivator, the entire pharmaceutical industry is based on this concept.
However, the Insurance Industry is based on the idea that people will make changes and investments to avoid FEAR. Fear that their lifetime of hard work can be destroyed by a fire, windstorm or earthquake. Fear that a law suit could take everything away even if they are not at fault. Fear that governmental regulation will put them out of business.
To succeed, figure out what pain or fear you can fix with your solution. Then target market to the potential people who might have that pain or fear and who might be willing to pay you to solve their problem. But understanding buyer motivation is only half the issue, you must be able to communicate your solutions. If you skip directly to providing a price quotation you are missing the entire buying motivation of solving a PAIN or FEAR.
Here is some information that may help you see more clearly Why Buyers Buy.
The statistics quoted come from a comprehensive study developed from surveying several thousands of buyers across multiple industries. The study was developed to answer one question; Why do corporate buyers buy? We felt we could get the answer by simply asking them.
What do buyers actually say are the reasons they buy, we will contrast that with why agents say buyers buy. When you poll agents about the reasons their clients made a purchase decision 89% of agents state that Price was the number one factor. This will surprise you but those agents are 100% wrong according to the actual buyers!
Buyers give four primary reasons for making their purchase decision:
1. The quality of their relationship with their agent 54%
2. Strength of Carrier /Agency 19%
3. Product features and applicability 18%
4. Price & Terms 9%
This is extremely interesting because of the vast difference between agent’s opinion and that of buyers. In fact it is almost exactly opposite. The real answer makes me wonder if the answer from an agent, that he lost the account because of price isn’t more a method of ego protection. We as agents have a difficult time facing the fact that perhaps another agent may be more knowledgeable.
On the converse may be a tendency in the response to answer that a buyer made their decision based on factors other than price for the same reason. All I can say is taking both motivations into consideration and adjusting the numbers you still get an incredibly wide gap.
I can only conclude that in reality it is great news for agents. We are obviously highly valued by our clients if we bring something to the table. Once we develop a relationship based on trust and knowledge they are very difficult for your competitors to compete with you. But, let’s not stop here; we need to go down another layer.
What we need to explore is what does it really mean when a buyer says his primary purpose for making the buying decision he did was because of the quality of the relationship they developed with their agent.
Here is a breakdown of what buyers look for:
1. Knowledge –
a. Knowledge of their industry
b. Knowledge of their needs
c. Knowledge of Insurance
2. Professionalism – Agent takes a unique role
3. Value – Agent provides Value beyond the policy
4. Buyers say the agent “Puts my needs first, before his own.”
Here is the exciting news; all of these attributes can be learned. Notice there is nothing on this list about being a great golfer, or the friendliest guy in the bar. All of them have to do with knowledge. You can learn how to become this agent. You can build a very successful career by committing yourself to learning. I’m not talking about getting your CE credits each year and thinking that’s enough, that’s the minimum standard to keep your license. I have a difficult time imagining a buyer saying “one of the critical reasons I made the decision I did was that the agent had a license.” It’s simply not enough.
The Insurance Community University has a complete course selection including different learning modalities, testing facilities and CE course capabilities. You should have an educational plan for yourself and every person in your agency. If you do you and your agency will be generously rewarded for your time and dedication. As a great agent I know likes to say “Knowledge = Bucks”!
Managing Director, Insurance Community Center