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Agents Are NOT a Commodity

Author:  Al Diamond
How do you keep all of your customers and continue to add more customers while noticing around you that you are losing ground to the direct writers and alternative distribution system who are blossoming in the insurance industry?
The cry we hear loudest from agents is that they are losing customers to cheaper alternatives.  Yet watching the buying habits of these same customers, they don’t buy the cheapest clothes they can find, the cheapest cuts of beef, and the cheapest cars on the market.  WHY?
Clothes are commoditized.  A shirt is a shirt.  But, whether by perception or good marketing, people will still select clothes based on qualities beyond price, alone.
Meat is even more commoditized.  Yet, more people are aware of the differences in cuts and many are willing to pay more to get the best cuts.
When we purchase a car, what do we look for?  Are cars means of transportation or reflections of one’s personality?  In reality, vehicles are a means to get one from point A to point B reliably.  But there are thousands of brands and models available throughout the world.  Each car maker spends billions of dollars differentiating their form of transportation to those of others car maker convincing the customer of their perception of what defines them as a person/personality instead of spending billions in advertising for the cheapest type of vehicle.
Many in the insurance industry are desperately trying to convince us and the buying public that insurance is the ultimate commodity – they are ALL THE SAME!!
While it’s easy for the gecko or Flo to convince the buying public that ’15 minutes can save 15%’ or that you can pick a box off the shelf and ‘name your price’, most intelligent people and all insurance professionals understand that insurance is more like medical procedures than like cans of peas.
A medical procedure may be common, but the practitioner you choose determines whether you will recover quickly or face complications.  Similarly, insurance products may be relatively common (although real and subtle differences exist that can radically alter insurance coverage) but the difference is in the person that you choose to tailor, service and administer the insurance program for you.
Most agents feel the pressure from existing clients whose relationships with the agencies are based on price, alone.  Selling price is easy.  If you are competing in only that dimension, you either have the lowest price or you lose the client.  But think about your most loyal clients – the ones who trust you to protect them and count on you as their insurance advisor.  Cost is certainly a consideration for them as well as for the price-shopper.  But most subscribe to the ‘You Get What You Pay For’ philosophy.

Reprinted from The PIPELINE, the national newsletter for agency principals.  The PIPELINE is published by Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for over 30 years.  Call 800-779-2430, E-mail, or visit for information about the content of this article or PIPELINE subscription information.
Copyright 2013 by Agency Consulting Group, Inc. Used with permission.
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