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12 Tips for Selling in a Hard Market

Author: Bill Wilson

Many people in the P&C industry, particularly agency CSR's and a number of producers have not yet had the pleasure of experiencing a hard market. It's been about 15 years since we last had a significant hardening of prices. A hard market presents a number of selling problems. On the other hand, it also presents opportunities. Below are 12 tips that might improve your sales results in the hard (or any) market.


What is a Hard Market?

Historically, a hard market is part of the cyclical nature of the insurance industry. At one time, these cycles occurred fairly consistently at about seven year intervals. However, the last significant hard market was in the mid-80's.

A hard market is characterized by increasing rates and/or reduced industry capacity which leads to affordability and/or availability problems. In addition, both underwriting and claims adjusting usually become more stringent. In the current marketplace, these conditions are exacerbated by increased uncertainty about loss exposures such as terrorism, mold, etc., and by a reinsurance market significantly strained by the events of September 11.

Looking specifically at the E&O marketplace, we can expect increasing rates/premiums and more stringent underwriting. This presents problems and opportunities. The bad news is that competition could lead to lost accounts. The good news is that competition could lead to lost accounts! That is, it is probably not desirable to retain all existing accounts...more on this later.

And there is more potentially good news...since many carriers are in the same boat, the hard market could lead to new business. In addition, increased premiums means increased commissions (until or unless carriers start reducing them again) can use this increased revenue to improve and expand services in a way that differentiates you from the competition.

So, let's take a look at 12 tips you can use to improve your sales performance during the hard market....


Sales Tip #1:  Know your buyer
Whether you're selling BOP's or Tupperware, you can only sell three things: (1) price, (2) product, and (3) relationship. When it comes to insurance, about 50% of customers are relationship buyers, 25% are price buyers, and 25% buy on the basis of product (10%) or value (15%). If you know where your prospect/insured falls, you can tailor your proposal to them.


Sales Tip #2:  Really know your buyer
•  Develop a client profile/rating sheet...include everything you know about
   that buyer down to their favorite TV show.
•  Identify the real decision cannot sell insurance if you're
   going through a gatekeeper.
•  Learn all you can about the to employees, business
   associates and others to learn what makes that person "tick."
•  Stay in frequent contact...communicate with VIP, at-risk, and high
   potential customers frequently and rarely should the contact concern
   their insurance account.
•  Pay attention to the little things...Joe Girard, listed by the Guinness
   Book of World Records as the best car salesman in the world, said
   his secret was greeting cards...sending birthday, holiday and other
   greetings. So, keep in contact and do little things throughout the year
   for clients (e.g., send a magazine article on a subject you know they're
   interested in) and do something really memorable shortly before
   renewal time that's unrelated to their insurance account.


Sales Tip #3:  Don't give up
According to Guerilla Prospecting, many contacts with fewer customers is better than fewer contacts with many customers:
•  1 sales contact     =    2% of sales closed
•  2 sales contacts   =    3% of sales closed
•  3 sales contacts   =    4% of sales closed
•  4 sales contacts   =  10% of sales closed
•  5 sales contacts   =  81% of sales closed


Sales Tip #4:  Never, never give up
According to the Darnell Corporation, 80% of sales are made by 20% of sales people. Over 50% of all of Avon's sales come from 17% of their sales reps...those reps produce 10X the revenue of others. The reason for this is that most sales people quit after one or two initial contacts:
•  48% quit after the first contact
•  25% quit after the second contact
•  12% quit after the third contact
•    5% quit after the fourth contact
•  10% quit after the fifth contact
As you can see from the Guerilla Prospecting figures above, 80% of sales require at least five contacts.


Sales Tip #5:  Recognize "No"
The following statements all mean "No." However, as pointed out above, don't take "No" for may take 4-5 "No's" until you get a "Yes."
•  "I'll think it over."
•  "We'll discuss it and let you know."
•  "I'm just looking at all my options."
•  "The price is just too high."
•  "I'll have to get back to you."
•  "Let me see how this fits our budget."
Source: "Six Rules of Salesmanship to Clinch the Deal," HOC, August 1995


Sales Tip #6:  Solution-Oriented Selling
If I said I could come into your agency or company and show you how to close over 90% of your sales leads, increase your retention rate to 99.9%, and more than double your book of business in less than a year, would you hire me as a sales consultant? You would?! That's odd because notice that I've made no mention of price! When you offer solutions -- to create opportunities, solve problems, reduce risk, etc. -- price is the last thing that will come up during the negotiations.

Let's face it, most insurance is sold the same way...similar approaches, similar coverages (in the minds of the prospects), similar proposals, claims, promises, etc. All these things being (perceived as) equal, the ONLY differentiation is price. You must determine what is your "unique selling proposition," what differentiates you from the masses.

Consider offering a package of solutions unlike anything offered by your competition. Consider free, discounted or in-house seminars, loss control services, or other perks...with increased commissions, you may be able to offer these perks essentially for free.


Sales Tip #7:  Painless Selling
With regard to acquiring accounts during the hard market, the best prospects are those experiencing problems with their current insurance program...and you can relieve their pain. If the person is a "product buyer," you can also create pain by showing coverage gaps compared to your sure to use vivid examples. Demonstrate how your proposal positively affects their bottom line by reducing risk.


Sales Tip #8:  Relationship Selling
My personal lines account has been with the same agency for 29 years. They don't offer the best "product" and I can get a much better price elsewhere. If you read Tip #1, you know, then, that they retain by account based on our relationship.

My mother worked for this agency for a number of years until she became terminally ill and passed away 26 years ago. During her final year, she was only able to work a few weeks out of that year. At best, one could expect, given a decent insurance package, that she'd get 60% pay under a salary continuance or LTD program. However, the agency owner continued to issue her full paycheck every two weeks whether she was able to work or not.

When the call came from the hospital that she had only hours to live, I raced there at 2:00 a.m., just before she passed away. At 3:00 a.m., the agency owner and his wife showed up at the hospital to offer any help they could. I've never forgotten what they did for my family and, for that reason, I've never considered moving my account to save a few bucks.

Relationships create loyalty. Strong relationships based on genuine interest, empathy and compassion create fierce, almost fanatical, loyalty. If you treat your customers like family and, when the need arises, you go beyond the call of duty, no coverage perks or pricing discounts can approach the effectiveness of such relationships.


Sales Tip #9:  Use testimonials
Include testimonials of long-term clients in your marketing materials. Every time you're involved in a claim "victory" for an insured, ask for a testimonial. Every time you exceed the service expectations of a customer, ask for a testimonial. Target these testimonials so that recipients of your materials know the persons if possible. Flaunt the fact that so-and-so chose your agency or company over that of a competitor. If needed, ask a respected client make a personal visit to a customer on the fence...prospects will appreciate your personal interest and value the opinions of a peer.


Sales Tip #10:  Multiple closes
There are dozens of closing techniques that you can use and you can learn all about them if you attend a formal sales training program. You can incorporate more than one technique in an attempt to close the account. For example:
•  Direct close...simply ask for the check.
•  Time-driven close...rates are going up next week, so buy now.
•  Relationship indicated above, this is a foolproof method.
•  Deal/concession close...but wait, there's more! At each balk, up the ante
   by adding freebies like discounted seminars, loss control services, etc.


Sales Tip #11:  World class service
Provide consistent, personalized, responsive, reliable, accurate and professional customer service. Do the unexpected to dazzle them with your commitment to service excellence. For a good article on this, check out "Puttin' on the Ritz" in our Research Library and be sure to check out the entire Customer Service section of the library.


Sales Tip #12:  Overcoming objections
Entire books and seminars have been devoted to this subject. Some objections are real and must be addressed while others may mask hidden agendas. Objections, in and of themselves, are not bad. According to Learning International, you are 20% more likely to close a sale that includes objections than if the prospect or insured raised none at all.

To minimize objections, sell the benefits, not the product...focus on emotional (e.g., security/risk concerns) or financial (e.g., cost reductions) benefits. Focus on why they should buy, not their objections. Anticipate and be prepared for objections. Avoid bringing up objections that the prospect would not have raised...e.g., don't start out the proposal with, "I know the price is a lot higher than last year, but...[add excuses here]." Avoid the discussion of price until after you've demonstrated the superiority of your proposal and never make excuses.

The Prayer of Alcoholics Anonymous says, "Lord, give me the courage to change the things which can and ought to be changed, the serenity to accept the things which cannot be changed, and the wisdom to know the difference." This prayer could apply to three major types of objections:

•  Sincere can negotiate around these.
•  Hopeless got to know when to hold 'em, and fold 'em.
•  "Smoke screen" pointed out above, these have nothing
   to do with the product, but rather mask a hidden agenda...fix that
   problem and you've got the account.

One other thing to keep in mind, particularly if you further your learning by attending a sales training program, is to remember that you're often selling to a sales person. In many cases, they've seen all the canned sales tactics. For a good article about dealing with savvy buyers, check out "Sales Closing Techniques in Industry."



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