Ten years ago I [David Batchelor] was at a crossroads in my practice. I was reasonably successful as a Court of the Table member, and making a reasonable personal income.
But then I attended my first MDRT meeting–and a new world opened to me.
I attended a session one afternoon and was challenged by the speaker: “Are you a businessman, or are you just someone who sells life insurance?” he asked. In that moment, I had an epiphany. I suddenly realized that I didn’t have a business but that I was just a salesman, selling life insurance, living month to month on my results. I wanted more–a real business.
Over the next 10 years, I revamped my practice. As a result, I have not only acquired everything from my want list, my practice is now also viewed by the U.K. regulator as a model for the industry.
So now I want to share with you three of the key areas of business that I think make the difference. I will then hand it over to my co-presenter, Dean, who will tell you about the second two key areas.
1. Charging fees instead of taking commissions. Back in 2003, I decided that I would not take a commission in payment from a client but rather that I would charge a fee, based upon the value that I decided I was delivering. I also decided that I would tell the client what the commission would be and that I would return it to him, but that he would need to pay me a fee.
My client conversation goes something like this:
“My fee for putting this policy in place is ?3,000, which is payable when we fill in the application. But when the policy is set up, the insurance company will pay me a commission of ?2,000, and so I will refund this to you directly.”
As you can see in this example, I have increased the margin by 50%. I am charging more than the commission. What do you think is the client’s perception of the cost?
That’s right. His perception is that he is paying ?1,000 for the policy to be set up. But if I took commission instead, his perception is that it is costing him ?2,000!
In the U.K., we have commission disclosure. This means we must tell clients the commission we will get paid before they sign the application. This only helps the fee sale because the perception is that I am not keeping the commission.
When I presented this technique to the U.K. regulator, I feared how they would view it. But they loved it; and now they show it as an example of best practices.
This technique, which we have developed further, is a great starting point from which to wean your business off commissions and to decide on your own pricing structure, rather than being told what you are going to earn.
2. Having a prospecting engine. Most of us hate prospecting, and I am no different. How can we survive without it? The answer came to me in 1999: to sell to more than one person at a time.
The result of this insight was the development of our public education seminars. Run in four of our office locations over 20 minutes, the presentations let attendees discover how much they didn’t know before. We then let them conclude that we are the people who can help them.
The seminars tie in with our “fee not commission” philosophy. At the meetings, we explain how commissions are not important to us as we give them back to the client. We also explain that our fee is based on the value the client receives.
People learn about the public seminars through mailings to our target audience, using names purchased from a list broker. Using a pre-annual review document that clients complete before a meeting, we also ask them once a year whom they would like us to invite to a seminar. Additionally, all referrals must attend one of our seminars, thus ensuring that everyone receives the same message.
3. Developing a superstar support team. To ensure that your staff has as much of a vested interest in the success of your business as you do, you must link extraordinary rewards to achievement. We do this in four ways:
? All of our employees are paid well in excess of the standard salaries in our area.