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Think Pink: Sales psychology lessons for the life industry

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With apologies to Jay Leno, Condoleezza Rice and others, my favorite featured speaker at last week’s Association for Advanced Life Underwriting (AALU) Annual Meeting in Washington was Daniel Pink, the bestselling author of six books, including his latest, “To Sell is Human: The Surprising Truth About Moving Others.”

His observations on sales and psychology seemed to ring very true, and I was particularly interested in a study he mentioned about how reducing choices for customers can increase acceptance. In the first week of the study, a trade show booth displayed 24 varieties of jams. But the next week, only six varieties were displayed. While more people tasted jams the first week, only 3 percent bought. The second week, with only six choices, 30 percent of booth visitors made a purchase. That’s 10 times more sales achieved while offering only one-quarter of the product selection.

The lesson? Being presented with too many choices can prevent customers from purchasing. Reducing the number of choices for the customer can increase acceptance.

I can’t tell you how many times I’ve heard at industry conferences in the past year that the industry needs to simplify its products to keep from paralyzing consumers, not to mention producers. Carriers are seeing a need to reduce the “number of levers” in their products. The more choices within a single product a consumer has to make, the less likely they are to advance through the purchasing process. And anything producers can do when meeting with clients to simplify the decision-making process is likely to pay dividends for everyone involved.

A couple of other interesting tidbits gleaned from Pink’s session:

  • Questions can be a very effective selling tool. Pink noted how Ronald Reagan, on his way to defeating incumbent Jimmy Carter, memorably asked voters during a 1980 presidential debate, “Are you better off now than you were four years ago?” He also noted that the Romney campaign very briefly dusted that one off last year but quickly shelved it when many people were not answering as they intended. Pink said that when people have their own reasons to agree with you, they believe it more deeply and adhere to it more strongly. “When the facts are clearly on your side, use questions,” he said. “When the facts are not clearly on your side, get some new facts.”
  • Most business schools don’t teach sales, which is kind of alarming. Pink said there are 15 million people in sales in the United States, which is about 1 in 9 adults. Pink noted that people still have a negative impression of sales, which he says is an outdated perception that still leaves a barrier. The old “buyer beware” warning isn’t so much the case anymore because we no longer live in a world of “information asymmetry.” Today, information is so readily available that consumers approach a sales situation with lots of information.

For more coverage of the 2013 AALU Annual Meeting, read:

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