Do your commissions depend on clients staying in your agency? Probably yes. Most of us have one or more products that either pays ongoing commissions, a persistency bonus or both. For your income to grow exponentially, it is vitally important for you to retain more clients, have them buy more, stay longer and refer. Persistency pays.
Well, I’ve got a secret to share with you: some types of clients will leave no matter what you do. Others will stick by you even when rates go up – unless you screw up badly.
Here is a second secret: by changing your marketing, you can attract the second, much better group to your agency. You can build a loyal herd that would never dream of shopping for a cheaper price or asking another agent for advice. And they will buy everything you sell (appropriate for their needs) and refer wonderful friends and family just like them.
Doesn’t that sound like heaven? It would solve any and all persistency problem in your business.
Three types of buyers
There are three types of buyers, or said another way, there are three main motivators for buyers’ decision. They are price, value and relationship.
A price shopper is just that, very sensitive to the price for the item or service. It is the prime reason for his choice. Often (but not always) this is because the price shopper is currently in a low to middle economic bracket or perhaps he or she has experienced real poverty in the past and just hasn’t shaken off the mindset. People who lived through the tough times tend to be frugal.
The only way to pry open a price buyer’s wallet is to offer the lowest premium. That’s fine if you indeed have the lowest price… but times change and rates change. This buyer very likely will jump ship and leave you if your rates rise sooner than those of your competitors. You and I know that your competitors’ rates will increase in the future. Will this buyer come back to you or beat a hasty path to yet another “lowest price”? Their only loyalty is to themselves and the quest for the lowest price, never to you, no matter how good your service.
This buyer doesn’t hang around long, but that doesn’t mean they are cheap to acquire and service. You paid your hard earned commissions to attract this person. Are they really worth it?
Value buyers are the next step up in quality. The profit of this type of client can be much greater. Sure, they pay attention to price but it is not the sole differentiating point. They look for a good value for their dollars spent which means they factor into their buying decision the value of the item and service being purchased.
That gives you something to work with toward the goal of building a herd of loyal followers. Your sales presentation need not be a robotic quote of rates. It can become a demonstration of value.
- What is the difference between two companies, two policies?
- How would they benefit by choosing a certain level of coverage?
- Which add-on ancillary products will serve their needs?
- What service do you offer that justifies choosing you over another provider?
- Why is it in their best interest to pay more for what looks on the surface as identical?
It’s entirely possible you will have this discussion with a value buyer. The price buyer will not care and cannot be engaged with these questions and answers.