Problem Recognition: Why do people shop for insurance? With you?
Problem Recognition: Why do people shop for insurance? With you?
Do you ever wonder why people shop for insurance? Specifically, do you ever wonder why people are shopping for insurance with your agency? When I ask newer agents or even seasoned agents this question, the typical response I receive is something like this, “The insured is shopping for a lower price or the insured wants a better price.” After selling, servicing and shopping for my own insurance, in my estimation people tend to shop for their insurance for three main reasons. People shop for insurance because they had the wrong agent, the wrong insurance policy and or the wrong insurance company and found out the hard way. That is not to say that some consumers perennially shop with the goal of lower prices. People who shop on price or make the claim of shopping on price, often just use price as a misnomer or reflexive defense mechanism against pushy salespeople. Most importantly as an agent price for the most part is out of my control, what I can control is value.
What is Problem recognition? Let’s take a step back. Why do people buy things? People buy things because of a perceived need or a want. Problem recognition involves establishing a problem/issue/concern/challenge for the client during the buying process. Ideally, as an agent, a consumer comes to you to solve a problem. The severity or frequency of that problem allows you to establish a sense of urgency, which triggers a buying decision. How do I know if a client has a problem? The shortest distance between two points is a straight line, so just ask. For instance, a prospect calls and wants cheaper insurance, “I don’t think I’m getting a good deal… or I’m shopping around for a better rate... or I’m paying too much” Have we established a problem? No. The answer is we don’t know. We don’t know if the client is paying too much. Why is that? It’s because we don’t know what kind of coverage the client has and if they have the appropriate coverage at all. What we’re missing is perspective, history, value systems and background. All we can do is make surface level judgement based on severely limited information.
Let’s say you circle around and ask a question, “Have you ever had to use your insurance?”
To which the prospect says, “No… And they raised my rates anyways!” Now we are starting to peel back the onion and get at the why. So, I pose a question to the reader. What is the problem? What problem have we uncovered?
· Is the problem, ‘the rate increase?’
· Is the problem, ‘the client is paying too much?’
· Is the problem, ‘something else?’
The underlying problem the client is facing is uncertainty. Uncertainty in what regard? Uncertainty if they are getting a good value for the price. How do we know that? Well, try asking more probing questions.
For example, “When was the last time you sat down with your agent to review your coverage and make sure it’s up to date?” What this question does is establish a need, people want to be cared about and want to be around people that care about them. If your agent isn’t reviewing your needs, what are you paying them for?
To which the prospect responds something along lines of, “Probably when I signed up with BLANK insurance around 20 years ago.” So, at this point we have a clearer idea of why the person is shopping for insurance. We know that the client had a rate increase, we know they value a relationship with an agent, we know they haven’t had much contact with their agent and we know they haven’t used their insurance. But, do we know what the problem is? At this point we can say the problem is that the agent didn’t bother to call and have a renewal conversation. This is a common reason why people leave an insurance agency, lack of communication which leads to customer defection. Why do people shop for insurance? Wrong Agent, Wrong Policy or Wrong Insurance carrier.
Contrary to popular belief, insurance is a product much like any other product. Agents occasionally make the bizarre proclamation, ‘People don’t treat insurance like other products, they don’t treat it like a mortgage or x,y or z…’ The truth of the matter is that consumer loyalty and purchasing behavior is not wildly different with a clothing company, a lawyer, a doctor, a financial adviser and or an insurance adviser. People make choices based on perceived value and purchase accordingly. That being said, consumers need to be reminded of the value of the product on a regular basis. If I feel the price doesn’t justify the value of the product, then I’m going to shop around.
A doctor has the goal of treating the patient and curing the underlying illness. Think of ‘paying too much’ much like a symptom and not the disease. At best all we can do is rate shop and strip down coverage to appease a client’s perception that price is the only issue. As an insurance professional you can try to slash prices, or you can try to solve problems.