Barney’s Battle with Commoditization
Barney is a 30-year-old producer. He is intelligent and highly motivated. He is technically proficient having obtained his CIC and ARM designations. As a former college athlete, Barney has strong competitive instincts and a passion to win.
I had the pleasure of meeting Barney at a Beyond Insurance workshopin Arizona two years ago. I was extremely impressed with his professionalism, inquisitive nature, and passion for excellence. He made a positive first impression.
Upon returning to my office in Philadelphia after the workshop, I was pleasantly surprised to receive a phone call from Barney. Barney confided in me that he was extremely frustrated with the insurance business and considering leaving the industry.
He was tired with competing in the “commodity trap” – the 90 day insurance bidding process.
“For the first time in my life, I have begun to lose confidence in myself. I am not used to playing a game where I have so little impact on the outcome. I do not like to lose.”
Barney was fighting an uphill battle against commoditization. Commoditization occurs when the consumer perceives little or no distinguishable difference between products, services, and resources. When this happens, price becomes the primary differentiator. Picture commoditization as a disease that eats away at your knowledge, wisdom, and professionalism. It is so cruel and debilitating that it strips away the value proposition of the most seasoned producer – his or her professional purpose for existence – to a number. Barney’s condition was exacerbated due to the fact that he was playing the majority of his game within the 90-day bidding cycle.
Barney gave me his stats. He had been a producer for four years. His new business “hit ratio” was 25% and he was averaging $50,000 in new business revenue per year. His book consisted of 35 clients with revenues of totaling $200,000. Barney dejectedly stated, “I feel like I’m spinning my wheels. Just when I win a new piece of business, it feels like I’m competing to keep one. One comes in the front door; one tries to go out the back door. Although my retention is 90%, about 70% of my accounts go to market each year.” Barney rarely got referrals and put in 60 to 70 hours per week. His work-life balance was going to be an issue as he had a child on the way. He made $60,000 per year.
My first inclination to help Barney was to calm him down. I had to make him realize that he was not to blame. He was simply caught in the “commodity trap” and fighting through the consumer’s “perception trap.” His anger, frustration, and loss of confidence was a typical reaction to the outcome of commoditization. A dose of reality put Barney at ease. I asked him to ponder three simple but powerful questions and call me back in a week.
The questions that I will share with you in my next post will take your career from ordinary to extraordinary! Stay Tuned!