For Producers

Three Key Commodity Questions

In my last post, Barney’s Battle with Commoditization, told the story of Barney, a 30-year-old producer stuck in the Commodity Trap.  As the story unfolds, I asked Barney to consider three key questions:

  1. To what degree does the middle-market consumer have the time and ability to identify exposures?  (0 low to 5 high)beyond insurance
  2. To what degree does the typical insurance agent or broker assist his or her client with exposure identification? (0 low to 5 high)
  3. To what degree does the middle-market consumer enjoy the traditional insurance bidding process?

I also gave Barney a study by Huthwaite, an acknowledged thought leader in the sales performance industry.  Huthwaite viewed more than 35,000 sales transactions over a 12-year period and determined that the consumer was willing to pay a premium, redefine the buyer/ seller relationship, erect barriers to the seller’s competitors, and establish the seller as a trusted advisor when two primary activities occur:

  1. Seller reveals to the buyer an Unrecognized Problem
  2. Seller establishes for the buyer an Unanticipated Solution

beyond insuranceOne week later, Barney called back.  I was amazed by the excitement in his voice.  His disposition had changed dramatically.  He said, “I have figured it out!  I must stop playing the 90-day bidding game.  The three questions you gave me last week made me realize that I need a process to enable my clients to identify risk issues with solutions outside the boundary of the insurance transaction.  If this can be accomplished, I will be playing a different game than my competitors.”  Barney had figured it out.

Over the next month, Barney worked feverishly and enthusiastically to design a differentiated process focused on the identification, measurement and mitigation of risk.  I gave him a formula entitled I3.  The I3 process stood for Issues, Implications, and Interventions.  Barney was on his way to creating a system that would dramatically improve his professional image, income and work life balance.  Barney now had a renewed purpose and passion for the business.

beyond insurance

The next year showed amazing results for Barney.  His career took off.  He did $200,000 in revenue the first year he used the I3 system.  Other indicators also showed dramatic improvement including, but not limited to, his new business hit ratio, retention and outside competition on key accounts.  He now receives 3-to-5 referrals per week.  I am pleased to report that Barney has a handle on commoditization.  He loves the business and plans to remain in the industry for years to come.  Oh, by the way, he had a baby girl.

The treatment for commoditization is aided when we realize that we sell intangible products.  The less tangible, the more powerfully and persistently the judgment about a product or service can be shaped by packaging.  It is essential that the package is positioned in a way to enable the consumer to change his or her perception about it.  To determine if you have been commoditized, I encourage you to see if the following five statements relate to you:

  1. I seem to be losing my passion for the insurance business.
  2. I cannot seem to change the consumer’s perception of me.
  3. I often get angry and frustrated with the 90-day bidding process.
  4. The consumer does not see me as a trusted advisor like their CPA, attorney, or banker.
  5. The insurance transaction is getting in the way of my ability to learn the customer’s business and its “issues”.

If you are commoditized, take a few moments to consider the lessons learned by Barney.  Barney was able to escape the “commodity trap” when he realized that:

  • The consumer perceived him as a commodity.
  • The consumer does not like buying insurance.
  • The middle-market consumer needs help identifying exposures.
  • His competition is not adequately helping the middle-market consumer to perform exposure identification.

I3 — Issues, Implications, Interventions.  This may be your best and most powerful weapon to escape commoditization!