Why Differentiation Is Critical for Insurance Agencies

You can differentiate your agency similarly to the differentiation of the automobile industry. The insurance companies certainly try in their marketing. But the reality is that a family auto policy is generally the same as another family auto policy and BOP policies in the same state don’t differ much. If there are coverage differences, you MUST know them and make them Points of Differentiation between your products and those of other competitor agencies and carriers. But that’s not what the advertisements are selling. They assume the products being marketed are commodities and when they sell price they are selling to the upscale and ‘modest means’ prospects similarly.

So what can you use to differentiate yourself from the few dozens and, in some locales, hundreds of agency competitors?

Advertising and marketing is reckoned in the billions of dollars by the major carriers, mostly the direct writers. Notice that they are not differentiating their products – their points of differentiation is based on gimmicks and price, the Cute Factor to align with the auto industry’s Cool Factor. And people remember the Gecko, Flo and her boxed insurance products. But no insurance carrier claims to have better or different coverage for the most common personal lines that are so heavily marketed. Their only major point of differentiation is in PRICE.

The auto industry is too smart to count on price, alone, as its Point of Differentiation. They know the slippery slope it would create and the price wars that would ensue. As an unregulated industry, the auto dealers are only limited by their pure cost for a vehicle and their ‘carrying costs’ to keep cars on their lot for months. They will charge whatever they feel they can sell.

We can’t do that. We are regulated and rates are filed. We cannot sell an auto policy for a dollar more or less than our competitor for the same product.

Yet most insurance agencies fall back on just that point – “Let me quote. Perhaps I can get it for you cheaper.” – regardless of product. Most agents have acknowledged what the industry has tried to sell to the buying public for many years – “Insurance is pretty much the same. Look for the cheapest product.”

If you are a knowledgeable agent who understands the levels of risk of your specific clients, advising the clients regarding coverage differences is certainly a tool you should employ. For the most part, the folks who quote on the internet and on the phone are not even asking the questions that will allow you to use your knowledge on behalf of the client. However, you are not selling differences between one product and the next. You are selling your knowledge and expertise. That, in a nutshell, is the major point of differentiation that you must define – knowledge and expertise.

The competitors may have low rates. They may even have faster service before, during and after the sale, but they fail miserably in the knowledge base that is attained by dealing face-to-face with customers over years and decades.

You should be seeking clients with families and businesses and you can’t let them go with a simple quote. Your role must convert from the price salesman to the insurance counselor.

For Commercial Lines, we strongly recommend using Relationship Selling (click here to link to our Asset Protection Model of Sales). This will teach your producers how to spend multiple visits with prospects showing them your unique value as an insurance expert BEFORE asking them to become your client. Once you earn their trust and admiration, earning their business is a minor task.

For personal lines we urge you to fight against joining the Quote Wars. The only thing 1000 quotes gets you is practice in quoting. If you successfully advertise and market to bring calls in to your agency for personal lines it only matters if you can establish a relationship with the client and impress him enough with your knowledge that you become a valued asset to him. You’ll know when that happens because he will share your name with social acquaintances and call and use you for as much advice as he can get. Treasure those clients. Our Referral Tree Program measures the value of every client by virtue of the number and value of his referrals to the agency. You’ll be surprised. You will find some ‘Treasures’ who may only have one or two policies with your agency but are responsible for thousands of dollars of commissions through their extended network of referrals.

If you can spend your time with current clients building relationships, then spend multiple visits on every prospect to show them your value to them. It is far in excess of the insurance provider they currently use and hone your skills in communications instead of always trying to sell something, you will find that customers come your way even though you are not the “cheapest car on the lot.”

An e-mail sent to me from a client in a Western state has, as part of his signature block, “ABC knows insurance…so you can stay focused on your business.” This says it all.