You Can Lead a Horse to Water


This statement appears, on the surface, to be so basic that it is ridiculous. But the number of agencies that we have visited who seek miracles and magic pills to increase sales is much higher than those who truly understand the Law of Numbers. “Direct Marketing”, “Telemarketing”, “Target Marketing”, and “Focused Campaigns” are all solid parts of a sales campaign. However, if used as isolated sales methods they represent some of the miracles and magic pills that are as effective as the placebos dispensed by medical experimenters. They look like a pill and taste like a pill, but they do nothing to stop the illness that plagues you. The Law of Numbers – “The more qualified prospects you approach to purchase insurance, the more insurance you will sell.” The corollary to the Law of Numbers is, “No one can qualify a prospect as well as the producer him(or her)self.”

When I arrive home after a week of consulting I will inevitably find fifty or more pieces of “junk” mail offering business products and services. The only thing that I read is the return address before discarding those items that appear to be blind solicitations. I consider myself a rather typical business consumer. So, what does that say about spending dozens of hours creating and hundreds of hours preparing and thousands of dollars of cost on pure direct mail solicitations for insurance purposes? In a former life as an insurance direct marketer I learned that a “successful” direct mail solicitation generated a 2% response. That’s 2% responding, not buying. If we sold 1/3 of the respondents, that resulted in a sales rate of less than .7%. That means we could expect sales to 7 customers for every 1000 suspects mailed. If we were selling a $1000 premium policy generating $150 commission, we would generate around $1,000 of revenue for every 1,000 suspects mailed, a dead break-even in year one since the cost of direct mail was at least $1 apiece (including creation, printing, stuffing, envelopes, and postage). Recent cost analysis pegged most direct mail costs at more like $2 each. And this defined a SUCCESSFUL campaign!

The problem is that either the prospect called us or was lost. If the prospect called us, a staff member would quote the account. This was also a problem because most prospects were initially price sensitive and our staff found it easiest to simply quote a competitive price instead of to probe for other issues that might somewhat supersede the cost issue. We didn’t SELL, we QUOTED. If the suspect didn’t call us, the $1-$2 was simply lost. If we included the suspect in another mailing, it was another pure cost.

Why did these problems occur? Because our producers experienced severe Call Reluctance to suspects with whom they had no prior contact or referral. Every producer claims that they have done “cold calling” in the past when they were starting out, but they found that referrals were much more productive. That’s true, referrals are more productive. And if referrals abound and can keep a producer busy fulfilling the Law of Numbers, so be it. But the competitive atmosphere of the insurance market today has caused every insurance agent to pursue marketing campaigns much more aggressively. Referrals, as a source of new business, worked in the past because prospects found it difficult to contact a competent agent. They would ask friends for referrals and the customer would call the agent. Referrals are no longer the continuing source of leads that they once were. The solution is to regain the hunger that overcame Call Reluctance in the past and to begin soliciting referrals from existing customers and contacting new suspects to introduce yourself and to qualify them as prospects for insurance products.


We have helped hundreds of agents create extensive and superb marketing campaigns only to see the suspects lost when contact by producers was refused.

A direct mail suspect, personal or commercial, is only “alive” for 2-5 days. Once the mail is opened, they remember your name for a day or two. That is when you want to speak to the suspect – when your name is still familiar to them. This means that “mass” mailings are doomed to failure unless you have a large enough staff to call everyone within a week. The smartest way to conduct direct campaigns is to mail a sufficient number of leads to call within a few days. The next batch of leads are mailed only when the producer completes the call reports on the prior batch. This gives the producer the best opportunity to speak to the suspect while your name is still familiar to him.

Last week I was called by a telemarketer regarding a service (a maintenance agreement) that a company wanted me to buy. Since I am in the marketing profession, I tend to be patient and listen to telemarketers. Rather than simply responding negatively, I tend to ask questions as my measurement of how qualified and prepared the telemarketer was regarding the product or service being pursued. In response to my question, the telemarketer told me that a representative would call me who was more acquainted with the technical components of the agreement. Three days later I received a voice mail message from that “qualified” person asking ME to call HIM! I did not and he did not return the call. Was I “qualified” by the telemarketer? I suspect that I was “qualified” simply by virtue of my asking a question. Was there sufficient follow-through to make the sale? Of course not.

If the person calling me was the producer, himself, he could have answered my question on the spot, probed for my needs and, potentially, made a sale. This is the same principal that applies to commercial lines targeted telemarketing. If you are marketing to plumbers, you had better be capable of answering the prospects initial questions during the initial call if you expect to proceed to the next phase of the sales process, setting an appointment.

The next objection that I get from producers is that they must be in touch with the prospect a few months before expiration in order to be most efficient. The response to this objection lies in the purpose for a producer contacting a prospect. If the objective is simply to make a sale, the months before expiration is just as good to contact the prospect as any. You will be just another agent offering a competing bid. But if the objective of the producer is to establish a relationship, identify and solve the prospects insurance problems, and to eventually become the prospects insurance agent, the personal contact should be made without regard to the customer’s expiration. A trust relationship is established over time, so a prospect who is visited and remains viable should be re-contacted as many times as reasonable in order to cement the relationship and make the proposal process one of problem-solving rather than simply quoting against the incumbent agent.

The basis of Call Reluctance is fear of rejection. No one likes rejection. However, the most successful salespeople have learned the Law of Numbers early in their careers. They measure their own success rate in order to identify the average number of suspects that they have to encounter before they make a sale. Once that ratio is known, they can rationalize the normal rejection by suspects as necessary in order to reach the percentage necessary to create a sale opportunity.

The insurance sales industry is changing. Everyone can get it cheaper, so price alone is not the best sales method. Those who live by price, die by price. Age, experience and success during the harder markets are not the measures of successful salespeople in this marketplace. The insurance salesperson must learn the methods of his successful peers in other industries. The key is relationship building and problem solving. If your prospects like and trust you and if you can identify and solve their insurance problems, they will buy from you. If you simply offer them competitive quotes, they will USE you and return to the agents with whom they have an established relationship.