In this article, Jan Weiser, Partner and Asia head of insurance and Frank Gehrig, Partner in the Global Insurance Practice of Simon-Kucher, share the 4 fundamental rules of selling to help insurance companies attain the ideal sales architecture. With that set in place, and the right digital elements supporting the sales process, companies will not be far from achieving their desired sales results.
According to a recent global survey by pricing strategy consultancy Simon-Kucher & Partners, there is resounding agreement among insurers that digital holds the biggest potential for future sales growth. However, most digitalization efforts so far have had no measurable positive impact on the bottom line – in fact, only one in four digital initiatives in the insurance sector has seen results.
A study conducted with CXOs in the Asia Pacific region reflect common issues impeding digital success, which includes customer behavior volatility, poor digital asset adoption, and lack of internal structures/ skills. 85% of participants state that they lack the key organizational structures, internal skills and partnerships to reap meaningful outcomes from their digital endeavors. (Download the survey report here.)
What then, is key to helping an insurance company achieve a successful future in sales? At the end of the day, it’s all about maximising value for the customer.
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There are four fundamental rules of selling that will help insurance companies attain the ideal sales architecture. With these rules in place, and the right digital elements supporting the sales process, companies will not be far from achieving their desired sales results.
What’s actually happening in insurance sales today?
Although the traditional sales models of insurers have proven remarkably resilient compared to the likes of the travel, entertainment and retail sectors, the arrival of price comparison websites has shown that insurance is not immune to the disruptive powers of digitalization. They may have been late adopters, but insurers have spent heavily in recent years on expanding their digital capabilities.
While many companies have been expanding their digital offerings, their execution is leaving the customer far from inspired. Look no further than the many scarcely-downloaded insurance apps – there are a great number of examples of pseudo digitalization across the industry. These initiatives lack any element of positive surprise and bring very little value to the customer.
It’s about going back to basics
What insurance companies should do is adopt a two-pronged strategy:
- Defend traditional face-to-face channels by improving sales effectiveness and customer centricity with initiatives and solutions that really add customer value through digital support. It has to result in making sales representatives’ lives easier while being customer-friendly.
- Explore new (digital) channels to address new customer segments, and increase relevance. There’s one key leakage point that can be observed in almost every sales team: the huge variance in how insurance sales agents do the actual selling. Not every sales approach is effective for an insurance company, and many fail to first master the 101 of selling.
Getting the basics right and supporting the sales process with the right digital elements at the right stage is the key to future success.
Attaining the ideal sales architecture
It rests on four basic rules of selling:
1.Establishing a value-selling culture
Sales representatives must be able to present relevant and compelling content to the customer throughout the sales interaction, with the conversation first focusing on product content and value. Pricing should be touched on after the product has been configured, and the value is clear to the customer. For customers who are most concerned with price, sales reps can offer strategic opportunities.
For example, they can offer an increased deductible or bundle discounts before moving to the last line of defence – free-hand discounts. It is important that sales reps are able to defend the price and features of their products against their competitors.
2. Using state-of-the-art digitally supported sales processes
A structured sales process consisting of strategic elements, such as cross-selling and “process guardrails”, can keep sales representatives on the path to success.
Sales representatives who employ a digitally supported, professional sales approach with a specific sequence and steps governing the selling process achieve better results in every area. These sales professionals have a higher likelihood of scoring a sale, selling more premium policies, and having more relevant cross-selling conversations, and in turn, be able to gain more loyal customers.
The same is true for digital channels. Today, these are mostly geared and optimized toward calculating a price, and not toward guiding the customer and selling a solution.
3. Personalizing the customer experience through data
Put in place a data-driven concept for recommending products for the entire insurance portfolio. This should be based on the actual needs of the customer in terms of a product category, and also within that product category.
The first offer should suit the customer needs and expectations as much as possible, and to achieve this, insurers need to be able to harness the power of data in a way which value-adds. By excluding irrelevant options for the customer, it enables individualized product configurations and significantly enhances the customer experience.
4. Using psychological pricing techniques
Digital sales tools and processes will allow insurers to create a more guided and defined sales process. This also means insurers can apply behavioral economics effects and nudges throughout the process. Insurers no longer have to rely on the sales capabilities of each individual seller and can allow nudges to work for them.
While nudges create upsides in each step of the insurer’s value chain, they are particularly useful in selling. By applying the right concepts, customers can be steered in a direction which leads to a higher likelihood of them buying a product. They may buy products at a higher premium, and fee more satisfied at the end of the day. This is the key to customer success.
There is no doubt that the future of insurance sales means embracing new technologies, more efficient tools and new channels.
Equally important, however, is to close existing loopholes which cause us to lose potential business every day. While technology can help in some cases to close some loopholes, it is not the remedy for every problem.
Changing the organizational mindset toward maximizing value for the customer is the cornerstone of a successful future in insurance sales.
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