Short-Term Profits Versus Long-Time Clients

By Tom Ninness | May 18, 2009

In today’s world, price is everything. Everyone seems to be looking for a bargain — shopping grocery stores for the weekly deals, hunting down the gas station with the lowest price or waiting for retail stores to put merchandise on sale or clearance. But is shopping for a bargain always the best strategy?

For insurance professionals, bargain shoppers will not guarantee long-term business prospects. Although the right price is essential to be competitive, it is more important to be trustworthy, service-oriented and conscience of the client’s specific needs.

For most insurance agents, losing a sale means not only commissions lost in the present, but the opportunity for future business and referrals. Building a referral-based business focuses the agent as the best person for the job. Undercutting price to “get the deal” may work for a while, but without substance behind it, business will dry up. Negotiating a price for the sake of a sale without consideration of profit will soon leave the agent with no income.

Referrals are the only way to sustain business for the long term. Sometimes negotiating a price will preserve the sale, and that may be prudent if the client has the potential to be a solid referral source or creates possibilities for future business. You don’t want to lose the sale and lose the opportunity of future business and referrals.

If the majority of your clients are a result of a referral, you have already been pre-sold as an expert and a have a high level of credibility. You have the responsibility of establishing trust by asking the prospect probing questions. Know your products well and know your competitors’ products. If negotiating price becomes an issue you will be prepared to position yourself as a top authority, with a commitment to small details. That can be the difference between saving and closing the deal at a respectable profit and losing it entirely because of price alone.

Although Internet shopping for lenders has become popular as of late, it is the classic example of price isn’t everything. One study shows only 16 percent of loans through Internet lenders close at the quoted price with the quoted rates and close on time. Your clients place a lot of trust in you and what you represent. Always under promise and over deliver.

Agents should be problem solvers. This is the reason the client is hiring you. They have a problem and you are the right solution. By asking questions, building rapport and caring about the customers’ needs, you will establish that you are concerned more about the client and not about the commission.

Develop relationships, listen to the client, understand their needs, and execute your services better and faster than anyone else. Every appointment needs prep time — make sure you are as prepared as possible for each and every client.

Be readily accessible for the client. Explain the best ways the client may communicate with you. Also ask the client what’s the most convenient way and how frequent the client would like to be communicated with. Keeping even the smallest commitments will slowly build trust.

Sometimes it becomes absolutely necessary to negotiate price. Move cautiously. Jumping to the lowest price leaves no latitude for discussion. Clients who are merely shopping for price will pin you to a price-point with no guarantee of commitment. When you are up against price, negotiating and meeting halfway with the client’s price gives you have a better than 50-50 chance in getting the business.

Building an insurance agency business through referrals keeps a steady stream of reliable income. Negotiate price only when necessary. Remain professional in every aspect, respect the client’s needs and concerns, build trust and communication, and be mindful of the small details. Your clients want someone they can trust and feel confident in referring others as well as the best price.

About Tom Ninness

Tom Ninness is vice president/regional production manager for Cherry Creek Mortgage in Denver, and president of Summit Champions Inc. Web site:

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Insurance Journal West May 18, 2009
May 18, 2009
Insurance Journal West Magazine

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