30 Sep How to master Red Ocean Selling in The Insurance World
Blue Ocean Strategy
is a marketing theory that suggests you can make your competition irrelevant by creating innovative products. As you do, you create new markets and new demand. Then selling becomes easy, profits sky-rocket and you are king.
Red Ocean Strategy
Contrast that with a Red Ocean Strategy which is competing in a bloody, cut-throat market. Where you actually have to play against and beat the competition to grow your revenue. And, where you have to always be in the mode of considering ‘how can I invest in value for clients and still be profitable’.
|Red Ocean Strategy||Blue Ocean Strategy|
|Compete in existing market space.||Create uncontested market space.|
|Beat the competition.||Make the competition irrelevant.|
|Exploit existing demand.||Create and capture new demand.|
|Make the value-cost trade-off.||Break the value-cost trade-off.|
|Align the whole system of a firm’s activities with it’s strategic choice of differentiation or low cost.||Align the whole system of a firm’s activities in pursuit of differentiation and low cost.|
It seems to me that about 95% of all businesses are in the Red Ocean, where they have to beat the competition to win.
Some exceptions could be Amazon, Apple and Microsoft. It took Amazon 14 years to become profitable. Apple went through the Jobs is in, Jobs is out, Jobs is back in and crushing it cycle. Microsoft is now on 800 million desktops with Outlook being the mission critical application that many of us rely on daily.
Creating a Blue Ocean, where your competition is irrelevant, where you are in uncharted waters, where your profits are sky-rocketing and your future is bloated with massive opportunity could be where you ought to be playing, but it could be hard to achieve for most independent insurance agencies.
InsurTech… The future of Insurance Sales
There is now a new buzz-word out there, InsurTech.
“Quite in line with what we already know from the Digital Transformation concept, the Insurtech phenomenon is grounded by Big Data, Artificial Intelligence (AI) and the Internet of Things (IoT) – most of the capital invested goes into these areas.” (For more on that, click here)
The InsurTech world wants to put a lot of brokers out of business, and they probably will. It’s a Blue Ocean concept being pursued with a lot of venture capital money.
The way they’ll put a lot of brokers out of business is predictable.
For the past 100 years, carriers have relied on agents and brokers to be pre-underwriters. They want you to go out and inspect the building you are submitting to them. In essence, let them know if it has a sprinkler system, confirm the square footage and whether its concrete tilt-up, metal or wood structure. In the future, InsurTech will provide all of that information to them because it will be stored somewhere on the cloud. All the underwriter will do is look it up, confirm that’s the right building and the algorithm will price it out. Very little human touch. Cut your commission and thank you for the business.
InsurTech will reduce your value and compromise your ability to make a living if you continue to rely on ‘the old way’.
But, it probably won’t replace you. Not for a long time anyway.
Just look at the financial services business, there is E-trade, Schwab, Ameritrade and many more. And, now there is the robo-advisor. But, the American public is still confused by terms like ETF, mutual fund, equities. And since money is so important, they are still looking for hand holding and advice. As a result, Financial Advisors are thriving.
Won’t buyers of insurance be the same way?
Become the Best You Can Be
Coming full circle, either you have and live in a Blue Ocean or you don’t. If you are in the Red Ocean where you have to compete for business, where you have to beat your competition, shouldn’t you become the best you can be?
When I first introduced The Wedge sales process, I almost got booed by many of the traditionalists who believed that selling insurance was all about relationship. They were aghast that I propose we have a strategy intent on getting the buyer to ‘discover’ that the incumbent was mediocre, maybe even incompetent.
Emails arrived in my inbox, “you are training people to get me fired when I’ve done a good job for my client”. Well, a good job is in the eye of the beholder, the buyer, not the agent.
If it is true that you are playing in the Red Ocean of selling insurance, instead of denying it, your opportunity is to become the best at it.
3 Things To Do as an Insurance Producer
To become one of the Top 5% you have to do what the bottom 95% is unwilling to do. And that is do the work. A.k.a. insurance sales training, customer service, knowing where you stand…
Study your competition. I just reviewed over 100 proposals from insurance agents. What I found would make a Red Ocean Seller smile. With only a few exceptions, they were all the same. They talked about themselves and their people. Almost nothing about the what they would do for the client except provide coverage and be there for them when needed.
Study yourself. You might want to record one of your sales calls, then have it transcribed. Look at it critically and review what you are saying to create differentiation. It could be that you feel you are different but when you read the transcript you are saying the same thing everyone else does.
Build your service platform.
In summary, if you don’t have the resources of Amazon, Apple and Microsoft to build your Blue Ocean Strategy, then accept that you are playing in a Red Ocean, where you have to beat the competition to grow your agency. To beat the competition, build a better you.