Profit Center Selling

Edwin L. Lamont CIC, CRM, CPIA | President, Lamont Consulting Group, Inc.

“The beginning of wisdom is the definition of terms.” – Socrates

PROFIT CENTER SELLING: Communicate the value you provide based on the financial impact you have on insurance buyers. PROFIT CENTER THINKING: Identify ways to decrease expenses, increase revenues, and promote profitability of insureds with Insurance Protection Plans, Risk Management Strategies, and Regulatory/ Compliance Knowledge.

You are a PROFIT CENTER. What does that mean?

As Professional Insurance Agent your sales are tracked, expenses totaled, and profitability to your agency determined. When revenue exceeds expenses, you validate or better yet, earn a bonus. If not, then draws may be adjusted, reduced, or worse, deficits required to be paid back. Do you know where you stand when measured for profitability at your agency? Just as importantly, your clients are PROFIT CENTERS. What are you doing to decrease expenses, increase revenue, and improve your client’s chances for profitable operations? How do you help personal lines customers protect their assets and ensure the lifestyle they’ve achieved? Do you understand how you impact a business’s profitability or personal lines buyer’s financial well-being? Or are you just hoping to provide a low premium to beat the competition? Consider adopting PROFIT CENTER SELLING as a strategy to better communicate value to the businesses and families you serve. When PROFIT CENTER SELLING, you separate yourself from competitors by the questions you ask, problems you solve, and the way you convey value. How does PROFIT CENTER SELLING goes beyond selling insurance or allowing price to be the sole determinant of value? Let’s begin with some definitions.

PROFIT CENTER SELLING - Tools

Insurance Protection Plans are just the start. Important? You bet! But remember, Insurance Protection Plans are a Risk Management Strategy. Insurance Protection Plans need to be tailored to a buyer’s risk appetite, the quality and effectiveness of management, and the ability to afford insurance products, limits, and conditions. What about Risk Management Strategies? Do you offer effective ways to avoid, control, or mitigate losses? How about ideas for workplace safety, disaster planning, and business continuity? When you do, you once again go beyond simply selling low-cost insurance. How about Regulatory and Compliance issues clients deal with daily? What knowledge do you supply commercial buyers regarding OSHA, DOT, or other regulatory agencies? Fines cost money. Work stoppage eliminates revenues. Both lessen profitability.

PROFIT CENTER THINKING – Decrease Expenses

To decrease insurance premium seems to fit the definition of PROFIT CENTER THINKING. Yet, too often it’s the sole way many agents think they can reduce expenses. Because we think that way, so do our insureds. Low price wins the day! But how did you get to that low price? To be blunt, when we sell price, not value, buyers view insurance as a commodity. Selling price instead of proving value does nothing to separate you, your agency, and those insurers you represent from others. Low cost may reflect lower coverage limits or increased deductibles. Is your client willing to self-insure to reduce premium expense? What happens when a claim occurs? Efforts to reduce insurance premium may result in high out of pocket expense.

PROFIT CENTER THINKING – Increase Revenues

How can a Professional Insurance Agent increase a client’s revenues? Have you ever helped a business meet insurance requirements necessary for a contract or lease? That alone can increase revenue.

What about Risk Management ideas? Improved workplace safety results in fewer losses. More importantly, employee

injuries decline in both frequency and severity. A lower experience modification factor increases a contractor’s ability to compete successfully and increase revenue. Perhaps you’ve guided a contractor through the process of qualifying for surety bond credit. Your ability to understand and communicate business and personal financial statements to a surety takes you to another level. Jobs available to bonded contractors create revenue unavailable to those not qualified for work that requires bid, payment, and performance bonds.

PROFIT CENTER THINKING - Increase Profitability

When you help decrease expenses and increase revenue, profits have the best chance to become real. Your network of strategic alliances, ability to refer business, and experience insuring others are assets to your buyers as well. All could lead to additional revenue for those you insure.

PROFIT CENTER THINKING – Personal Lines

These concepts apply to personal lines as well. The words may be different, but the core ideas remain the same. What you do to decrease expenses, increase revenue, and promote business profitability for commercial accounts becomes what you do to decrease expenses, protect assets, and ensure the lifestyle of personal lines clients. Decreasing expenses is more than low-cost protection plans for personal lines buyers too. What else might a personal lines client need to know to avoid a large, unplanned loss? The opportunities to protect assets and lifestyles aren’t limited to providing personal automobile and homeowners policies. Excess liability, flood, and coverage for home-based businesses are often overlooked. What about boats, RVs, or ATVs? Kids in college? What property or liability exposures do they create? Do your buyers have home care workers, nannies, or house cleaners? Do your clients travel overseas? What happens when they rent a car, become ill, or are subject to kidnap & ransom demands? Insurance options exist and need to be communicated effectively to personal lines buyers for these and many other perils. Where does money come from to deal with uncovered losses for personal lines clients? Home equity, retirement accounts, and investments are on the line without a thoughtfully created Insurance Protection Plan. When buyers elect to reduce liability limits, increase deductibles, or self-insure, consider asking, “What’s the plan in the event of a loss?” Get buyers to tie dollars to assuming more risk. Offer Insurance Protection Plans as a cost-effective alternative.

TAKE IT TO THE STREET

How do you apply PROFIT CENTER SELLING when you prospect for new customers or compete to keep current clients? First, learn to read a financial statement. Take an accounting course and discover how balance sheets and income statements provide risk management information. Become comfortable with personal financial statements. Create your own. Analyze it. Understand it. Then apply your knowledge to those you serve. Next, catch yourself decreasing expenses, increasing revenues, or supporting a client’s profitability. When paying a claim, note how a loss with a large deductible more than offsets any premium savings. Be able to tie dollars to the problems you solve. When Risk Management Strategies are in place or Regulatory/Compliance issues are resolved, learn to communicate the value of those outcomes to a business’s bottom line.

Finally, make a paradigm shift when selling insurance. What’s a paradigm shift? It’s when you look at a situation the same way over and over then decide to look at it from a different direction. Shift from selling price to proving value. Think Risk Management first, then Insurance Protection Plans. Be consultative. Ask questions and listen. Resist the urge to dominate a sales discussion with memorized features and benefits. Present solutions not quotes. You sound, act, and sell differently when you shift your focus from price to value Adopt PROFIT CENTER SELLING. Separate yourself from competitors. You’ll be glad you did. So will your agency, the insurance companies you represent, and most importantly, your clients.

Ed will present “Separate Yourself from the Competition” on October 13 at Engage 2022