Add-On Selling Secrets of the Pros |
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| This is the little instruction
manual that has shown thousands of auto agents how to earn millions of
dollars. Ten or fifteen minutes spent understanding the principles in this
text may be the most important investment you ever make.
The Authoritative Guide |
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We
don't have to tell you that it's getting tougher and tougher to be in business.
Long time agents tell us that, in the 1960's, all you had to do was hang
out an "Insurance" sign, call up the Traveler's or the Aetna, and in a
few years you could make a fortune. You
know it just isn't that way anymore. That's
why agents have become serious about
agency income. They've come to the
realization that they are the only person
who cares if they make a profit. That's
right. Their customers don't
care. Their companies don't
care. The Department of
Insurance doesn't care. For the most part, as long as they are receiving a paycheck,
even their employees don't care.
But
the business owner/manager must care.
It's his or her job to care. Some agents seem to think there is something mutually
exclusive about making a fair profit and doing a good job for their customer. Actually,
the opposite is true. Until you do
make a decent profit, including a fair
return on the time and dollar investment to the business owner, you simply
cannot afford to do a decent job for your customer. It
costs a lot of money to offer excellent service to thousands of insurance
customers. Like every other
business in America, the customer must somehow pay the cost of that service in
an insurance agency. Our add-on
products provide an efficient, low cost method of paying for that service while
delivering a substantial and worthwhile benefit to the customer. One of the most frequently voiced concerns from new agents is “Won't I lose some of my new auto insurance sales if I include a charge for T&R each time I quote a premium to a prospective customer?” Absolutely! You will lose every unprofitable account that you are now writing and will keep only those accounts where you are making money. TO ILLUSTRATE: If you are quoting $45.00 T&R's on each account - you could lose 6 of 10 quotes and still make TWICE AS MUCH MONEY than if you had sold all 10 without T&R!
In actual truth, you would not
have made even the $80.00 in the first example, because your expense per policy
is really greater than $40.00. (just divide your last 12 months expenses by the
number of policies you wrote...) You would have lost money unless you have some magic formula for cutting a profit
at 15% — and, as I write this, the average commission is actually somewhat
lower than 15%. And, in truth, you would not
have lost anywhere near 70% of your quotes by quoting the T&R each time. There is no business reward
for writing the greatest number of policies. The reward is for the highest
net income. So what sense does
it make to write business at a loss? None.
Let your competition have the privilege of losing the money on the
accounts without the add-on! After
working with a whole lot of agencies over a whole lot of years, we've figured
out some valuable things about selling these Towing & Rental contracts that
we'd like to pass along. We
noticed that agencies new to our product (and especially agencies new to the
idea of “add-on” sales in general) mostly followed a pattern of selling our product over the first 3 or 4 years.
The new agencies usually started with just a few sales per month.
A new agency might only sell 4 or 5 Towing & Rental Contracts. The second, third and fourth month sales would usually climb
a little bit, but nothing dramatic — maybe 15 or 20 new contracts per month. Now,
20 new contracts at, for example, a net profit of $40.00 each is nothing to
sneeze at. Heck, that's $800
per month in extra fully earned agency income.
That's almost $10,000 per year.
You've just paid for that new computer
network the agency has been needing to upgrade customer service, or maybe a
decent raise for your key people.
But,
you see, we knew that 15 or 20
contracts per month was nothing
compared to what a typical agency produced later on when they were really
with the program after, say, 3 or 4
years. Because a typical medium-sized agency that has really
learned the secrets to selling the
towing & rental product is easily
and routinely selling 100 to 125
contracts per month. You understand
that 100 average sized contracts per month is bringing in an extra $4,000 in monthly
agency commissions. Now that
is serious money. Especially when
it doesn't cost the agency ten cents
in time or expense to make that extra money.
You are already doing the work. We
just want you to get paid for it!
It made us feel pretty good when agent after agent started telling us how they could finally operate their agency the way they always wanted: with first class, highly paid people and with a lit sign outside so the customers can find the office and a decent phone system and new lines so customers could get through the first time and of being able to handle unearned commission and other agency expenses when they came due and finally being able to draw the kind of salary any other business owner who puts in a 70 hour week does, and, well, you know. But, getting back to the point... The
point is we had to figure out what had happened in those 3 or 4 years and
explain it all to a new agency so they didn't have to lose about $150,000
in agency income while learning it themselves.
We found out that there are all sorts of ways that the new
agency finally figured it all out. Sometimes
it just took a couple of years of one of our company reps stopping in the office
and going over the program. Sometimes
the agency would hire somebody from another agency where they were
selling 100 contracts per month. Sometimes
the agency owner just got flat sick of either losing money or just breaking even
and suddenly got real serious about
agency income. Sometimes a profit
cork leaves the agency, finally allowing enough commission income to pour
into the business. Note:
A “profit cork” is a
person who is usually from a time long, long ago when an auto agency could
actually make a profit selling auto
insurance without add-ons. A true
profit cork just can't seem to adjust to modern economic times and keeps hoping
to make it at 12% commission - if only they just keep trying... Anyway,
there were all kinds of reasons why it took so long for a typical agency to get
up to speed making real money selling Towing & Rental contracts.
But, we knew it didn't have to
take this long. And we were sure
that most of those agencies couldn't afford to lose the $150,000
while learning. So we thought we
would put together this little list of red hot sales tips that you can use today if you want to, even though you haven't sold your first Towing
& Rental Contract yet. DO IT! You
have actually got to decide to use
these techniques in your agency — then you've got to do
it!
It's not
difficult or complex, it's been done by hundreds of agents just like you
already, and it's worth thousands of dollars per month to your agency.
But
it will not happen by itself.
You have to make the decision and then stick by it! When
you do, you can go ahead and order
those new computers
or those lateral
files or that FAX machine now...
Because you are going to have that $4,000
in first month agency income in your hands in 30 days! Here's how you do it. It's really simple. 1.
SIMPLE
Remember
— don't reinvent the wheel. We
have already developed a marketing system that is guaranteed to be
successful in your agency. All you
have to do is commit yourself to applying this winning program. If
you are going to wait for the occasional "likely prospect" and then
pounce on them with your best motor club sales pitch, your add-on marketing
efforts are doomed to failure. It
is the worst mistake you can make. If you forget everything else in this booklet,
remember this: If you are serious about making money, every one of your auto insurance
quotes must include towing & rental — matter of fact and automatic
— along with your insurance coverages exactly
as we describe under Section 5 below. Every
time.
Oh, there will be a few times you don't.
Maybe two or three times a year. But
no more than that. And don't be
conjuring up all sorts of nightmares about forcing screaming insureds to buy
something they flat don't want. It
just won't happen that way. You are
selling something just about everyone wants:
reasonably priced towing and rental coverage.
You are going to be getting about as many rejections
as a State Farm agent gets on Uninsured Motorists Coverage. Just make sure you don't beg
for that rejection! “Defensive
selling” is a big mistake.
It's what many new agencies do in order to make themselves comfortable
with selling add-ons. Their sales technique
is so defensive that they are figuratively holding up a neon sign that reads:
“I'm
trying to sell you a completely optional motor club you probably don't want and
don't need and you can go ahead and say “no” right now and get me off the
hook!” That's
exactly what you do, after you go quote the whole auto insurance program,
and then stop. And pause. And look out the window. And clear your throat. And
scratch your head. And then offer
your motor club as if it is something of which you are embarrassed.
You
don't have to do that! You've committed at least two classic sales errors.
First, by your body language and tone of voice and timing, you have warned
your customer that you are not comfortable
with what is coming next. If you are uncomfortable, your customer is going to be even more so.
They will be ready to say “no”
to anything that comes next. Second,
you have forced your customer to make a specific “YES/NO”
decision as to purchasing the towing & rental.
(Read that last sentence again.
Asking your customer to make the decision is the single
biggest mistake you can make. You
make the decision. Your
customer can always say “no” if they want.) What
is the result of these two errors? A
whole bunch of those same people (98% of them) who would have gladly
and willingly and knowingly walked out of your office with towing &
rental coverages, properly offered and sold, are going to say "no" —
because you asked them —
you begged them
to do so. And,
don't call our towing &
rental coverage a motor club. Call it towing
& rental. Think
about it. The decision to “join a
motor club” is much more difficult and complicated for your customer than
whether to have T&R included with their insurance coverages. One of the most important things to remember about selling our towing & rental contracts is to keep your quotes matter of fact. “Matter of fact” is the opposite of “defensive selling.” Don't make a big deal about the towing & rental. When
you are going through the list of coverages you are offering at the point of
sale, simply list towing & rental along with all the others.
There is no need for trumpets or marching bands!
If your customer doesn't want the coverages, they will tell you.
But, don't beg 'em to say no! If,
at the point of sale, you normally break down the cost of each coverage for your
customer, simply continue to do so. If
you normally state the total premium along with the payment options (as most
agencies do) simply continue to do so. Of course the total will contain the cost of the add-on
contract, and so will the down payment. The
key here is to keep your presentation simple,
relaxed, and matter of fact. No
mirrors. No shell game.
No marching bands. No trumpets. Just
to show you how easy and routine the whole thing is, I am going to go through
two sample quotes. The first quote
is the wrong way, almost guaranteed to
cause your customer to reject the Towing & Rental.
The second quote, the right way, will result in only 1
of 400 customers saying “no”
to your offer of Towing & Rental. The wrong way. AGENCY: “OK, here's the deal.
For the coverage you need the price is $630 for the year. I would highly recommend you buy a motor club so that if you
have your car towed or get in an accident and it's only an extra $50 and I'll
have to add that to the down payment and it's really a good deal and I really
recommend...” CUSTOMER: “How much is the down payment without the motor club?" AGENCY:
“$210.” CUSTOMER: “All right. I
think I'll just take the $210 this year.” NET RESULT: Agency either loses money or just breaks even on the sale.
Customer has an accident two months later and his first question is:
“I got that towing & rental don't I?”
Everybody loses. The right way. AGENCY: “OK. I've checked a number of markets that I represent and
I was able to put together a program that will keep your cost low and provide
you the important protection I believe you need.
The annual cost is $680 but all I'll need to get you started today is
$260.” “Now here's
what you'll be getting for your money. 15/30
Bodily Injury Liability; 10,000 on your Property Damage Liability; No-Fault
coverage with no deductible; Comp & Collision with a $500 deductible, $125
per occurrence on towing & up to $25 per day for up to 20 days on rental for
most car accidents.” “Does that sound like the coverage you want?” CUSTOMER: “Yeah — sounds good.
How much are my monthly payments?” AGENCY: “Let's see... Can you fit $57.73 into your monthly
budget?” CUSTOMER: “I guess.” AGENCY: “Great. Now
— is that down payment going to be cash or check?” NET RESULT: Customer is fully aware of all costs and coverages.
Agency makes a fair profit on sale.
Customer is provided important protection.
Everybody wins. What
we're talking about here is just good
salesmanship. A lot of people
get confused on salesmanship. They
think “selling” is the art of talking
somebody into something. Wrong! If
you have to talk somebody into something, you've already blown the sale!
Good
salesmanship is presenting your products in a manner that makes it easy
for your customer to buy what you are selling.
If you find yourself having to debate
the customer on what they should buy, you've probably already lost the sale.
In
the first sample quote above, the agency made it easy for the customer to reject the Towing & Rental.
They almost begged him to reject it. In the second sample quote, the idea of rejecting the Towing &
Rental never even entered the customer's mind! Think
of selling as paving a highway for your customer to follow.
You make sure that the direction that you want your customer to go is the
smooth, paved route. Now, depending on how well you've paved your highway,
your customer may, nevertheless, decide not to follow your route — they
may actually drive through a culvert or take a dirt road to end up somewhere
else — but it should never be as easy or attractive as following your paved
highway. In
the “Wrong Way” quote above, the sales person paved a beautiful highway away
from a Towing & Rental sale. In
order to actually buy a contract, the
customer would have had to drive around 3 detour signs and travel on a pothole
filled road to reach the spot the sales person desired!
Why make it so difficult for you and your customers? The
way you structure and word a sales
presentation creates a picture in the mind of your buyer.
It is very important to paint the best possible picture.
For
example: I sell to agents.
If I walk into an auto insurance office, describe the proper method of
quoting add-on (as demonstrated above) and offer the agent a brand-new Mercedes
Benz 300 SE, in lieu of commission,
as long as they agree to quote each new policy in that simple manner,
I believe most agents I've called on would jump at the opportunity.
Yet
I would be cheating them badly! I
can lease the Mercedes for only $500
per month — whereas you could have
collected the $4,000 commission and leased yourself almost 8 of them! Why
does a value 1/8 of another seem greater in the mind of the buyer/agent?
The Mercedes “paints” a much prettier image in the mind of the agent
— a shiny new prestigious luxury car with all the feel-good thoughts versus a
simple number to be added to existing revenues. The
structure and words you choose when selling mean everything.
While
we were checking all these things out, we learned something interesting.
It seems that trainees (new people recently hired
by the agency without insurance background) often outsold their more experienced
counterparts by a wide margin when it came to Towing & Rental contracts.
Why? They didn't have any
bad habits to break. They didn't
have any old fears to unlearn. They
were simply told to sell the Towing & Rental on each auto policy and they
did so — matter of factly and without giving it a second thought.
And that is exactly the way their customers bought it. More
experienced people ended up talking their customers out
of buying the coverages (they thought they were selling!)
blowing trumpets, defensive selling and all the rest of the mistakes we've
already discussed. If
you're like most of our agents, you have years of insurance experience and
hundreds of hours of insurance education. You
are a professional. Your office
is not a self service supermarket where the public is expected to come in and
pick out coverages like they would bananas in a produce department.
They rely on your expertise.
We
found that our new agents were sometimes hesitant to apply that professional responsibility — allowing customers with
little or no insurance knowledge to “package” their own coverages — often
with disastrous results! But,
the agents sending us 100 or more applications every month had learned
that customers expected and demanded that an agent
arrange a package of coverages that will meet the customer's needs and budget
— a package that includes Towing & Rental protection. Did
you know that more than 50 million Americans — many of them your
customers — bought a motor club last year?
Not only did someone else make a commission selling those contracts to your customers, but because they didn't buy from you, they paid more
for less! Nevertheless,
lots of agents harbor all sorts of secret fears about selling
add-ons. Maybe that's why it
often takes so long before they get rolling on the program.
Maybe it takes that long before they realize that there is no reason to
be afraid. Years
ago there were some auto agents whom we believe were direct descendants of John
Dillinger. They sold $500 AD&Ds
along with $100 No-Fault policies — and not a single one of their customers
even knew they had the AD&D coverage. These
were the “bad old days” for add-ons, but those days are long gone, although
the mention of add-ons sometimes brings the memory of these old crooks to mind. In
large part, it has been the lead of ASCC
and our sister company, National Consumer Services, Inc., that caused the almost
total elimination of these practices. When
using our high profile add-on products, you can truly think of yourself as a
“value added reseller.” You
have added considerable value to the entire auto insurance transaction by
selling your customer a low-cost package of needed benefits unavailable through
any other source. Everybody
knows what they bought. Everybody
signs an application. Everybody gets a contract.
We pay our claims every day. You have never hidden anything from a customer. You
have done a service to your customer in several ways.
Not only have you provided them the important benefits provided in one of
our add-on products, but you have almost certainly invested a major portion of
the add-on profits back into your agency to
the direct benefit of your customer! If
you're still nervous about add-ons, stop for a minute and think about other
successful industries and their add-ons. McDonalds®
sells hamburgers for a certain price. They
charge about 15¢ extra for a piece of cheese that cost them about a penny.
That's 94% commission! Do
you find that scary or immoral? Of
course not. It is simply good
business. It's called up-selling.
Tire
companies up-sell valve stems, road hazard warranties and balancing.
Auto dealers up-sell maintenance agreements, undercoating and paint
finish protectors. Copy machine companies up-sell service agreements.
Sofa manufacturers up-sell Scotchgard® fabric
treatment. Airlines sell First
Class. There are virtually
thousands of examples. Remember — most smart businesses up-sell, and, many (like auto
insurance specialists) could not survive without it. It's
up to you. Once you get over the
little hump of making a decision to really
get with the program and get serious
about agency income and customer benefits, everything else is coasting. It's
easy. It's simple.
It's extremely profitable. It's
good for your agency, your people, and your customers. So
you can imagine our frustration, after having set up a new agent, thinking we
had fully explained the entire program,
to find that the agency had
sold only three contracts in the first thirty days.
When we call the agency to see if we can help, a typical follow-up
conversation might go something like this:
NCS:
“Hi Bob. Just wanted
to thank you for the business and ask if
there is anything we can do to help you bring up production.”
BOB:
“Hi.
Well, we're trying to sell it. We
have a sign in the window and all, but
most people don't ask for it. I'm going to talk to my
girl Irma and tell her to make sure she tells
everybody about it.
And we're going to try and send out flyers on our renewals.” That simple little conversation tells the whole story. Bob's problem, of course, is he was hoping that Irma was
going to talk people into buying
his motor club (#6). Irma won't.
It is not going to happen. Irma
is comfortable with her routine and agency income is the boss's problem.
If Bob would have instructed Irma to follow our sample quote (#5) every
time (#2), and made sure that she did so, he would have had at least $4,000.00 more in his pocket.
As a matter of fact, Bob made just about every
mistake we've talked about here. He
worked harder to lose the $4,000.00 than he would have to have earned it.
From experience, we can tell you that Bob will eventually get with the
program, but he will probably wait until events force him to get serious about
agency income. And, unfortunately,
he will lose a small fortune until that happens. JUST A LITTLE MORE
COMMON SENSE... Here is a little tip to get your people to be as
enthusiastic about add-on sales as are you - and it will even work on a “profit
cork”
like Irma. There is a magic
word in sales: incentive.
Give your people a reason to follow the program.
Remember the two rules of add-on incentives:
RULE #1: When
their income is tied to their add-on sales,
they will sell add-on.
RULE #2: The greater
percentage of their income results
from add-on sales, the more add-ons they will sell. Does that mean you could calculate 100% of your sales
people's income on their add-on sales? You
could and you should. After
all, the reality is that you are just breaking even or losing money on selling
insurance. Your real agency profits will result from your add-on sales.
The closer your people are tied to that truth, the more add-on you will
sell and the greater your profits will be. How to calculate the incentive? You can be as creative as you want here, but it usually pays
to keep things simple. When I
was in the retail business, I paid my people a "guarantee" of $200.00
per week. I calculated their
incentive by paying them 25% of add-on sales after they sold their first $200.00
in add-on weekly. We called this a
$200.00 deductible. It worked out like this:
Let's say that your sales person is writing three applications a day.
That means three add-on sales at, for example, $50.00 each.
That works out to $750.00 per week in add-on sales.
Subtract the $200.00 “deductible”
leaves you $550.00 to calculate a $137.50 bonus @ 25%.
I had people earning over $1,000 per week on this system.
Let me tell you — they were motivated! If you already have a good sales person that is reluctant
to work on a bonus system, phase it in over several months with the guarantee
and the deductible shrinking and the percent of bonus increasing each month. Let's face it, ultimately, we are all on commission. Maybe you know of other companies that offer products of
the same nature as Auto Service Contract Company, Inc. (ASCC) or National
Consumer Services, Inc. (NCS Instant Issuesm)
Maybe they've even taken similar sounding names, or used some of our
copyrighted contract language or attempted to make their product look like ours.
(You can understand why they want to imitate the leader) Everybody pays high commissions, so, why do business with us? Here are six
simple reasons: Reason #1:
Stability. In our offices, we have a big box full of the supplies of our
recent “competition.” About 70%
of them are no longer in business. Guess
who's paying their claims? Their
agents. In contrast, we have been
serving the add-on needs of auto insurance specialists since 1983.
Because our business is run by business professionals, we know we're
still going to be here in 2003 and beyond. Reason #2:
Innovation. We innovate — they imitate.
Just in case you didn't know, we invented
the towing and rental contract. Before
us there were just those big silly “motor clubs” that were too awkward to
sell — you had to slide them! Since
1983, each of our new products has redefined the add-on industry.
And, much to the distress of those jokers who can only imitate, about the
time they figured out what we were doing last year, we were already designing
for next year. When you deal with
us, you can count on a state of the art product that is constantly being
improved. Make sure you check out
our automated direct renewal notice system, non-owner's contracts, easy to read
contract language and other unique features. Reason #3:
Benefits. If benefits mean anything to you, you can't do better than
our Instant Issuesm Road
Service Contract — no matter where or how far you look. Just for example: Towing
up to $125 per occurrence - no limit to the number of tows per year.
Rental up to $25 per day for up to 20 days with limited rental even in
the event of a theft. Locksmith,
fuel delivery, flat tire changing — all included.
Just compare this contract to AAA® or Amoco® or
Allstate® or any other club charging more than twice as much as our
suggested retail. Reason #4:
Service. Simply put, our claims service is the fastest and fairest in
the industry. We set the standard. If
we have all the documentation on a particular claim in this morning's mail —
odds are a benefit check will be going out
to your customer this afternoon. Reason #5:
Class. If you don't mind
a rate chart and commission schedule scratched on a back of a napkin with forms
and contracts designed by some guy at Sir Speedy® printing, maybe
you can appreciate some of our competition.
But if it is important for you to deal with a company where intelligent
design is an inherent product feature, where all of the forms are clean and
crisp, where the look and feel of the contract itself lends credibility to your
business and your sale — then you need to look no further than our companies.
We take a lot of pride in what we do. Reason #6: Simplicity. We have three towing & rental contracts, and three Group Accident programs — each with its own unique personality — and each with its own marketplace function. We guarantee that one or more of these programs will be perfect for your agency. Our competition? Frankly, we're amazed. Plan T1 through T200/Q. Plan OA1 through OA6000. Plan AO through DO-3. Do you get the impression that even they don't know quite what they all offer? If you like things complicated, you are going to love the other guys. If you've got better things to do than attempt to figure out the difference between Plan T-15(b) and Plan A0-6, you've got another excellent reason to sign up here! Contact the author by clicking here: Ronald J. Manera © copyright 1986-2001 The Towing & Rental Group, Inc. 1-800-742-2722 |
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That's
right, the program is simple.
