Editor’s note: This post was originally published on 2/23/17 and has been updated for accuracy and comprehension.
Why life insurance producers shouldn't compete on price
- You cost more.
- Selling value makes more sense.
- Clients don't really care about cost.
Competing on price may seem like the only way to get an edge over other life insurance producers, but going this route may actually sabotage your success.
In fact, trying to compete by scouring the market for the lowest price is the best way to bring your business down.
As an independent life insurance producer, you won’t find success by competing with other agents strictly on price.
If you’re trying to emulate everything they do, and offer the same cheap prices, how do you think customers will see you?
You haven’t differentiated yourself from the competition.
In effect, there’s no reason why consumers should choose you over the agent down the street.
Trying to copy competitors’ pricing strategy or hoping to get customers by offering low quotes generally won’t work.
Here’s a closer look as to why.
Why You Shouldn't Compete on Price
1. You cost more.
It’s plain and simple, but true. Your services will cost at least a bit more than the cheapest option out there. So instead of going after the people who only care about price, compete for the consumers that are willing to pay more for better service and personalized attention.
2. Selling value makes more sense.
Studies have shown that consumers give preference to brands that sell value over price. In fact, successful businesses prioritize two functions: being better than the competition (value) rather than cheaper, and keeping revenue at the forefront instead of costs.
When you can deliver on the value you offer customers, you’ll drive success.
And the biggest surprise...
3. Clients don’t really care about price.
Sure, there is a segment of consumers that care only about price, but the other significant driver of life insurance decisions comes from peace of mind. That’s what consumers are looking for when they buy insurance.
When presented with quotes ranging in cost, 57 percent of them do NOT go for the lowest price!
It’s foolish to try to compete based on price when your business can’t sustain selling products at a very low cost.
And not all customers are motivated by price only. Instead, pursue those customers that care about the results of owning life insurance: protecting their loved ones and providing peace of mind.
Go for value over price and gain the clients you want
As an independent life insurance producer, you have a lot to offer prospects. Relationship, service, personalized attention, and peace of mind are services that will drive your business.
You have to figure out how to leverage this advantage for your clients. That’s when you’ll separate from the competition and start winning – big.
So, stop competing on price. It won’t get you anywhere and it’s not a smart selling strategy for the independent life insurance producer.
Have you had success selling value over price?