We talk frequently about getting paid for the value you deliver. And in the insurance industry this tends to be difficult because of the way we've worked for so long.
We've gone through an evolution in the way we deliver services to clients based on industry offerings, the way businesses operate and the state of the competitive market. At some point in there, value-added services became all the rage.
By definition, a value-added service is something added to an otherwise homogenous product or service to give the client a feeling that they've received more value for their commodity purchase. As an industry, this has become an important part of competitive selling because agencies are on a level playing field in terms of the products they offer and the rates they charge clients. For so long the carriers were the ones in charge of those variables. By adding the services to the offerings, agencies are able to feel a sense of control in a model where they didn’t have much previously. This sounds like a great idea, and it is, but we've gotten upside down on it and need to turn it around to really make it the great idea that it could be.
Here’s how we got here
- We needed to give more so the client had something substantial on which to make a broker decision.
- We wanted to offer something that our competitors weren't, but charging for it could have made it less attractive, as clients tend to make insurance buying decisions based on price.
Since the carriers pay commissions, it was easy to avoid talking about money and value and worth with the client. Telling them these services were free was in that same vein of "easy."
We might have some uneasy feelings that we're really not providing the amount of value equal to what we receive in commission payments, so saying these extra services were free eases that guilt. Our competitors were doing it, so we did as well.
Now we've got a problem
We've spent all this time finding services that could be interesting and useful to clients; we've spent time and money procuring the services, administering them, and wishing clients would use them effectively. And we've not received any more money in return for this outlay of resources, and likely not seen any substantial increase in client retention because clients aren't actually using the services in a way to make it truly valuable.
We've taught ourselves to not talk about money and to not tell clients we spend both time and money on these services for their benefit. We've taught clients to expect that everything we do for them is free, and to think of us, and all competitive brokers, as a free service provided by the carriers.
How can anyone place value on something they receive if the person giving it away doesn't even value it? And by not placing a dollar value on it, we are deeming it as not worth anything in the eyes of the receiver.
Critically important to this discussion, we've positioned ourselves as that free carrier resource, instead of teaching them that we are independent business owners who work to help them better manage their employee and risk management — insurance products aside. Which is what we need to be doing.
So what do we do about it? We spend way too much money and valuable time on these services to de-value them as free.
The first step is to stop using the term Value-Added Services. The term is synonymous with free, not worth anything, and throw-away. Instead, we need to replace the idea, both in our own minds and in our clients' minds, with the notion that we offer relevant and valuable services. Used correctly, these services have the potential to change the results clients see in their organizations.
Understand what can happen in organizations if the services are used properly; know what results can be achieved and how to achieve them.
Only offer the services that are directly applicable to each client. Just because you've got 10 different services doesn't mean every client needs them or even needs to know about them. Don't overwhelm clients with unnecessary information; instead, wow them with relevant information and results.
Help clients use it. Just giving them a log-in isn't enough. Show them what you thought was specifically relevant and how to use it. Get them started, and have a plan of action for how it's going to be used to see specific results.
Tell the client the cost of the service up front. Even if you include it in with the commissions and don't charge separately, the client needs to see there is time and money associated with services you offer as a professional organization. The cost should include direct expenses of the service, plus time and expenses associated with administering and consulting around the service.
A consultant is in the business of sharing knowledge and insight and making sound recommendations based on experience. In order to be a consultant or adviser to your clients, it starts by changing your own mindset: stop de-valuing and commoditizing your services.
Instead, set new expectations for how you view your time and the knowledge you have to help clients achieve results. All of it is incredibly valuable and very worth paying for.
Keneipp, of St. Louis-based Benefits Growth Network, coaches, trains, and develops strategies and curriculum for agency growth. She can be reached at firstname.lastname@example.org.
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