Thursday, August 25, 2016

Empathy and The Golden Rule in Selling

Empathy and The Golden Rule

I’ve been exploring the ideas of Empathy and The Golden Rule in selling.  I think that the professional salesperson has to demonstrate one and abide by the other in order to have the right kind of career over a long period of time.  

To be empathetic is to have the ability to feel what someone else is feeling or to recognise another’s emotions.  This ability is essential to doing good business if you are in sales.  The very best salespeople are only inhibited by sales scripts because they have the ability to figure out each individual buyer.  We all know the classic and very trite car salesman line…”What’s it going to take to get you into this car today?”... Well, the very best salespeople can see through the client’s eyes and walk in his or her shoes and thus could just ask “What would it take for me to buy this car today?”empathy.jpg

There is a perfect kind of language that raises the odds of selling to each individual person or couple.  The most empathetic salespeople can figure it out.  This comes naturally to some salespeople, but for others it must be studied.  Just as a Psychologist spends 10 years in college to be able to relate to people, a salesman can study enough material to learn empathy.  There are seemingly endless books on the subject.  You have to be able to understand what your client is feeling in order to pick up on the subtle clues that are like a breadcrumb trail that leads you to the close.  

So here’s the danger to the client.  Some of the best salespeople can show empathy but be completely amoral.  You know these kinds of salespeople, or at least you’ve seen them in movies like “Boiler Room,” “The Wolf of Wall Street” and “Glengarry Glen Ross.”  If you haven’t seen these movies, go and watch them all.  These people are real and they are out there folks.  I once heard a guy say “I didn’t get in this business to save the world.  I can do that when I have money.”

The most skilled salespeople can sell inferior products to clients.  They can also sell a good product at an unfair price.  What can happen is that a person can be so well trained at selling that the client would literally buy something that makes no financial sense.  For example, my business is life insurance.  I have worked with many clients over the years who bought policies for 30+% more than market cost even though the agent had access to lower prices for better products.

Let’s talk about why The Golden Rule is so important.  As you hone your craft, you have to keep in mind that you must always do the right thing for the client.  For some of us, it isn’t hard to always do the right thing.  It just comes natural.  Others might be tempted by greed.  Some find ways of spinning their own truths or rationalizing to make themselves feel better about what they choose to sell.  You may be able to get away with making a few sales this way, but it will catch up to you.  A reputation of being a salesman of low character will directly affect your income in a way that you’ll never make up for with sales skill.

If you plan on making a career out of selling, you must blend these two important elements.  You have to be able to understand what your client wants and needs and be able to convince them to buy.  You also have to do so in the most scrupulous way.  One without the other doesn’t work.

Tuesday, August 23, 2016

90% of People Have The Wrong Life Insurance

If you bought it from someone who works for an insurance company, you are paying 20%-60% too much. It may even be in danger of lapsing, and no one is telling you! It isn’t your fault and you aren’t alone.  This is an industry wide problem.
Let’s Start With the Facts
Only around 60% of households have life insurance. Only around 40% have individual life insurance. Among those people who do have life insurance, 40% don’t think they have enough. If you are one of those who has the right amount of individual coverage, Well Done!

Why aren't people buying the right coverage?  
They don’t have a good independent agent to consult with. Over 80% of consumers say they don’t purchase more life insurance because they think it costs too much.  When asked what price they think it is, they estimate triple the actual cost. Thinking it’s out of budget, they don’t even shop it to see. Others think Life Insurance is complicated and they won’t be able to understand it enough to buy it.  They have a point.
Among Americans surveyed about buying life insurance, understanding what they’re buying ranks as the number one concern. Price ranks 3rd.  Why is it so hard to understand?
Some people who want to buy do not think they can qualify. Many have tried through the mail and other sources with no luck.

I’m One of the Ones Who Does Have The Right Life Insurance.
That’s great, but where did you get it? If you bought it across the kitchen table from someone, you’re probably paying double.  
Did you buy you life insurance policy as an investment, or for college planning? Some agents manipulate the commission on these to get paid more, making the policy underperform its potential!
You might be one of the people who bought something you do not understand. The agent might not have understood it either! Many or even most agents who are really good at selling are bad at designing the the right kind of insurance. Others, like some Home and Auto agents only do it because they have to in order to validate their carrier contracts.

We can help.
A 20 minute phone call could save you hundreds or thousands per year.
No Obligation!  If you would rather not work with us, that’s OK!  We will still tell you how to fix your life insurance.  That’s how much we care about this.

Thursday, August 18, 2016

Perspicaciously Simple Speech

Perspicaciously Simple Speech

Does your sales pitch sound like mixture of Pig Latin and a Dennis Miller comedy rant?  If so, you’re probably leaving business on the table.  Keeping it simple is the key to communication.

Some salespeople insist on using every brain cell to craft the perfect sales pitch.  They design explanations for the logic and reason that supports buying their product using Youtube footage from the 2012 Scripps National Spelling Bee.  While it sounds great in their heads, essential information is not sinking in because the client’s brain is in turmoil.  

One of my favorite clients is a well aged Italian fellow who is a no nonsense, shrewd, somewhat intimidating self made millionaire.  About 10 years ago, I sold him the first of many insurance policies for his large estate planning need.  Even then, I knew more than most, but prepared for several hours for the meeting so I could pull back the curtain to explain to him all about the inner workings of the policy options I was recommending.  I also talked about ownership options, premium financing possibilities and the like.  Thankfully, he liked me just enough not to boot me from his office but instead scolded me.  “Stop!,” he said sternly, “I can tell you know what you’re talking about, but I’m not getting it.  Start over and explain it to me like I’m a child.”  Maybe I shouldn't have put that in quotes since I edited all the swearing, but he was dead right.  I felt about two feet tall after he snapped at me.  I was wasting his valuable time.  He really only needed to know the essentials.  I gathered myself and gave him the info using simple language and sold him that first policy.  From then on, our meetings rarely lasted more than 20 minutes because I condensed all the information for him into its simplest form.  Wasting his time could have resulted in him changing agents or my waking to find a severed horse head in my bed or both.  I have learned a lot as I have worked with him and his family over the last several years and I value those lessons.  Here are a few:

Drop the industry jargon.  Just because the person across from you is nodding his or her head, that doesn’t mean they understand what you’re saying.  If they leave to “think about it,” it might be so they can google some of the words you were using.

Use simple speech.  There’s no reason to use big words in a sales meeting.  It makes you sound like a phony.  Studies have shown that those who use large academic words are regarded as having lower intelligence.  In other words, trying to sound smart makes you sound stupid.  By the way, Guetapens was the winning word in the 2012 National Spelling Bee.  Ironically, Guetapens could be used as a metaphorical substitution for “Sales pitch.”

Focus on the result.   Mr. Client, buying my product will make you happier, healthier and wealthier.

“If you can’t explain it to a six year old, you don’t understand it yourself.” – Albert Einstein

Monday, August 15, 2016

ROP Term, The Worst of all Life Insurance Policies

ROP Term, The Worst of all Life Insurance Policies

I think I will get a little flack from this, but I’m feeling the need to blow the whistle on a life insurance product that is still being pushed by a lot of insurance agents out there.  I can find some positives in just about every kind of life insurance product, but right now, this is one that makes no financial sense.  In the past, this product design had some merit for some people and I have seen it work and sold it myself.  New insurance regulatory changes in actuarial guidelines have come through that make this product perform poorly.  Today, this product only makes up about 2% of term insurance that is sold, but I think it would be much less if the consumer knew the math behind it.  


First, let’s examine why a consumer would find it desirable enough to buy.  In simple terms, loss aversion is the reason.  When we hear the salesman say “How’d you like to buy an insurance policy that gives you back all your premiums if you don’t die?,” it’s like music to the ears.  Naturally, this seems like a good deal and if the price is palatable, it could seem like the way to go.  That’s only if you didn’t have the rest of the story.  In a way, the sales line above is illustrative of the kind of doublespeak that gives life insurance salesmen a bad name.  Let’s see the numbers first and then we’ll adjust the sales pitch a little and see how it sounds.

A 35 year old male can buy a $1,000,000 20 year level term policy at “Preferred” for about $600 per year.  A Return of Premium product would be about $2,500 per year.  At the end of 20 years, the entire $50,000 that was spent over that time would be returned to the policy owner.  But, if we invest the $1,900 per year difference, we only have to earn a 2.8% return over 20 years to create the $50,000.  If we achieve an 8% return with the same $1,900 per year over 20 years, we end up with $86,000.  So what is the opportunity cost?  On the surface, it looks like the opportunity cost is $36,000.  But, that isn’t the whole story.  In a ROP product, you have to make it to the end of the policy to get all your money back.  So, if you change bank accounts and your policy lapses, then you’re just screwed out of most or all the money you put in there.  You cannot actually calculate the opportunity cost of buying this type of policy, but it’s greater than just the interest rate difference.  Some might argue that the return in these kind of policies is guaranteed, unlike stock market returns.  This is true, but most who are buying this are in the younger ages and can take on the risk.  Even those who are skeptical about the stock market can outdo the ROP’s guarantees with annuities from the same company that is selling the insurance policy.


I ran several scenarios and was able to find a few age/rate classes that could get the return into the low 3% range, over 20 and 30 years.  Many were in the mid 2% ranges.  I can’t see how inflation rate returns could ever be worth tying up any amount of money for that length of time.

Here’s the adjusted sales pitch.  “How’d you like to buy some well priced term insurance, plus tie up an extra $2,000 per year for the next 20 years at inflation rate returns, contractually guaranteed as long as you make that payment faithfully for the entire 20 years, otherwise we keep it.”

Sunday, August 7, 2016

The Puppy Mills of the “Financial Service” Business

The Puppy Mills of the “Financial Service” Business

Have you met any of these young go getters with their do-it-yourself bow ties, new shoes, briefcases, and sunglasses dangling around their necks?  Be careful Aunt Suzie.  They’ll corner you and awkwardly fumble their way through their best attempt at a sales presentation and guilt might just drive you to buy a bad version of something you sort of need.  How excited they must be, beginning their short lives in the “Financial Services” business through internships with the big boys of the Life Insurance business?

I’m sort of kidding.  You’ll forgive me for my tone, won’t you?  The tragedy is that these young men and women, if taught properly, could be our next generation of real professionals in insurance.  And the industry needs them.

I don’t think it’s a secret that no more than 1 out of 10 people (of any age) succeed in the Life Insurance business.  I recently read an article written by an AXA career agent who said he was one out of three remaining from a starting class of a thousand.

I see two major problems that are keeping these recruits from succeeding.  The first problem is that these people get lured in under the guise of “Financial Services” meaning something other than Life Insurance.  Eventually, they figure out that the future set for them is not making a fortune by managing multimillion dollar portfolios, but selling the same 3 life insurance products to everyone.  By then, these agents have seeded their hierarchy with a few cases that will feed the beast for years to come.  What bothers me is that the system is really set up this way on purpose.  In other words, one of the marketing strategies of some companies is to recruit the family and friends of the eventual client.  

The other thing that keeps new recruits from succeeding is that they have to start selling to clients too soon.  What’s normal is on the job training where the new agent is sent out to set meetings with as many people as possible within the first couple of weeks of being licensed.  Understandably the recruit fails to sell most attempts (other than Aunt Suzie).  This is what I call the Win Win Weeding Process.  The agencies are happy with the business they get and happy to have hired the few who make it.  There needs to be a much longer training and mentorship program where the recently licensed agents can spend their time learning while getting paid fast food type wages.  With few exceptions, I would say it would be smart for most new agents or financial advisers to stay away from clients for the first six months.  This time should be dedicated to sponging up as much knowledge as possible.  But, Imagine a recent college grad who is considering a career path.  How would recruiting work if the only promise you could make is that as a new agent, you’ll barely scrape by for the next couple of years and then maybe begin earning a decent living and if you bust your ass, you’ll achieve a 6 figure income in around 5 years?  That just wouldn’t gather much attention from most young people who are sick of ramen and ready for kobe beef.  Well, this kind of dedication and suffering is good enough for doctors.  Maybe that’s what these young people need to know.

Here are the facts.  Life Insurance is a good business.  You can be your own boss.  Six figure incomes are the norm for people who stick it out and learn all they can.