The preoccupation with price is more in the mind of the broker than it is in the mind of the client writes customer service expert Martin Grunstein in the latest issue of Insurance Adviser.
“It seems that in the face of competition, the response in almost all of the industries is to either match the price or lose the sale. Insurance brokers are worse than most industries because many of them offer reduced prices at renewal time to existing clients when the clients don’t need those discounts to maintain the relationship” states Grunstein.
Not only is this bad for your profitability (and there is evidence of this margin erosion in so many industries, for example, the retail margin in the IT industry on many products has gone from over 40 per cent to single figures in the last 15 years; real estate commissions in Sydney have gone from 3 per cent to 2 per cent in the last 15 years), it is bad for your future profitability because all those who have screwed you on price refer their friends and colleagues who expect – and get – the same cheap prices.
Where does it stop?
Well, in a lot of industries it hasn’t stopped and the results are a lot of people going out of business in the last 10 to 15 years.
It’s time for brokerages to brainstorm all the things your customers get that are included in the price of your services and communicate these before they make their purchase decision.
Not only is prevention better than cure, it’s more profitable!
Want to read more of what Martin has to say? Pick up the Dec/Jan issue of the Insurance Adviser magazine or email firstname.lastname@example.org to subscribe.