As the revenue stream of benefits producers continues to come under attack as a result of healthcare reform, producers find themselves scrambling to figure out how to replace the lost commissions. Unfortunately, their short-term solution will, in many cases, be their long-term curse.
Some of the more common strategies I have heard include:
- Start selling voluntary products
- Buy books of business from other producers/agencies
- Start selling P&C
- Just sell more of what they’re already selling
Here’s the problem: none of these are solutions where the producer is taking control of the product or the model. In every situation, they continue to rely on someone else’s product and they continue to allow someone else to determine how much they get paid (i.e. the carrier determines the value and pays accordingly through their commission schedule).
Another part of the problem comes from how the prospects/clients view producers who are using this approach. With every one of these strategies, the producer will either be viewed as the same as every other benefits producer, or even worse, just an insurance generalist.
Regardless, the client will view what the producer sells as a commodity, which does nothing to improve profit margins.
Today’s benefits producers have to make a shift in how they get paid
In order to stay a relevant business, producers need to change their model to get paid for the value they create for their clients rather than for the placement of a product (which is what other benefits producers and insurance generalists do).
Producers must reposition themselves to be seen as a specialist & produce the results of a specialist
Clients hire specialists because they are looking for business results. They hire benefits specialists because they want to improve employer – employee relations, better serve their clients, and improve profitability. As a specialist, producers need to be able to identify the opportunities to help clients achieve these goals and deliver the solutions to drive the results.
As far-fetched as this may sound for benefits producers, it isn’t as far away for most as you might think. Many producers are already having this kind of impact on client businesses, but, unfortunately, it’s a byproduct of their efforts, and largely goes overlooked (by the producer and the client) rather than being the defined purpose of their efforts.
Becoming a specialist
- The first step to becoming that specialist is to make sure that the reason you are hired is no longer about a spreadsheet, but about your ability to deliver a better business solution to your clients.
- Additionally, continuing that client relationship has to be based on the results the producer delivered, not the renewal rates the producer delivered on behalf of the carrier.
Advantages of being a specialist
- Instead of talking about the multitude of ways you can make a small impact on the client business, you can now talk about the one way you can make a significant impact on their business
- Confidence that comes from having less competition
- You now control what you are selling
- Specialists always create more value than a generalist and, therefore, are paid more
- Easier to be positioned as an “expert”
Put yourself in the place of the buyer
If you received a letter from the IRS, would you want a main street lawyer working on your behalf or an attorney who specializes in tax law? If you developed a life threatening condition, would you want a family practitioner or a specialist working to keep you healthy? The answer is obvious. When you want to work with someone who can deliver the best results, you ALWAYS want a specialist.
When presented with the option, what makes you think your prospects/clients are any different? They aren’t; they want a specialist who is going to deliver a better business solution and help them deliver better business results. Make sure it is you they see you as a specialist and not your competition.
Photo by WeiSheng Zhang.