Howard Behar, former president of Starbucks Coffee Company International, explained his Company’s purpose:
“We’re in the people business serving coffee, not the coffee business serving people.”¹
“People first” is a good business strategy. “People over profits” is a Starbucks cultural value. Can anyone buying a beverage, meal, or snack at Starbucks actually tell if people are valued more highly than coffee? Easily. When greeted upon entering the store, the customer is not pushed to select one beverage over another. Instead, the barista awaits the customer’s order and records the customer’s preferences on the cup along with the customer’s name. One personalized, customer-designed beverage coming up. If you are considering starting a coffee business and want to find out more about the suppliers who can help kickstart your business, it could be as easy as checking out sites like ironandfire.co.uk for more information. The more you know, the easier it will be when it comes to finalizing everything for your business.
We in the life insurance industry help the unprepared plan for the unexpected. However, it very much seems we are in the life insurance business serving people, and not the people business serving preparedness. Whether you are employed by a carrier home office, a brokerage general agency, or are an independent financial professional, ask yourself these questions:
- Do I hear more about our industry’s products or about the people buying them?
- When a consumer is presented with a life insurance proposal, how much of the consumer’s objectives, needs, dreams, and practicalities were assessed ahead of time?
- Does the application process start with how a consumer wants to do business?
- Do our technology solutions start with what consumers really want?
- Does the issued policy look like something the consumer would go out and buy?
- Are the annual policy statements created with the consumer’s normal understanding in mind?
- Is the process designed to build an ongoing relationship?
- Does our industry support the consumers’ changing needs throughout their lives?
- Are we preparing technology solutions that create a better initial consumer experience but which may inhibit long-term relationships between independent financial professionals and their clients?
Elizabeth Dipp Metzger, MSFS, CFP, is a seven-year MDRT member from El Paso, TX. Her mission statement reads as follows: “We’re about families, businesses, and generations, helping our clients get from where they are now to where they see themselves in the future. It’s not about products; it’s about family legacy.”²
If we want to grow as an industry and put the luster back into life insurance, should we not start, like Elizabeth Metzger, by focusing on the consumer? Instead, this is how our industry is acting:
- My product illustrates better than theirs.
- My long term care rider is much better than their living benefits.
- Our caps are higher than theirs.
- We have positive arbitrage opportunities way higher than theirs.
- Our options budget is higher and therefore we can offer higher caps.
What does any of this have to do with helping America’s consumer prepare for the unexpected?
America’s life insurance consumers are not begging our industry for more and more complicated products. They are not desirous to learn new phrases, like “Monte Carlo simulations,” “Sharpe ratios,” “Sortino ratios,” and the like. What consumer ever asked to see an illustration that even the independent financial professional presenting it does not understand?
The People Business, Serving Preparedness
Unpreparedness is something American consumers often are not conscious of and not thinking about. Who wakes up thinking they may die today, or have a stroke or heart attack, or be disabled in an accident? No one lives that way, and they shouldn’t. That does not mean terrible things won’t or can’t happen. In fact, there is a high likelihood that something will happen someday. Unpreparedness ends with a plan and a solution.
A plan needs to be made, and provisions arranged in advance of a tragedy.
The life insurance industry has the products that people need. We have the solutions for dying too soon, becoming disabled or chronically/critically ill, or simply out-living means of support. We just go about marketing and distributing these products in ways that are contrary to consumer preferences.
In 2016 McKinsey & Company published a report entitled, “The Key to Growth in U.S. Life Insurance: Focus on the Customer.”³ Note what they wrote: “To return to growth, life insurers must build value propositions that connect with consumers’ concerns about lifestyle and income preservation in retirement and develop more sophisticated ways to engage with consumers on their terms.”?
The phrase “sophisticated ways” means going beyond business as usual.
The phrase “engage with consumers on their terms” implies we are currently doing it wrong.
What could possibly be wrong with our current model of sending out product-centric representatives to call on unwitting consumers to discuss something they do not have on their minds already?
The McKinsey report went on to state that we need to “Rethink salesforce models, moving away from a product-push mode to provide customers with more unbiased advice, education and ongoing engagement.”?
What might that look like?
Carrier Home Office
- Communicate in terms the consumer can relate to, perhaps through stories, the attractive after-tax returns and disciplined savings model of permanent life insurance and annuities.
- Focus on helping consumers to understand the unique ability of our industry’s products to provide guaranteed lifetime income since consumers are concerned about outliving their savings.
- McKinsey & Company: “Life carriers could promote a ‘retirement readiness index’ that includes mortality, morbidity and longevity scoring in addition to asset accumulation goals.
- Build a brand consumers will associate with information, videos, helpful calculators and testimonials all aimed at educating the consumer.
- Educate consumers to the reality of what today’s life insurance can accomplish for them. These are not the same products our parents or grandparents purchased 15, 20 or 30 years ago. Consumers must be educated about the value of living benefits.
- Meet the consumers where they are on digital and social platforms in order to effectively disseminate education.
Brokerage General Agency
- Develop a directory of unbiased advisors, known and credible, reliable and experienced, that can be available to consumers seeking such advice.
- As wholesale insurance professionals, work with advisors to provide education above and beyond the “illustration” sale.
- Adequately prepare life insurance producers to offer the best possible solution for their clients.
- Balance the need for objectivity with the emphasis on value beyond mere price or illustrated performance.
Independent Financial Professional
- Be discoverable, such that a consumer can easily assess important considerations such as credibility, compatibility and approachability.
- Reimagine the type of information and understanding consumers are seeking, the expectations consumers have, and the medium of communication they prefer.
- Adapt a consultative approach based on discovery, uncovering client priorities and practicalities.
- Move beyond spread sheeting to provide three carefully selected, comparable solution alternatives for client consideration.
- Make the first objective to recognize a client’s need. Consumer patterns prove that if there is a recognized need, they are more inclined to purchase coverage.
- Fact based evaluation of the clients’ current and future needs to provide for the security and safety of their families will inevitably reveal living needs as well as death benefit needs.
- Utilize the educational and technology resources that insurance companies and your BGA provide to stand out as one of the best. There are a number of technological advances in application submission, underwriting and policy delivery. Take advantage of these methods with new clients and existing policyholders to provide a better experience of obtaining life insurance as well as managing their inforce policies.
A Traveler’s Tale
There is something to be said about TSA Pre-Check. The things you don’t have to do, like taking off shoes and belts and taking out your laptop, make paying for the TSA Pre-Check status worth it.
Frequent Flyer status with an airline allows you to check a bag and not pay for it, and board early so you always have a place for your carry-on bag.
These are examples of privilege earned or purchased.
On the other hand, Uber makes getting from the airport to the hotel easy for everyone. All users get the same experience. All that is needed is the app on the phone, the destination address, and then start looking for the driver.
Uber even has something called Spotlight that helps your driver find you in crowded areas or late at night. You only need to tap the Spotlight button in the Uber app and hold it in the direction your driver will arrive. Your phone will light up with a preselected color, and your driver will be notified of what to look out for—making your pickup even easier.
Uber’s business model is sophisticated and engages with the customers on their terms.
Applying this to Our Industry
Like TSA Pre-Check status, certainly we can offer the consumer a path that eliminates hassles they would otherwise have to experience! Is a face-to-face appointment required? Do they need to bring their existing policies? Must they answer embarrassing medical questions? Do they have to provide the names and addresses of all their physicians? Is a paramed exam necessary?
Can we develop Uber-like experiences revolving around the consumers and their phones? Can we develop connecting technologies such that the consumer can select a local advisor? Can the destination (like what the consumer is seeking, what questions need answers, priorities and budgets) be plugged in ahead of any meeting (virtual or physical)?
The McKinsey report concluded: “Life companies are uniquely positioned to protect American families in the event of premature death or disability by preserving income during retirement regardless of longevity and by protecting against long term care and uncovered post-retirement medical costs.”?
We have what Americans need. We deliver it today in a manner Americans do not embrace.
By redesigning how we deliver what we offer, making it consumer-centric, we can regain momentum and help a greater number of consumers prepare for the unexpected!
- http://www.imdrt.org/blog/marketing-focus Written by Matt Pais, MDRT Content Specialist, Posted on August 10, 2018 at 6:59 am.
- The Key to Growth in U.S. Life Insurance: Focus on the Customer, Financial Services Practice, March 2016, Copyright © McKinsey & Company, http://www.mckinsey.com/clientservice/financial_services.
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