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LIMRA INSIGHTS

Connecting With Consumers in the Era of ‘Seller Beware’

I opened my presentation at a meeting of financial professionals with this question: “When I say the words ‘sales’ and ‘selling,’ what words come to mind?” What I heard were responses like “value added,” “serving others” and “trust.”

While researching his latest book, To Sell is Human, Daniel Pink posed the very same question to 7,000 consumers. Here’s what he heard: “pushy,” “annoying,” “aggressive,” “slimy,” “smarmy” – you get the picture. In fact, of the 25 adjectives that consumers most commonly used to answer that question, Pink notes that 20 were negative.

This contrast illustrates the great disconnect between today’s sellers and today’s buyers. Just a couple of decades ago, we lived in the era of “buyer beware,” where the seller had more information than the buyer. This situation was a key cause of all those negative adjectives.

Today, we live in a world where buyers often have as much information as the financial professional. Sometimes, buyers have even more information than the financial professional!  In this situation, let the “seller beware!”

LIMRA has been tracking consumer sentiment and buyer behavior for years, revealing our findings through research studies including Every Excuse in the Book (2006), Consumer Trust (2009), Using Behavioral Economics to Sell (2012) and many others. The insights from these studies reveal four important themes:

[1] The need for insurance and retirement solutions has never been greater.

[2] Trust is under siege.

[3] The crisis in buyer confidence is worse than you think.

[4] Consumers can be moved to act.

In a “seller beware” world, successful financial professionals are making connections, building trust, and motivating people to act on their intentions to buy the right coverage for themselves and their families. 

Selling is both an art and a science. On the science side, LIMRA has conducted research on “choice architecture” to examine how financial professionals can best present advice to potential buyers. Choice architecture seeks to affect outcomes through the manner in which choices are presented to decision makers.

LIMRA uncovered a number of tactics that can help people make beneficial financial decisions. Here are some examples:

» Share personal stories to overcome irrational optimism. People typically underestimate their financial vulnerability unless they have some personal experience that reduced their optimism. Telling prospects stories about people’s real-life experiences will help them realize they have a need for insurance and/or retirement solutions.

» Avoid ambiguity. People find it difficult to make complex or expensive decisions, so ambiguity only makes things worse. To avoid being vague and leaving things open to interpretation, financial professionals should conduct collaborative discovery interviews that ask meaningful, deeper questions and illuminate any points of confusion.

» Use rules of thumb. People want help making decisions. Financial professionals can provide rules of thumb to ease decision making, provide guidance about dollar amounts and so on. They can provide specific recommendations and ways to choose among various options.

It’s not that people necessarily want a simple product or simple-minded advice, but they want a simple way to decide.

For example, you’ve probably read or heard ads telling prospective bridegrooms to spend two months’ salary when buying an engagement ring. The ads aren’t focused on selling some generic ring they should buy. Instead, they provide guidance on how much to spend. Our industry is rife with rules of thumb related to income replacement – and they work.

Guidance from third parties can be useful, too. For example, the U.S. Department of Justice used rates of 12 to 20 times income to establish the benefit amount the government paid to the families of 9/11 victims.

Applying tactics like these enhances prospect engagement by breathing life and emotions into fact finding and presentations. It simplifies and clarifies complex products in a way that enables action. We know that this approach is effective: Consider that the financial professionals to whom we taught these tactics experienced a nearly 20 percent lift in average monthly premium!

It’s Time to Change

Today’s cautious, information-laden, untrusting and unconfident consumers bring new challenges to financial services sales. Fortunately, today’s new selling principles can help motivate people to make financial decisions and take action. It’s no longer about “dazzling” people with product knowledge. Today, success comes to financial professionals who connect with their prospects, who act as guides worthy of their trust – and who embrace the “irrationality” of financial decision making.

Delores Freitag, assistant vice president, Talent Development, LIMRA’s Assessment Solutions Group, designs and delivers customized training programs for financial advisors, managers and field support staff of member companies. [email protected].


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