Brevity Consulting

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Anchoring Away: How Much Should You Pay For Something?

How do you know how much you should pay for something? How do you know what’s a deal and what’s a ripoff? You need some sort of reference point…a cue to help you evaluate.

The anchoring effect is a cognitive bias that influences you to rely too heavily on the first piece of information you receive. Stores use it all the time to convince you to buy.  So if you’re shown a pair of jeans for $100 and then a similar pair for $150, then the pair for $150 seem expensive. But if you’re shown a $300 pair and then a $150 pair, the same $150 jeans seem like a steal by comparison.

Remember when J. C. Penney introduced “everyday low pricing?”  They wanted to eliminate coupons and instead create a best price all the time atmosphere.   Too bad they weren’t aware of the power of the anchoring effect. When sales slid bigtime, they got the message. Customers need that anchor number to inform them that they are getting a bargain.

All buyers, no matter what they are purchasing, want to know these two things:

1) What does it cost?

2) What do I get?

Potential customers believe if they know what they’re getting in exchange for the money they’re giving up, they can choose whether or not the product is worth it. Here’s the problem: human beings aren’t rational buyers.  Whether or not something is worth it depends on several factors. Most importantly, it’s decided by our expectations. Expectations are set by anchoring.

Dan Ariely did an experiment on pricing for The Economist.  When he surveyed 100 MIT students about those pricing options, Ariely got these results:

Subscription type Cost for a year Percentage who chose it
Web only $59 16%
Print only $125 0%
Print and Web $125 84%

Why did the Economist even bother with that $125 print only option? Ariely conducted a second survey that shows why. In the second survey, Ariely removed the $125 print only option and asked a separate set of 100 MIT students what they would choose.

Here’s what happened:

Subscription type Cost for a year Percentage that chose it
Web only $59 68%
Print and Web $125 32%

The mere presence of the print only option even though no one chose it prompted a much higher percentage of people to choose the more expensive $125 print and web option. The difference would have amounted to 43 percent more hypothetical revenues for the Economist. Print and web for $125 seems like a much better value when it’s anchored by a $125 print only option and a $59 web only option.

So if you are engaged with a client, should we artificially inflate our prices and let the anchoring effect work its sales trickery?  Um, no.  There is an offsetting sales principle called price integrity which is crucial for building trust and continuous business relationships. We shouldn’t present a higher price without demonstrating more value and we shouldn’t show a lower price without a reduction in benefit.  In both directions, clients should expect and see integrity in the price.

I Know the Market: Trust Me

In an experiment conducted some years ago, real estate agents were given an opportunity to appraise the value of a house that was actually on the market.  They studied the house and the comprehensive booklet of information that included an asking price. Half the agents saw an asking price that was significantly higher than the listed price of the house; the other half saw an asking price that was lower than listing.  Each agent was asked about a reasonable buying price and the lowest point at which they would agree to sell if they owned it.

What factors affected your judgement?

Remarkedly, the asking price was not one.  They took pride in their ability to ignore it.  Wrong, the anchoring effect was 41%.  That’s a $82,000 difference between a $200,000 house and a $400,000 house assuming it’s the same house just listed differently.  A group of business school students with no real estate experience was 48%.  The only difference was the students admitted to being influenced and the professionals did not.

Does that mean we should disregard the anchoring effect altogether?  If we are providing value, we should be aware of the anchoring effect to help us deliver the highest level of benefit for which our clients are willing to pay. This might mean presenting solutions in a good, better, and best approach for a particular need. Our best option is our anchor and provides the most benefit to our client. Consequently, it has the highest price. If our client is unable or unwilling to purchase this solution, then we have established a point of reference for both benefit and price, allowing us to adjust down our solution until we fit the highest level of benefit with the highest acceptable price.

Peoples’ objections to price rarely have anything to do what is or is not fair. They come from a place of inexperience and emotion.  The client simply doesn’t have the background you have and relaying the message can be difficult.  As someone who is trying to do the best thing for the client you are torn between the elements of price integrity and getting the business.  You have to avoid paralysis by analysis that a prospect can slip into and present your solutions in a manner that gets them to act.  If done properly it is a win for both sides.

Do You Love To Win or Hate To Lose?

Do you love to win or hate to lose?  Pro athletes get asked that question fairly regularly.  What really drives them?  Is there a right answer?  Well, the results are in and people hate losing.  Well, they hate losing more than they like winning at least.

Prospect theory explains that there is asymmetry between gains and losses, and it really is very dramatic.  Let’s look at an example of how this works with money.

  1. You have $1,000 and you must pick one of the following choices:

Choice A: You have a 50% chance of gaining $1,000, and a 50% chance of gaining $0.

Choice B: You have a 100% chance of gaining $500.

  1. You have $2,000 and you must pick one of the following choices:

Choice A: You have a 50% chance of losing $1,000, and 50% of losing $0.

Choice B: You have a 100% chance of losing $500.

The results of this study showed that an overwhelming majority of people chose “B” for question 1 and “A” for question 2. The implication is that people are willing to settle for a sure thing (even if they have a reasonable chance of earning more), but are willing to engage in risk-seeking behaviors where they can limit their losses. In other words, losses are weighted more heavily than an equivalent amount of gains. We have a loss aversion and the ratio is about 2 or 3:1.

What if I told you that you were more likely to become disabled than to pass away prior to 65.  At no age is the risk of death greater than being disabled. For life insurance, the major problem is getting individuals to assess how much coverage they need. For disability insurance, the major problem is getting individuals to assess any need at all.

Age Likelihood
30 4 to 1
35 3.5 to 1
40 2.7 to 1
45 2.1 to 1
50 1.8 to 1
55 1.5 to 1

A majority of American adults have no private, long-term disability insurance, to replace lost income.  The evidence for the risk is clear.  And going back to prospect theory, it would be natural to theorize that most people would want this risk addressed.

Let’s consider why more private/personal disability insurance isn’t bought.  Since we know that people are loss averse, we also know that they are averse to paying premium.  Even though there is a great risk of loss in becoming disabled and not being able to earn income, the loss of the premium dollar is a sure thing…..Throw this idea into the mix though… What if they never had the money to begin with?  As in, if the premium is deducted from their paychecks.  If the money never reaches their bank accounts, the premium for disability becomes very palatable.

 

People Love Getting Money Back, Even If It Was Always Theirs In The First Place.

Think about tax refunds.  Tax refunds are returns of overpaid taxes at 0% interest.  This seems like a pretty sour deal, especially considering how much we complain about Money Market and CD Rates.  So why are people so much more happy to collect 0% interest on their money than to take what they would have overpaid in taxes and save it over the same period of time for a positive rate of return?  Maybe it’s because underpaid taxes carry a 3% interest rate, but I don’t think so.

 

People Like Return Of Premium.

They like to see cash value in their Whole/Universal life policies, even if the insurance is only for death benefit.  They want to get something for their unused premiums, even if it’s only their own money back at 0% rate of return.

Let’s say you recently started a new job and were offered 2 disability options.  Both pay ⅔ of your salary if you are unable to work for more than 30 days, and for so long as you are disabled, up to age 65.

Policy A: Will reimburse you $1200 if you do not file a claim within 5 years.  It costs $90/mo.

Policy B: Has no refund.  It costs $70/mo.

The rebate policy was preferred by 57% of respondents.  The average odds of collecting disability payments and not receiving some or all the refund was 3.6%.

So what this means is that out of 1000 people, 570 would choose to basically take out a 5 year annuity with a 100% penalty (if they change jobs or become disabled) for a 0% rate of return, instead of doing something else with the $20 per month.  WOW!

 

Availability Heuristic

The availability heuristic comes into play as well.   The Availability Heuristic and The Proclaimers  If a recent outcome was negative without regard to the odds a person will put more weight on that situation.

If someone has had a family member or friend pass away or become disabled, they are more apt to see value in covering that risk even if their age, health, or financial situation is completely different.  I just had a client call to buy life insurance because a friend of his died piloting a small plane that crashed.  My new client is not a pilot himself.  He also happens to be someone I had approached 6 months earlier about adding more life insurance and he put it off.

Tennis great Jimmy Connors knew his own emotions and stated that “I hate to lose more than I love to win.”  As a consumer, this is built into our psyche.  Many financial decisions are ultimately based on emotion.  Taking a step back to fully assess the relevant details is key.  This is especially true on a risk management choice.  Force your emotional mind take a back seat to your practical mind long enough to make a smart decision.

The Availability Heuristic and The Proclaimers

Availability is a cognitive heuristic in which a decision maker relies upon knowledge that is readily available rather than examine other alternatives or procedures.  It uses strength of association for the judgement of frequency.  For example, one may assess the divorce rate in a given community by recalling divorces among one’s acquaintances.

Smokers who have never known someone to die of a smoking-related illness might underestimate the health risks of smoking.  The problem with relying on this kind of shortcut to judgment is that it often leads to poor estimates and bad decisions.

This bias seems prevalent in many walks of life.  The news industry can even contribute with a little help from the human mind.  Remember the Ebola panic of 2014?   News of a rare disease in this country caused something just short of hysteria among the American population. Why? Because the media went wild. Article after article surfaced with the tiniest developments in the American cases.  In fact, the total confirmed cases of Ebola in the US were only 4.  The only actual transmission of Ebola in the United States occurred when a man in the last stages of the disease (most contagious) transmitted it to his healthcare professionals.  The others recovered and were discharged.

The financial services business is no exception.  Here is a response we have heard countless times as we have tried to arm our insurance consulting partners with solutions to assist their clients:

“That is too expensive.  My client would never buy that.”

Who is it too expensive for?  You the advisor?  Remember your financial situation is different.

The next response is:

“I’ve never had client spend(fill in the number)… $500/mo for coverage.”

So they don’t exist?  Sure they do.  You probably have some existing clients who would be very underinsured if they are only spending $500 per month.  Would you try to insure a skyscraper for what you pay in homeowners insurance?  Open your brain.

Many insurance agents look at what a client currently has and provide a lightning fast reflex type response: I can do it for Cheaper. Why?  Because saving someone money is the way to earn their business?  That’s the Availability Heuristic whispering in your ear.  Until you know someone’s entire financial picture, you cannot know if something less costly is better or worse.

Also, not every dollar spent should be seen as a pure cost.  Look at the benefit it provides.  It could be piece of mind, business continuity, tax benefits, improved employee morale etc.  Let’s start from the beginning and use reason and logic to get our answers on how best to serve the client.

What about self serving bias.  People tend to give themselves credit for successes but lay the blame for failures on outside causes. When you do well on a project, you probably assume that it’s because you worked hard. But when things turn out badly, you are more likely to blame it on circumstances or bad luck. This bias does serve an important role; it helps protect our self-esteem. However, it does often lead to faulty attributions, such as blaming others for our own shortcomings.

We see our consulting clients push back.  Many find it tough get beyond this bias.  They use their own failures or successes as a guide to what they think the whole buying population wants.  One too many failures or successes early in their career can shape the rest of their work life.  Here are some of the things we have heard our consulting clients say:

  1. My clients only buy term insurance
  2. My clients don’t want to do health exams
  3. My clients like what I sell them
  4. My clients don’t buy life insurance
  5. My clients do what I say
  6. Term insurance is a bad deal, why would anyone buy it?
  7. I just sell (blank) because that’s what I know
  8. Disability/LTC is too expensive

These people have all shaped their opinions over time toward what creates less pain for them.  This leaves no room for the flexibility to really do the right thing for every client.  How many opportunities are you missing because of this mindset?  Why wouldn’t you want to have every feasible option availability so as to not limit yourself and in doing so provide a better client experience?  Don’t let the pain of possible failure be a roadblock.

I’m fairly confident The Proclaimers were in customer service prior to starting a band.  As a homage they wrote in 2 lines for song you can’t get out of your head.

When I’m working yes I know I’m gonna be

I’m gonna be the man who’s working hard for you

I would expect most financial professionals say they are indeed doing so.  Many times their actions don’t reflect that.  They may not even realize they have a bias.  Take this as some cold water (or slap) to your face to snap you out of these tendencies.  Now that you know (half the battle) put in the real work to improve.

What do Bill Lumbergh and Warren Buffett have in common?

I have always thought of fictional Bill Lumbergh as a middle management puppet.  As I reexamine I see him more as a Warren Buffett disciple.  Lumbergh was smart enough to bring in a pair of consultants to analyze his company, Initech.  As part of his introduction of the consultants(the Bobs) to his employees a banner is hung and the buzz phrase is established.

 

With every decision you make is this good for the company?  



I don’t think this cinematic excellence pushed me down that path but, now I am one of the Bobs.   My business partner and I have a strong distaste for Michael Bolton music.

 

As simple as the phrase is we often see making decisions that are good for the company isn’t easy.  Warren Buffett writes about a concept that he calls the “institutional imperative”. The premise is any institution’s inherent propensity to do dumb things simply for the sake of doing them. In his 1989 shareholder letter to investors, Buffett opines:

 

“I thought then that decent, intelligent, and experienced managers would automatically make rational business decisions. But I learned over time that isn’t so. Instead, rationality frequently wilts when the institutional imperative comes into play.”

The institutional imperative can take many forms.  

 

Publicly traded companies who overly focus on the current stock price, often pressuring Wall Street analysts about their investment rating, are all part of the institutional imperative. Focusing on the stock price or caring about Wall Street’s investment rating is counterproductive. This behavior creates a major distraction for company management from focusing on what is important— running the business.

 

We see it with financial services companies and insurance agencies.  Their top priority is getting new clients.  It is #2 as well.  Is that new client going to be as profitable as an existing client?  Have you maximized your existing portfolio?  Have you as the owner improved your expertise and given the same mandate for your employees?  The focus is on the wrong thing.  It starts at the top.

 

This seems to be particularly true if the institution in question is a bank. Take, for instance, the industry’s love affair with auto leasing back in the 1990s. For a while, the business generated solid returns. Then, as is to be expected, competition intensified and returns fell to unacceptably low levels. Did most banks curtail originations or exit the business when profits began to dry up? Nope. Most hung on doggedly until profits turned into losses that eventually proved ruinous. Board members should insist on being regularly briefed on the profitability levels of various product lines and market segments, and should encourage management to make any needed changes before profit levels become unacceptable.


Maybe this is a stretch but, I never would have pegged Bill Lumbergh as a forward thinker.  He clearly had to intuition to bring in a consultant group to better assess his company.  Was he too close to situation to truly gage company efficiency?  Perhaps.  Was he a Warren Buffett protege implementing Berkshire Hathaway’s approach to business?  Signs point to yes.

The Pleat of Your Jeans (Cut of Your Jib)

Hey, the 80’s called, they want their pleated stone washed dad jeans back.  

 

I thought about something today.  My mind wanders, you see.  It has been a lifelong condition.  What I thought about was this.  What would be the goofiest clothing you could wear in front of your client and still close the deal?  Really think about it.  And if you have the stones, test your theory or challenge a colleague to a contest of creativity and will.  

 

A lot of us really “dress for success” because they believe that it boosts credibility.  This builds confidence, lowers fear of rejection and puts the wearer of those fine duds (at least in his or her mind) in a better starting place.  We play dress up to go on dates for the same reason.  We want to look our best, right?  There’s nothing wrong with that.  We want our clients to have the best experience that we can create for them.  Sometimes a casual approach is best for the client.  Other times, a more serious look is better.

But, won’t some people always pull it off a bit better?  Someone is always going to be taller, have better shoes, nicer hair, a smaller belt size or more desirable bone structure.  Some people are born wealthy, or are naturally smart or talented.  Someone will always have the upper hand in some regards and there isn’t a damned thing you can do about it.

 

However.. In other ways, the ways that count the most, you can outclass your most worthy adversaries.  Think about the thing you do best or know most about.  This might not be work related, but I’d bet that it’s something you care about.  If you’re a great surfer because you love it so much that you’ve worked at it, spending every opportunity in the water, you don’t need the newest and greatest board.  You can outsurf the weekend warriors on a yard sale board that’s held together by duct tape.  If you’re a great golfer, you can play with borrowed clubs and still hit lasers.  You may be growing enough food in your backyard to eat for a year while your neighbors harvest weeds and clip coupons for 2 for 1’s on creamed corn and succotash.  I’m sure you get the point.

 

There are some pretty good salespeople out there (By the way, we are all salespeople).  I define a great salesperson as not only great at getting the business, but doing it with perfect focus on the client’s need.  I consider myself to be in this class of people.  So, back to the pleated jeans.  I would look and feel pretty dumb in pleated jeans, but I can’t think of a situation in recent history where I wouldn’t have still made the sale wearing them.  I have a lot of experience with fashion faux pas according to my wife, so it wouldn’t be as much of  stretch for me as it would for most.  
You want to be in a position in your career where your expertise is in such demand that the quality of your work can always overcome the distraction of goofy looking pants.  This is because your clients and prospects probably have other distractions you’ll have to overcome  that you can’t see.  It could be a competitor of yours or a false preconception.  If you aren’t there, you have to spend time getting there.  If you don’t, no clothing budget, fancy watches, euro car leases or anything else done in an effort to make you look like you’re good at your job will help you.

The Improbability of Practicality

I want to have a round table exchange with those few of you all who run across my internet leavings.  Since I was a kid, I’ve had a contempt for things that seemed impractical and irrational.  I’ve also desired to know why these things that seemed idiotic to me were in practice.  I asked often, but received a lot of those answers like… “Because it’s always been that way.” or .. “If it ain’t broke..”


Here are a few of the impractical things that bothered me as a kid.  Daylight Savings Time, Neckties, Itchy Sweaters, Standing in Lines….


Let’s talk about neckties for a second.  This article of clothing makes about as much sense as a powdered wig.  Maybe less.  You know what does make sense?  A bib.  Babies and lobster eaters wear those with some measure of success in keeping their shirts clean.  Ties take longer to get around your neck and only guard a small portion of your shirt.  They’re uncomfortable, and restrictive and they cut off oxygen to your brain, which makes you stupid.  I have no concrete proof of the stupidity but I have met many tie wearing dummies.  And anecdotal evidence counts for the purpose of this article.


Let’s say it takes 2 minutes to tie one and you wear it to work for 50 weeks per year.  That means that you are wasting 500 minutes per year putting on a tie.  Seems pretty dumb to me.  Look up the origin of the neck tie if you don’t know it.


Here are a few of the things that bother me now…some more than others.  Daylight Savings Time, Neckties, I can wear whatever I want so the sweaters don’t bother me, Standing in lines, Interactions with scripted worker bees, red and green on port-a-potties but not on bathroom stalls (my wife’s gripe), Cranberry Sauce, Car Speedometers, Banker’s hours, Settled science,  Double doors and one is locked, This page is intentionally left blank, Bad Grammar, Backing into parking spots, Irrational fears, vanity, The cable and internet bill creeping up while new customers pay half, talking to the scripted cable company worker bees.  There are many more.


I better say that there are lots of impractical things (by some measure) that have value, like art and sports, but we accept that because these things entertain and inspire.  And they are fun.  We need fun in our lives.


Daylight savings time.  What benefit could it possibly have nowadays?  Time is relative, so just pick a number that matches where the Earth is, in relation to the Sun and stick to it.


Cranberry sauce.  I have no problem with it at all, but why is it only served at holidays?  It actually makes a pretty good “poor man’s currant jelly.”  It’s good on venison and pork.


Speedometers.  I drive a ford explorer.  I doubt it can achieve 160 mph.


Banker’s hours.  Let the bankers have those.  Otherwise work should be performed at each individual’s most efficient time of day.  What’s so special about the hours of 9-5 that work must be performed then?  What if you want to get done early or start late so you can do something else in the same day?  Inflexibility stifles productivity. https://www.youtube.com/watch?v=LwDMFOLIHxU


Settled Science.  During 90% of our recorded history, the Earth was flat.  50 years ago, smoking cigarettes was good for you but cannabis would kill you and make you kill others, 40 years ago, Time and Newsweek printed articles on Global Cooling, yet many people still use the words “settled science.”


This page is intentionally left blank.  No it isn’t.  It has “This page is intentionally left blank.” written on it.  And why do you hate trees?


Double doors and one is locked.  Is this a candid camera trap or something?


Backing into Parking Spots.  How could this possibly make sense unless you are planning a quick getaway with your stolen merch?  These people are like the ones who are lurking around the parking lot for a better spot.  For what?  Are you planning on buying an anvil?  Because if you are trying to save time, well, you aren’t.


We don’t have to accept any of this “that’s just the way it is” bullshit.  We can eat ice cream for breakfast or have a beer at 4:49.  We can make changes to things that make no sense to us or just ignore them.  Every time I pull into my driveway, I wonder why the hell I bought a house that has 8 different roof lines.  I don’t recall having a few thousand extra dollars burning a hole in my pocket that I couldn’t wait to spend on impractical architecture, but here I sit.
Tell me about the things that make no sense to you.  And let’s talk about how to change them.

The Overcloser, The Undertaker and Other Nomenclature

Ever wanted to tell someone to shut the hell up?  I have.  This is not because I’m an asshole, though that could be argued.  It’s because I have a desire to help.  We can talk about why some people like being helpful while others prefer to see their peers fail at a different time.

The best salespeople stop at “Yes” instead of rambling on.  Why?  Because after the “Yes,” anything you say in an attempt to strengthen your client’s conviction has the opposite effect.  Think of the Overcloser as a clingy girlfriend or boyfriend.  These people tend to be insecure, suspicious, and too accommodating.  The things you found attractive about this clingy girl, guy or salesperson get eroded by their own exaggeration.

It isn’t always what they say after the close has been made.  It is the way they are making the client feel about them.  And the feeling is pursued, or let’s say overpursued. You don’t have to attain the level of Glenn Close in “Fatal Attraction” to make your prospect feel overpursued.

People want what they can’t have.  You can create power in the ability to deny access to yourself.  You have to make yourself desirable.  Then you have to hold something back, or at least seem like you are.  You have to be a little mysterious if you want to be the best at sales.  The Overcloser reveals everything and saves nothing for a later time.  All used up, the Overcloser gets tossed out with nothing to show for his efforts but a new hatred for white bunnies.

Let’s talk about what’s at the other end of the spectrum.  The Undertaker.  Yes, the wrestler.  I wouldn’t say my 11 year old son has revived my childhood interest in professional wrestling.  However, I noticed as he is watching the WWE on Hulu, that The Undertaker is still just as I remember.  He is a man of very few words and in the business of sports entertainment, he seems much less clownish than the rest.  Here is what is important.  Among his peers, he seems to carry uncommon credibility.  His character/persona has worked for over 25 years making The Undertaker the longest running character in pro wrestling.  Take it for what it’s worth, but you can draw inspiration from some pretty varied sources.  In this instance, we can use some characteristics in our practices.  Here are a couple.

Stoic:  He takes blows without showing pain, emotion.

Laconic:  Using few words to make a point.

Look, even if you do know everything about your product, that does not mean the client wants to know.  Your best clients don’t want to know how the sausage is made.  If you force too much info on them, they will lose their appetite.  Be strong, but welcoming.  Ask perfect questions and give anvil solid responses.  Learn how to sell the right way so you don’t show the anxiousness of the Overcloser.  Be a Goalminer (Or a Goalminer’s daughter if you’re a country singer).  Dig through all the worthless info and figure out what your client’s goals are.  Then put something in place that helps the client achieve them.

-Insurance Professor

Bruce Lee, Sales Genius

Just when you think you have something unique, you find out someone has done it before.  In this case, the “Brevity” style of selling was invented for the purpose of fighting 50 years ago.

Bruce Lee changed martial arts by taking something with rules and rigidity and stripped away all the restrictions to make it simple, quick, powerful and fluid.

“I have not invented a “new style,” composite, modified or otherwise that is set within distinct form as apart from “this” method or “that” method. On the contrary, I hope to free my followers from clinging to styles, patterns, or molds…. The extraordinary part of it lies in its simplicity….There is nothing artificial about it. I always believe that the easy way is the right way. Jeet Kune Do is simply the direct expression of one’s feelings with the minimum of movements and energy.”

— Bruce Lee

Consider the relationship between the rigidity of sales training and selling and that of many of the traditional forms of Karate.  Have you ever been frustrated by a person who you could tell was reading from a script?  Over the phone maybe?  How about at the bank, car lot, jewelry store?  How do you feel when you know the pitch is scripted?

I earned my black belt in Tang Soo Do at the age of 14 and can tell you first hand that there is a very frustrating framework for sparing and 3 point matches.  I really value the 5 years or so that I was there, but I got bored.  Looking back, I wish there had been something like Jeet Kune Do in my small town.

Let’s talk about some of the core techniques of Jeet Kune Do and how they are similar to the Brevity selling techniques.

The Straight Lead:This is a quick straight punch that starts closer to the opponent.

-This is similar to our techniques for gathering key information with direct and honest questions.

The Non-Telegraphed Punch:  This is a technique whereby the fighter remains loose with no “get ready poses,” twitches, tensing up or drawing back to strike.

-This reminds me of the casual nature of our approach.  You often hear me talking about  shiny wingtips, bow ties, etc.  We teach that you can look expensive to your prospect, thus telegraphing.  The intention for Bruce Lee and Brevity is for the opponent or client to remain at ease.

Economy of motion:  This is based on the ideas of Simplicity, Efficiency and Directness.

-What could be more “Brevity” than that?  Our company and platform is named for these ideas.

Simultaneous Parrying and Punching: This is a way of simultaneously redirecting a blow from an opponent and throwing a strike.

-I like this one.  It reminds me of a technique we teach of not telling the client he or she is wrong, but instead focusing on and agreeing with only the portion they got right and simultaneously steering the conversation down that path.

Low Kicks: This is a technique of keeping your kicks at or below the midsection.  This puts your target closer to the foot and minimizes to risk of throwing yourself off balance.

-I teach my agents to shoot for small commitments from the client.  Getting several small commitments is better than trying to land one giant roundhouse to the face.

Be Like Water:  “Be like water making its way through cracks. Do not be assertive, but adjust to the object, and you shall find a way around or through it. If nothing within you stays rigid, outward things will disclose themselves.  Empty your mind, be formless. Shapeless, like water. If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot, it becomes the teapot. Now, water can flow or it can crash. Be water, my friend.”

-Bruce Lee

I don’t really expect this to ring true for all of my readers.  Some of you, who have either bought from a rigid salesman or who have been trained to sell the old way can relate.  Like Bruce Lee pushed Karate forward, our goal is to push selling forward.  Some of the old techniques will remain in practice for years to come.  After all, humans are humans.  We will even incorporate a few of the ones that work.  What we will not do is abide by a set of old standards when we can get better results with a new way.

-Insurance Professor

Clint Eastwood, Sales Genius

“Ever notice how you come across somebody once in awhile you shouldn’t have messed with? That’s me.”  Clint Eastwood “Gran Torino”

Ever notice how you come across someone once in awhile who is always unmistakably blunt and honest?  That’s Clint Eastwood.

If you have read my Maya Angelou article or seen the video Maya Angelou, Sales Genius, the theme is that people remember the way you make them feel.  Clint Eastwood intentionally starves the audience of dialogue only to bludgeon them with a few sharp words of truth delivered through his gritted teeth.  He wastes no words, yet his characters share a similarity.  Honesty.  Eastwood never uses any doublespeak or fuzzy language.  The audience knows where he stands without him having to try and convince them of anything.

clint-eastwood-dirty-harry-cop-movie-legacy

As a salesman, you may be a great speaker whose voice is music to your own ears.  If so, it has to be gratifying that you’ve got an audience who might pay you at the end of your perfectly delivered sales pitch.  What if you just perfectly delivered honesty?  Would that work better?

Sales pitches are written specifically to get people to buy.  They are not written to tell the truth.  Otherwise, no one would ever buy overpriced pieces of shit (OPOS).  In order to be able to exude truth, you have sell the right thing to the right client and do it with rock steady conviction.

“You have to feel confident. If you don’t, then you’re going to be hesitant and defensive, and there’ll be a lot of things working against you.” Clint Eastwood

So how do you attain this Eastwood kind of confidence?  You have to learn everything about the material you are delivering and everything about the client buying it.  We built our Insurance Professor Consulting Program for licensed insurance agents, so that they can deliver products to clients the best possible way.  I’m talking about the way that ends with happy clients and more income.

Here’s the rest.  I don’t know about you, but I like the idea of saying whatever I want without worrying what anyone else thinks.  It’s freeing.  I am not talking about insulting people.  I am talking about being honest with people for their own good and mine.  In my business, there has been a lot of effort put behind shielding the client from what he or she is actually buying.  I think the whole idea of it is idiotic.  Calling it “Mortgage Protection,” so you don’t have to say the words “Life Insurance” is weak.  Our training program is not about hiding things from the client.  It isn’t about wasting words.  It isn’t about driving Euro sedans and wearing shiny wing tips.  It’s about making it happen.

Some of our consulting clients already learned a different method of selling.  The old method.  Well, the old way is losing to the Brevity way.  I am not telling you that it is easy to forget the old way and adopt something new.  It is actually pretty difficult, which is why you will see the old way in practice for probably around 10 more years.  But, if you think you should be closing more and bigger business, you have to take the plunge.  The good thing about our system is that you have peers around you who are making or have made the same changes to their practices.

“To make a fighter you gotta strip them down to bare wood: you can’t just tell ’em to forget everything you know if you gotta make ’em forget even their bones… make ’em so tired they only listen to you, only hear your voice, only do what you say and nothing else… show ’em how to keep their balance and take it away from the other guy… how to generate momentum off their right toe and how to flex your knees when you fire a jab… how to fight backin’ up so that the other guy doesn’t want to come after you. Then you gotta show ’em all over again. Over and over and over… till they think they’re born that way.” Clint Eastwood, “Million Dollar Baby”

Insurance Buyers, Static or Metamorphic

My 10 year old son is in homeschool.  His best and favorite subject is Science (mine too).  He and my wife get to do all kinds of cool science classes and experiments.  I am not very involved in the lessons except when I overhear what they’re working on and feel compelled to interject with a very important theory of my own.  Typically, I find that my speculation is undervalued by the two of them.

Earlier today, I heard the words, “Static” and “Metamorphic” in reference to earth science.  I thought about how these two words are perfect to describe people who buy stuff.  We have addressed the idea that consumers buy differently now than they did in the past, but I want to talk quickly about the rate of change.

First off, the Insurance industry is very slow moving, kind of like a three toed sloth.  For decades, the same type of sales training has been used for these 2 reasons.  The products have been fairly consistent over long stretches of time and people have consistently fallen for the same sales pitches.

But, there has been a change.  Did people get smarter all of a sudden?  No.  They did not.  They used an information gathering tool that became available.  It used to be that if you needed information on life insurance, you reached out to an agent.  If he gave you a queasy feeling and if you wanted a second opinion on life insurance, you reached out to another agent.  At some point though, you had to buy or you would have invested too much time shopping to justify the savings you may have achieved.  In other words, a person is only willing to dedicate a specific amount of time to learning about a particular good or service before deciding to buy it or not.

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About, 15 years ago, people were still getting their first look at life insurance products through the agent but then seeking validation of their queasy feelings through the internet.  Even when internet speeds were that slow, you could now figure out that you were being pitched something that sucked… and you didn’t have to burn time getting in front of another agent.

Fast forward to today.  In just 15 short years, the captive/career agent system for life insurance is crumbling.  Career agents are being laid off because consumers are too well informed to buy from them.  Even those who still work for life insurance companies are often allowed to sell other companies’ products because if they do not, the consumer will just buy the best priced product somewhere else.  The carriers are being forced to innovate.  They are finally using online applications and are closing offices because no one walks in any more.

Neck ties are being sent to GoodWill for greatly overestimated tax deduction values.  The best, most talented agents of today are independent.  They are smarter about the industry and product, yet much more casual.  They address the need and help the client buy the right thing instead of selling the merit of a one size fits all product.  I think i may have been one of the very first life insurance salesman to abandon slacks for jeans.

The flow of information in the last 15 years has made a metamorphic change, which has been the catalyst for changes in the whole industry.  The need for life insurance has remained static.  And this may surprise you but the client has really only made a minor change in the way he or she buys.

In general, people want the same thing they always wanted.  They want to take care of their families.  They want to understand what they are buying.  They want to buy it at the right price.  And all things being equal, they prefer to buy from a person.  But, old methods of selling will feel more and more uncomfortable to the client.  I believe those methods will eventually be abandoned by the industry.

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