Build a business that defies commoditization

By Jim Ruta | May 14 2013 04:09PM

How do we fight the negative media pressure and technology that is commoditizing the business?“Consumers hate sales people. The media is always negative and soon everyone will be able to buy their insurance through some sort of technology.” I’ve heard it too. I just don’t see it that way. If people don’t like sales people, the trick then is to be like no other sales person they have ever met. That makes the sentiment work for you. Avoid tacky tactics. Be a professional in every respect. Dress like you mean business.

You’ll stand out by being NOTHING like they expected you to be if they expected you to be a “sales person”. Be classy. Be gracious. Be considerate and thoughtful. Help them first. People will love you. Give sales people a good name one client or prospect at a time.

When the media says we don’t do what we are “supposed to do” for consumers, use that sentiment to good advantage. Rather than whine about it, adapt your business model to account for those things. Maybe you just have to promote what you are already doing that covers it off. Media scrutiny actually gives us the opportunity to underline the advantages we already provide and add to them. Like competition, it can make us better if we have the winning perspective. Be careful of your ego though. It can prevent you from making the changes necessary for high performance. Respond to media negativity and popular sentiment with psychological judo. Use the information against itself.

It may very well be that the business is being commoditized at some level. It happens to all popular businesses. And, it doesn’t matter if you know what to do. I read a recent study by a major international consulting firm that says consumers are more likely in the future to buy simple insurance products through some sort of technology. Indeed, there already is a lot of business sold this way – association group, TV offer, credit card and online purchase options. Is this the beginning of the end? Not likely. That very same study, a little further along, said that more complicated products and sophisticated services will still require the help of competent advisors.

There’s your answer. To avoid being swept up in the terrible “C” word – commoditization, create a service and style of business that defies commoditization. Be someone special. Add so much value to your clients’ lives and portfolios that they will pay a premium to have you work for them or at least pay you to do it.

Think about it. Just being able to buy a “will kit” at the local book store hasn’t put estate lawyers out of business. In fact, it’s added to their business. A real will is more than a kit. A real insurance portfolio is more than a policy.

Be a valuable, premium brand in your own right with focus, expertise and experience. Create exceptional value and deliver it with class. It works for Starbucks. It can work for you.
When you rearrange your business for highest value, you’ll never give the media or technology another thought, except for the next round of improvements.


Another advisor magazine recently recommended that rather than selling permanent insurance today we should instead refer younger clients to nutritionists and personal trainers so they’ll stay insurable until they really need it. What do you make of that?

Not much. I’m reminded of a caution I have written before in this column. “Always be wary of advice given to you by people who never have to use it.”

This is a good example. Nutritionists and personal trainers rather than insurance? Imagine. I found the column and it puzzles and scares me. To recommend average advisors determine when a young prospect might be at actual risk and “need” coverage based on their lifestyle or family history is asking a great deal. Frankly, that’s way over their pay grade. For advisors to make life insurance buying decisions for consumers’ families based on what interest rates, accounting rules, insurance premiums and mortality might do in the future is asking a lot of a life actuary, let alone a life agent. It may also be asking for more liability than anyone should be prepared to assume too.

This comes from the “head” rather than the “heart”. It’s technical, not practical. For some, life insurance needs boil down to numbers and "hard" facts. I say the “soft facts” - how we feel about our families, are just as or even more important.

For instance, when I was young, I bought life insurance for future needs and to be sure my parents didn’t have any undue expenses at the worst possible time. I didn’t have to buy (Head). I wanted to buy (Heart). Are no young people this responsible today? My children are.

No one knows whether today’s rates are the lowest this generation will see or not. They might take decades to change back, if they ever do – even as that column suggests. The danger is in the wait. Certainly today’s actuarial wizards in insurance factories are making long-term gambles on the prices staying where they are or they wouldn’t be changing the rates as they have. There’s more too:

Not buying today means consumers don’t take advantage of interest compounding in policies or of increased mortality returns due to people living longer, two significant components of permanent insurance value, especially PAR.

Delaying purchase also means certain age rate increases, regardless of what happens to overall rates. What about that?

How about future genetic underwriting that might make insurance buying a major challenge for anyone but those with the best genes?

Not buying today means young people don’t guard against freak accidents and unexpected uninsurability.

What if permanent policies just disappear altogether as some predict? Wouldn’t today’s policy be a wonderful asset?

Maybe it’s just me, but I always thought that buying life insurance was the opposite of gambling. If you mix the two, you can always expect awkward and even unfortunate consequences.

I say leave the guessing to the actuaries. Sell your prospects the best coverage you have available today. No one will be disappointed.