Here’s an insurance sales tip to all of you who have trouble selling higher premiums: show higher prices first.
One problem agents have is “selling out of their own wallet” and thinking of how much they’d pay for a policy. Don’t assume they can’t afford it. They know how much they can pay.
Think about this: when they pass, what do you think their family is going to care about most? That their loved one had the cheapest policy or the most protection?
During your appointment process, you should never ask your prospect what their budget is or what price they’re looking for in a policy. If it doesn’t kill your sell, it will cause you to sell lower premiums as a result.
So, how do you show higher premiums and actually make the prospect want it?
Insurance sales tip: Show higher prices first
When you show your three options, show them the premiums starting with the highest amount first. Most of the time, they will select the middle option instead of choosing the cheapest price.
This tactic was proven in a 2012 study by Kwanho Suk, Jiheon Lee, and Donald R. Lichtenstein.
Over an 8-week span (and 1,195 beers), the researchers alternated the sequence of beer prices. They maximized revenue when they sorted prices from high to low. Thanks to a simple change in sequencing, the bar owners now make an extra $0.24 (on average) for every beer sold.
Why does this work?
When consumers are reading through a list of products, they use the first price they see to generate their “reference price.” If the initial prices are high, customers generate a higher reference price. So, when customers use a higher reference price to evaluate the options, all of the options seem like a better deal.
Another reason is the psychology behind loss aversion.
When you show price in ascending order (low to high), customers view each new product as a “loss” in price. With each price hike, they’re gradually losing the ability to pay a lower price. Thus, they feel motivated to minimize that loss by choosing a lower priced product.
But, by showing options in descending order (high to low), customers view each new product as a loss in quality. Thus, they feel motivated to retain a higher quality product.
However, you must get them to perceive the quality in the higher price. Which is why we preach to show the five benefits to a policy before you present the options.
Cody Askins also has ideas specific to each line of insurance on how to sell higher premiums. To get this insurance sales tip, agency building secrets, and one-on-one coaching, Cody has a new coaching program that helped one agent sell $300 more annual premium per sale on average.