Want Annuities With That? The Power of the Upsell
AnnuityNews.com
The key to success in many businesses is the upsell.
Consider Best Buy, the electronics retailer, for example. An article in BusinessWeek magazine noted that Best Buy makes more than half its profits from the sale of extended warranties, at least partially because warranties cost virtually nothing to market. Best Buy spends considerable money on advertising to get you to come to their store when you want to buy a television or computer, but to get the warranty sale, a staff member simply needs to ask you, “Would you like the warranty with that?”
Consider Southwest Airlines, which has rejected the approach other airlines have taken in charging their customers baggage fees. The airline nonetheless offers its customers the option to spend an extra $20 to get to board the plane first to claim their choice of seats and carry-on space. Southwest has gained an extra $100 million in annual revenue from this upsell program.
And, of course, fast food restaurants are famous for asking you “Would you like fries with that?” or “Would you like to make that a combo?”
In the insurance business, many agents who are new to the business ignore or even reject the power of the upsell. Perhaps you are struggling in this business. When a sale comes along, you may be so grateful and excited that you are afraid to mess it up by offering an additional product.
Keep in mind that Best Buy, Southwest Airlines and many fast food restaurants would be struggling, too, if it weren’t for the power of the upsell.
No matter what type of insurance you sell, whether it’s life, health, auto or homeowners, annuities are the perfect product for you to offer your customers on an “Oh, by the way, would you like to hear about this?” basis.
There are two reasons for that.
First, annuities don’t require your clients to spend any money. That’s right – your clients are not spending money when they buy an annuity. They are simply moving their retirement savings from wherever it is now into an annuity where they can get better guarantees of safety, higher interest rates or both. So, an annuity sale does not take any money away from your insurance sale.
Second, this is a great time to be selling annuities. If your clients have their money in an account with a fixed interest rate, right now those interest rates are at historical lows. Chances are your clients can get a better interest rate in an annuity. If your clients have their money in securities, they may be concerned about risk and frustrated with the returns they have achieved. Annuities can provide superior guarantees of safety while still retaining the ability to achieve excellent long-term growth.
Here are three questions you can ask your clients that can lead to an annuity sale, on top of the insurance sale you have already made.
1. What interest rate are you earning on your savings?
This is a great question because the interest rate your client is earning is probably frustratingly low. With an annuity, you can offer excellent safety along with the prospects for a better interest rate.
2. Have you lost any retirement savings over the past few years?
This is a great question because many people have lost retirement savings in the market, and they are frustrated and perhaps angry about that. Yet, at the same time, it seems to them that all safe products offer low interest rates. They probably are unfamiliar with annuities, which offer a very attractive combination of safety and growth potential.
3. Have you left any 401(k) money sitting with a former employer?
Many people have, and it makes no sense to do so. You can help your clients move their money via a tax-free transaction into an annuity that they – not their former employer – own and control.
It can’t hurt to ask these questions. When a fast food worker asks a customer, “Would you like fries with that?,” customers answer “yes” or “no.” No one ever says, “I’m offended by that. Cancel my order!” Thus, your worst case scenario is that these questions don’t lead anywhere, but you didn’t lose anything – your original sale remains intact.
But I can assure you, if you ask these questions to every single one of your clients, you will make some annuity sales. And, you just might find that you make more money off of your annuity up-sales than you make off of your primary line of business.
So take a tip from Best Buy. Asking an extra question of your customers costs you nothing but can yield big revenue results for you.
Brian D. Mann is the executive vice president and chief marketing officer at Partners Advantage Insurance Services, LLC. He is a multi-million dollar personal producer, coach and mentor for insurance professionals. Partners Advantage is a national insurance marketing organization that proudly serves as a one-stop shop to more than 20,000 independent insurance agents, financial planners, and broker-dealers.
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