Every individual has insurance, whether it’s a signed and paid for document for your house or car, or just a way to ensure your business partners are working with you toward a common goal. Monitor columnist Gerry Egan brings a simple yet profound principle to consider that may be just what your business needs.
How are you fixed for life insurance? Don’t worry; I’m not trying to sell you any! I’m not and never have been a licensed insurance agent. I have been an equipment leasing broker for many years, though, and that’s why I’m asking. I’m asking because I wonder if you’ve had an opportunity recently to observe how insurance agents sell insurance and then compare it to how equipment leasing brokers sell equipment leasing.
The reason I wonder that is because of conversations I’ve had with a number of folks on the funding side of our business. They were decrying both the quality of the business they’re getting from their brokers and the relatively dismal percentage of leases they get to fund out of the total number of applications they process. Basically, they were blaming the brokers for the business they were getting: wrong!
I’m going to tell you why that viewpoint is both wrong and impractical; and about the single, critical principle they’re ignoring. It’s a principle, which if understood, could dramatically increase the quality of their businesses, as well as both the short- and long-term profitability of them. It’s no secret, either. It’s a simple principle that’s well understood and widely practiced in many other industries, like insurance. The only really amazing thing about it is how much it’s still resisted in our business.
Last year, I wrote in the Monitor about brokers trying to re-imagine their businesses, and I lamented a lack of effective, meaningful training available for them. I said, in part, “I save my criticism about that for the part of the business that has the most to gain by solving that, the underwriting side of it.” That got me a little feedback. Here’s what I heard: “That’s not our job; that’s why we use brokers instead of hiring our own salespeople,” and, “Our margins are so thin we can’t afford to do training.” These were the most common comments I got. If they really understood this fundamental principle, though, they simply couldn’t feel that way. Here’s the principle. The leases you write are not what you are doing for your brokers; the leases you write are the result of what you are doing for your brokers.
It really is that simple. Truly understanding it may not be, but making the effort to do so can open worlds of opportunities. If you don’t like either the quality or quantity of the business you’re getting from your brokers, simply change what it is you’re doing for them. Here’s the good news. It’ll be cheaper to do that, and control what’s coming in, than it will be to continue processing a bunch of leases you ultimately turn down.
Now, why did I start out by asking about life insurance? It’s simple. There are exceptions, of course, but, the life insurance industry strongly embraces this principle. They accept, as a matter of course, that it’s in their best interest to train and manage the sales efforts of the independent agents they depend on for getting business. As part of that, they make sure their sales force, (virtually all of them independent brokers), is trained and equipped to do two things well that most equipment leasing brokers are not doing well.
They make sure their agents are good at these two things because they understand — in a way that far too few in our industry do it — that it’s in their own, corporate best interests for their agents to be good at them. They don’t do it for their agents; they do it for themselves! Here are the two things they’ve learned they benefit from when they take the initiative to train and direct their agents to do well: prospect effectively and use sales tools. Let’s see why.
How much does it cost you to review and decline a lease? Probably a sight more than it costs an insurance company to decline coverage, but they still don’t want to do it if they don’t have to. The first skill you want your brokers to be good at, then, is effective prospecting. The better they are at prospecting customers you’re likely to approve, the less time you’ll spend declining lease applications. That’s the kind of effective improvement that will go directly to your bottom line.
There are always going to be unforeseen credit issues that cause you to decline leases that “theoretically” looked approvable, of course, but virtually everyone I talk to acknowledges that the majority of their declines are from applications that shouldn’t have come in to begin with. Why do you think they come in? Do you really think the brokers who send them in want to waste time, too? They don’t. You get what they’ve got because it’s what they’ve got; and they’ve got what they’ve got because it’s what they get. It’s really that simple, but you certainly don’t have to leave it to chance like that.
Most insurance agents I know have regular access to highly qualified prospect lists of people their underwriters want to insure. The insurance companies don’t want them spending a single minute in the field with someone they’re not likely to want to insure. They know that pointing them at the right prospects pays off in both volume and efficiency.
By the way, do you think I’m talking charity here; or even cost? I’m not. Most agents pay for these lists. When I told that to the marketing head of one large lease funding source he told me their brokers would never pay for leads. I told him he needed to get either better brokers or better leads.
In fact, some insurance companies rate their agents by how many leads they buy. That’s their way of identifying a good agent; one who’s willing to invest in working on the exact kind of business they want. You can leave it to chance if you want to, but good brokers will pay for good leads and the result will be that they’ll be calling on the people you want them to be calling on. Who benefits from that?
The second sales skill most insurance companies make sure their agents are good at is using sales tools effectively. Any salesperson, (of any experience level), who is not using sales tools, is not selling as effectively, or as easily, as he or she could be. I also think most salespeople who aren’t using them know that, instinctively. So why wouldn’t they use them? They don’t have them; plain and simple. Absent having them, they avoid sales situations where they’d be most helpful; in-person sales calls on real discerning customers who have multiple choices available to them— the very prospects that are the most likely to be saleable and approvable.
My experience as a trainer and consultant has convinced me that this, in turn, is what drives many brokers towards the harder-to-control and more competitive phone and Internet-type sales and sales to subprime credit prospects. Most funding sources I know, value the local, in-person type of sales more, though. Insurance companies recognize this, too. There’s an online market for simple policies but the premier prospects still want someone to sit down with them and craft custom plans. The premier insurance companies want to be sure their agents are both comfortable and effective in that market, and they make sure their agents have the sales tools to be so.
In 17 years of independent equipment lease brokering, I’ve never been offered an effective sales tool. I’ve been offered brochures, pricing sheets and lists of credit requirements, but never anything that in any way dealt with the three or four most common sales hurdles I regularly face.
In another venue, a year or so ago, I spoke about one such tool that I developed on my own out of necessity. I was swamped with requests for it. Brokers are desperately hungry for things that can help them. It was incredibly simple and the kind of thing that any and every funding source should have been providing to each and every one of their brokers since using it made both my job and my funding source’s job easier.
The insurance companies I’ve observed don’t take that chance. They constantly monitor feedback from the field and make sure they’re continually producing and updating solid, professional and effective sales tools that can help their agents deliver the specific kind of sales they’re looking for. Not only does it help them get the sales they want, it helps make sure those sales are made in a consistent way. That, in turn, can dramatically lower after-sales service call issues.
Among agents, providing effective sales tools are some of the most commonly cited loyalty engendering things a company can do. You show a broker something that helps easily close the kind of approvable sale you both want in the way you both want to close it and see what happens. That broker will go where those easy sales are; and then do so over and over again. Who benefits from that?
Do you think you’re in a competitive, commoditized business? What do you think the life insurance business is? I’m not saying they have all the answers or even that they’re the only industry doing these things right. It is, however, a business I’ve observed closely and there is a lot we can learn from it, particularly as it relates to selling through independent brokers. Stop reacting to whatever your brokers are finding and, instead, start really putting them to work for you by pointing them to the business you want to write, and equipping them with the tools they need to close it in the way you want it closed.
Let me put it another way; the way I like to look at things. Would you rather have your company sell this way, or would you rather compete against the company that does? That’s your choice.
Gerry Egan has been arranging equipment leases for more than 30 years, starting as a vendor, then working for a direct funder, and for more than 16 years as owner of TecSource, Inc. TecSource® brokers leases, holds its own leases and manages the leasing portfolio of a private, business-only bank. Egan is a past-president of NAELB and a frequent presenter at industry conferences. He recently wrote, presented and produced the first three of NAELB’s online video distance learning programs. Egan appreciates feedback and can be reached at firstname.lastname@example.org, or through his training site, www.realworldsalestraining.com.
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