A great negotiator understands the client’s needs and is willing to make concessions.An insurance agent’s main job, of course, is to close deals, but agents sometimes focus so intently on making a sale they fail to reach an agreement that satisfies both parties. When that happens, an agent may find themselves with an unhappy client who eventually moves their business elsewhere when the contract expires.
Perhaps that’s because agents view negotiating as more difficult and time-consuming than simply getting a client to sign on the dotted line. Before any deal closes, however, agents and clients must first settle on important terms, such as coverage limits, services, and price. Achieving this requires flexibility — on both sides.
The good news is that agents can learn how to be better negotiators. These four tips in particular can help agents succeed when negotiating with any client or prospect.
“Win” the Deal By Compromising
Agents who enter negotiations intent on “winning” the deal on their terms create a tense atmosphere for both sides, making both less willing to compromise. Agents can overcome that mindset by viewing negotiations as an opportunity to understand their client’s insurance needs and then suggest solutions to those challenges.
During negotiations, a client or prospect may express reservations about certain aspects in a contract. Instead of viewing those concerns as roadblocks, savvy agents ask questions to determine why the clients harbor those doubts. By listening and understanding the client’s point of view, agents can recommend options that the client finds acceptable while furthering their goal of closing a deal.
Set an “Anchor” on Price
An important component of any insurance policy is price, yet agents may mistakenly believe that they might set a too-low floor by being the first party to submit a price. In fact, one study found that the opposite is mostly true: when the seller (or agent) initially offers a price, or the “anchor” in negotiations, the final price usually ends up higher than if the buyer (the client) made the first bid, since making the first price offer establishes the agent’s confidence in the value he or she brings to the table.
Make Reasonable Concessions
Successful negotiations typically involve concessions from both sides, but that doesn’t mean that agents can’t get something in return. Agents know what it takes to produce a profitable deal within realistic parameters. So if a client wants a meaningful concession on price or coverage terms, an agent can ask the client to grant a reasonable giveback, as well (though they should always explain their rationale for requesting it). As David Connolly, Founder of iQ Consulting, writes in Insurance Journal, “The goal [of negotiations] is always for both parties to walk away feeling like they have not given away too much.”
Finally, negotiating an insurance policy should be regarded as a way to foster a relationship with a client, not just a one-off deal. Exploring risk mitigations solutions with clients from the standpoint of mutual benefit increases the chances of establishing a long-term business partnership, which makes it all the easier to negotiate contracts in the future.