3 Tips to Overcome Objections and Drive Wedges

What is up, CBK Nation?  It’s been a while because I’ve been traveling.  I’ve seen many of you personally this summer, but the travel games are over, and it’s back to reality.  Today, I will talk to you about three of my favorite ways to overcome objections and drive wedges when talking to prospects.

One of the first questions I get is, “David, how do I overcome objections and drive a wedge when I’m talking to a prospect at the point of sale?” And I’m going to tell you; it’s not easy.  Sometimes it takes like 20 years to perfect your craft.  I’m just now starting to come into my prime.  But I will give you three that have worked for me over the years.  And I think you’ll understand why when we break it all down.


Break Down the Costs in Understandable Terms

The first thing I like to do is I want to break costs down in a way that a prospect can understand them.  Now there’s a little bit of an art to this, so you’ll have to work on it, but you want to use an estimated annual revenue for your prospect.  And if you’re going to estimate, you want to estimate high.  The last thing you want to do is talk to a 10 million dollar a year business like they’re only doing 5 million a year.  That’s a problem.  If they’re doing 8 million a year, always go with 10.  They will be able to do the math themselves and realize that if the results are that bad for a 10-million-dollar company, it’s even worse if they’re only doing eight.

The other thing you want to do is use an assumed profit margin.  Keep it easy.  Use 10%.  The math is easy to do if the prospect is doing worse than 10%.  The same holds if the results are better than 10%.  But you want to do this because you want to calculate an approximate value in dollars of the profit that the operation is making every year.

The next thing you’re going to do is you’re going to calculate the total cost of risk; however, you’re going to do that.  Some people will tell you to throw soft costs into the calculation.  Others are going to ask you to throw them out.  When doing this calculation, I always use a multiplier of two times the direct costs for soft costs, and it works out well.  I add everything up, and I show them the dollar amount.  Then I show them the profit.  And then I take that profit amount they’re making and divide it into a daily or monthly amount because I want to show that prospect how many days a year they’re working to pay for their total cost to risk.  Sometimes it’s a month, a month and a half.  I had an account one time that was 17 months.  It took them over a year to pay for their total cost to risk from one lousy year.  So break it down so you can show them how many days a month or a year they are working.  It’s incredible how well that works.


Quantify the Hourly Rate

The second one that I like to do is I want to quantify the hourly rate.  A lot of times, we’re going to get on the phone with someone, and they’re going to say, “Oh man, I don’t have the time to talk to you.” Let’s say I’m calling an account paying $150,000 yearly for their workers’ comp premium because their mod is a 1.5.  That means they’re paying 50,000 more than the average peer in their industry group based on their results.  If that CFO or controller says, “I don’t have the time to talk to you,” the first thing out of my mouth is, “Oh, well, I apologize.  You must make a hundred thousand dollars an hour.” And immediately, I catch their attention.

For me to get them back to average on their mod would be a savings of $50,000.  If they’re not willing to talk to me for 30 minutes to save $50,000, that must mean they make at least a hundred thousand dollars an hour.  Otherwise it would very much be worth their time to talk to me about how I can help them save.  I say that because I’m only asking them for 30 minutes of their time, and I want to get them back to average first.  Then, we can work on being the best in class.


Place a Value on the “Friendship”

The third one is to displace the friend.  Everybody’s got a frat brother, a sorority sister, or the high school buddy they hang out with that’s now an insurance agent.  And let’s say that that agent is the one who placed that same $150,000 comp policy.  When that prospect comes back, I might say, “I’m sorry, my friend’s my agent and has been.  We’re lifelong buddies.” I might say, “I need more friends like you because I don’t know anybody I associate with that would be willing to pay $50,000 a year just to have me in the mix.”

The reason is the agent’s not doing their job.  The mod’s high because they’re not doing their job, and the agent is costing that client at least 50,000 more.  50,000 more than average, not 50,000 more than the minimum mod.  They could be costing them a hundred thousand bucks.  Who knows?  We’d have to run the mod software on mod advisor to figure that out.  But I want to quantify that because I don’t know many prospects out there with $50,000 a year friends.  In that case, I would tell them it might be cheaper for them to go ahead and hire us, let us fix the mod, and then just stroke a check for $15,000 to their buddy and pay him 15 grand in his commission so they can stay friends, but ultimately save more money for the company.  The notion sounds ludicrous.  But if you pitch that to a prospect, they will think it sounds preposterous too.  And they’re going to realize maybe there’s some truth in what we’re saying.

I can’t promise you that those three will work every time that they will work way more than they don’t.  And if you follow those three things, you’ll kill in Commercial insurance.


Break Down the Costs in Understandable Terms

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