Build a Better Mousetrap!

We have said this before, but it bears repeating: The basics of selling have not changed since the Persian Traders first traveled the Silk Road 3,000 years ago. It all comes down to what Frank Bettinger so eloquently stated in his 1947 classic, How I Raised Myself from Failure to Success in Selling: "Show a person what they want and they will move heaven and earth to get it!"

We have said this before, but it bears repeating:  The basics of selling have not changed since the Persian Traders first traveled the Silk Road 3,000 years ago.  It all comes down to what Frank Bettinger so eloquently stated in his 1947 classic, How I Raised Myself from Failure to Success in Selling:  "Show a person what they want and they will move heaven and earth to get it!"

Perhaps this is better presented though one of the oldest adages:  If you build a better mousetrap, the world will beat a path to your door!

Over 320 years ago when the lads where sitting at Lloyds Coffee House, a novel concept was created: exchanging risk for money. It was a better mousetrap for entrepreneurs who were opening the New World through the sea lanes and trade.  Business people were willing to take risks because they could shift it to a third party through this new financial tool called insurance.

That was the best mousetrap of its time. . .

For over 300 years, commercial insurance has been unchanged.  Exchanging risk for a monetary expense (Rate).  Using brokers who bring underwriters the deal (Commissions).  Oh, you could tell me that the types of risks have changed . . . but the principle of rate for risk has not.  The only significant change in our business since the Great War has been the effectiveness by which the product is distributed (Technology).

Now, here is a little shocker that many of you already know.  Clients and prospects have been desensitized to the "privilege" of having their risk underwritten.  They do not consider themselves fortunate to be given the opportunity of shifting their risk.  Excellent service and stable carriers are expected.  Technical expertise is expected.   And of course, competitive premiums are expected.

Now the mousetrap is breaking.  It has passed its useful life.  But, like every dying process, it does not all happen at once.  The warning signs of the broken mousetrap come slowly until the trap is completely useless.  Some choose to ignore it because they either don't know anything else or they are so close to retirement they don't care.

Here are the warning signs of a breaking mousetrap:

  1. It becomes more difficult to hire and retain successful new people into the business.  The ways of 30 years ago do not attract them.  Many flounder because they are not provided tools to become better business people.

  2. The suppliers begin to merge or disappear.  They are not able to differentiate themselves so they must revert to pricing or cutting overheads.  Thereby being forced to abandon the 300 year old mousetrap.

  3. Potential new clients are much more difficult to engage in buying conversations.  They see nothing new in the old mousetrap and are not motivated by any urgency.  There is no scarcity in their options to exchange their risk for money.

  4. Large buyers leave smaller firms.  These larger buyers perceive a drop in "value" for their money.  After all, if they are only getting a 300 year old mousetrap, why not get it from someone who has a larger inventory.

Here is the bottom line.  I know that this will make some of you crazy.  You will not be able to remain in the upper half of the middle market unless you build a new and better mousetrap.  There has been too much change in your clients' business skills over the past several years.  Those who survived the Great Recession are not the same businesses who entered it.

While they are loyal, they are not naïve.  They are not continuing to accept a business delivery model that is 320 years old.  They just can't afford to.  Many now have debt, investment bankers and much stiffer competition from diverse channels of competition.

Now, I hope that I have convinced you.  If so, make certain that you catch our next Consultative Broker briefing.  In the upcoming edition, we will show you how to build the best mousetrap.  This one is the "next level" that everyone talks about.  If you are happy with the current mousetrap, then stay the course.  If you intend to be in the commercial insurance business in 10 years ...stay tuned.

-Rob Ekern


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