Distribution Paradigm Shifting—Consumers Are Selling To Themselves? Huh?

The earth is round, man can travel to the moon, Charlie Sheen is replaceable, and insurance distribution models can be made efficient.

All four have something in common…that is, some level of disagreement among experts that they could become a reality. While all of these are really important issues (well sort of…), the latter has not yet been proven. And on some level, it is stuck.

I am not suggesting the industry is giving up; however, I do sense that it is losing steam and excitement to “get ’r done…”

Over the last several decades (yes, decades…), the insurance industry has been observing and lamenting over the decline of life insurance ownership in the U.S., and also the shrinking, aging and general economic malaise of the face-to-face distribution channel. Attempts at modernizing these channels have failed; attempts at growing them significantly have failed; and attempts at going direct have not even had much of a chance to fail or succeed.

Maybe the loss of steam is coming from a sense of futility?

Do you think that Christopher Columbus, Neil Armstrong or John Stamos ever felt like giving up? Probably. But we are glad that at least some of them didn’t.

So let’s try looking at the problem from a different angle. Most of us with any experience in the insurance world will look first to the offering and poke holes in it, assuming that THAT is the problem. You know, like: it’s too expensive, or it’s too complex, or it’s too negative. Well these things may be true, but are they the strongest forces inside of the problem?

How about examining what is happening in the world of “sales.” Not sales of insurance…sales. Judging from the comments of some gurus in the area of sales, we can see the consumer tolerance for certain approaches is changing. Perhaps rapidly.

Here is a hypothesis that we need to examine:

The consumer’s tolerance for push marketing is waning.

Just to be clear, let’s make a distinction between push marketing and pull marketing. Push marketing is the type of activity that a manufacturer engages in to entice its sales force to sell more of a product. This includes things like sales incentives, awards, high commission rates, and putting an abundance of resources toward activities and processes that create sales excellence—essentially, “pushing” the product from manufacturer to consumer through the distribution chain.

Pull marketing, in contrast, is when a manufacturer goes directly to the consumer and positions the product or service in such a way that entices that consumer to ask for the product—to seek it out. To “pull” it from manufacturer to consumer.

Push vs Pull

Obviously, the insurance industry relies most heavily on push activities to get the job done. And when we assert that consumers are less tolerant of push marketing…that, of course, could be a big driver of the problem.

Einstein taught us the definition of insanity. Perhaps the idea that the product that must be “push” marketed needs a second thought. Let’s see, what is different these days?

Well, if we get outside our own sales paradigms and just look at trends in sales techniques in general, experts have uncovered some key things that are instructive:

  1. Today’s consumers are USING sales people as information sources for validating decisions that they may have ALREADY “made.”
  2. Consumers have FAR less time for a pitch, but plenty of time to surf the Web for what they are interested in.
  3. Consumers must see/perceive some value in what you have to offer BEFORE they will even listen to you.

When looking to validate a problem or insight, it does help to look to what people are making fun of, to see how they are really feeling. Take two minutes to watch this and decide if 1–3 above is or isn’t present:


So basically what this is telling us is, weirdly enough, that the consumer is selling things to himself. This sounds more like “pull” doesn’t it?

Let’s look at what are the tools in the marketing tool chest for each of the above trends, and ask ourselves some questions about how we are using them:

  1. Using salespeople as validation—This requires a shift in the way we train sales reps to behave. They need to first learn how to make the consumer feel good about themselves, and then about how to provide validation, or not, for the decision the consumer is about to make. How do we stack up in that area?
  2. More surf, less “pitchy”—This requires our sales presentations to be geared around what people have likely already seen online, and to be much shorter and to the point. It requires a deep understanding of what your demographic is looking for online. Everything. How well do we do that? How well have we adjusted to the demands of time in our pitch and in our overall process?
  3. Seeing your value before they will see you—This requires some kind of information flow directly to the consumer in a relevant way so that they are predisposed to agreeing there is value. How much of our marketing, advertising and R&D budgets are aimed directly at the consumer?

Hmmm, me thinks we have some work to do.

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