Document Type
Article
Publication Date
6-24-1905
Abstract
This ethnographic study of effective selling skills in life insurance sales was conducted in Houston, Texas. The identity of the financial service company, the producer, and other participants were withheld for confidentiality. Persistent industrial problems in life insurance sales of mostly new sales producers and their inability to attain a successful sales career consequent to poor sales production spawned this study. A consequence of poor sales is low commission income, which directly impacts attrition of sales producers as well as recruiting efforts of companies. Life insurance is an intangible product with an inherent level of difficulty, hence effective selling skills are needed to be successful. The strategic goal of sustaining a market share or gaining a competitive advantage is contingent on effective selling skills of the sales team. The producer's perspective includes the need for continuous improvement as consumers are more informed today than in the past. Moreover, the repeal of the Glass-Stegall Act increased competitive pressure by allowing banks and other financial institutions to compete in the same market. This impairs the competitive landscape for ineffective producers. Many prospective agents who successfully passed the selection and licensure process leave prematurely because of poor sales. The company either terminates the relationship or the producer leaves voluntarily because of insufficient income. It is known in the sales environment that "most salespeople who fail will fail within the first year. In some fields of selling, this figure can run 99 percent and even higher" (Lawhon, 1995). However, separation in life insurance occurs in most cases after six months, allowing time for training and acquiring professional licenses. The implication of this separation is magnified in the wasted resources in opportunity costs by the company and producer during the engagement period. The organizational structure of a life insurance company has the producer as the only member of the company with direct consumer contact. This arrangement forces the producer to perform strategic functions of distribution and production for the respective company. This relationship means that "the agent is located at the point in the organization at which the company's financial security policies and plans are distributed to the consumer, and also at the point at which services are directly produced to the consumer" (Oakes, 1990). These services are delivered by the agent in the form of consulting--providing financial security information to clients and assisting them in financial planning strategies to meet their goals. The goal of a producer is to build a practice by growing the client base. As reported by Kimball (1994), relationships and emotions are the keys to success in selling. People buy from salespeople they like and trust. This fact makes price and the company brand insignificant when clients make a buying decision, hence increasing the importance of a producer. “The insurance company can distribute its products only if consumers buy them and consumers can be expected to buy life insurance only if agents sell it to them" (Oakes, 1990). The implication of this notion on a company's strategy is that it increases the need to maintain an effective sales force to sustain a competitive advantage. This study provides an understanding of effective selling skills and explores how these skills can be integrated in the organizational structure to enable successful selling. This ethnographic study began with reviewing relevant literature on effective selling including skills needed for good sales performance and management of a sales force. I was cognizant of what I bring into the research as a practitioner and knew to avoid any biases, hence the "researcher experience memo" (Maxwell, 1996). According to Maxwell, this is a way to identify and take into account the perspectives that a researcher might bring to the study from the experiential knowledge of a practitioner. As a nineteen-year veteran of the industry and a manager with recruiting responsibility, I am committed to a better understanding of the problem. Thus, my experience memo accomplishes this task with the following: Opinion--During interviews, my opinion was not offered and I did not participate in discussions, as this might influence the results. Product Analysis--Product analysis in comparison to others in the industry was not done, as this is not the objective of this study and may affect the results. Pricing —Analyzing the cost is not the objective of this study, hence a highly competitive company was chosen to mitigate the effect of pricing. Compensation--Compensation is also not the objective of this study and as one of the leading companies in the industry, the expectation is that the commission rate will be competitive for a producer. Feedback--Feedback after a presentation with regards to how well the producer performed was not offered, as it may jeopardize the study. Many authors in the literature reviewed acknowledged an inherent difficulty in selling at various levels, depending on the type of product or service. However, a consensus among the authors on the prerequisite of salesmanship exists. "Sales people have to master the fundamentals of selling...have to learn prospecting... [and] they have to present their products. Some sales people have to use some fundamentals more and some less. Only when these fundamentals have been mastered can they specialize in computer sales or insurance sales" (Ridge, 1995). I began this ethnographic study after reviewing the literature on selling. The study was conducted through participant observation of an identified successful producer. The structured interviews were conducted with the producer as well as the recruiting manager. Recruiting participants for this study took several steps to ensure depth in research and value to the potential audience--the practitioners. Studying one person allows the opportunity for depth and thick description needed to understand effective selling skills. Therefore, the objective is to discern, by shadowing and through structured interviews, what makes this individual a successful producer. The structured interview with the manager explains the company's commitment to skill developing and hiring practice. The expectation is that this interview will provide understanding on how to leverage resources to improve agents' development and selection process.
Keywords
Selling -- Life insurance
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Ofili, Benjamin K., "Effective Selling Skills in Life Insurance Sales: The Implication on Sales Performance, Recruiting, and Retention of Producers" (1905). Student Scholarship. 175.
https://commons.case.edu/studentworks/175
