You’re likely always on the lookout for ways to increase insurance sales, but you may be wondering how behavioral economics plays a role in that. In fact, you may be wondering what the heck behavioral economics is.
It’s a concept that dictates how we make many decisions, including how salespeople and insurance producers make decisions during their sales process—so understanding this theory can help greatly increase insurance sales effectiveness. In this blog, we’ll explain the basics of behavioral economics, and how it can benefit an insurance agency and its producers.
What is behavioral economics?
According to Investopedia, behavioral economics is “the study of psychology as it relates to the economic decision making processes of individuals and institutions. It explores why people sometimes make irrational decisions, and why and how their behavior does not follow the predictions of economic models.”
Essentially, everyone has past experiences that influence how they make decisions, which often give them biases they are unaware of. For instance, if you generally close a sale with someone you’ve built a great rapport with, you may experience optimism bias and not see negative signs that a sale is going poorly.
Why does this matter to insurance producers and agencies?
Without examining behavioral economics at an agency, each producer (and sales manager) is viewing each opportunity with their own set of subconscious biases. Even though you may have a framework to evaluate your sales process, it’s likely that people will not be on the same page many times.
This can cause:
- A producer to spend too much time on an opportunity that isn’t going anywhere
- An opportunity to fall through the cracks when it could have used a little extra help or guidance from a sales manager
- Challenges predicting revenue because pipeline data is based on subjective opinions and is less reliable
By using behavioral economic concepts to revamp your sales process, you can avoid these issues and empower each producer to grow, get everyone on the same page, while gaining confidence in your monthly or quarterly forecasts.
Our next blog will discuss how to begin implementing some of these concepts, or you can download this ebook, Boost sales & increase revenue predictability.