Secondary market annuities: 4 key psychological truths reveal why they sell themselves Article added by Nathaniel Pulsifer on February 21, 2014
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I’m going to let you in on a little secret here. Secondary market annuities are a marketer's dream. I’ll talk about a little marketing psychology in a moment. But first, I want to touch on four core sales psychology principles that move people from being “shoppers” to “buyers,” so you can see exactly how it all fits together with secondary market annuities (SMAs).
The recipe for a compelling offer consists of:
1. Making the offer appealing
Let’s look at an example of a retailer that hits the nail on the head every time. The home shopping company, QVC, works exclusively on these four principles, both on television and online.
2. Being enthusiastic
3. Creating a sense of urgency
4. Giving yourself permission to pester
The host makes the offer appealing: “The design of these sweaters is based on a compilation of the five favorite sweaters I have in my closet today.”
The host is always incredibly enthusiastic. She practically shouts, “These sweaters are fantastic! I cannot wait to buy one of these for myself!”
And urgency and the permission to pester are created as the availability of each item is counted down in the corner of the screen. "There are only five of these sweaters left. Don’t miss this fantastic opportunity. It’s going, going … gone!"
No matter what you think of QVC, it’s massively successful, and people from all walks of life are glued to it every day, calling in and submitting online orders.
Smart marketing with psychology
So, now that we understand these four core sales principles, lets back up to marketing psychology. Marketing is what gets the phone to ring. It's what alerts the customer to the launch of a new flash sale or the availability of a new product on QVC.
So, how do we first market effectively, so we can then sell more? Rather than draw parallels, it’s more effective to quote one of the greats.
Here are three gems from Peter Drucker that will tie all this together.
1. "The customer rarely buys what the business thinks it sells him. One reason for this is, of course, that nobody pays for a 'product.' What is paid for is satisfaction."
2. "There will always, one can assume, be a need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself."
3. "Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available, i.e., logistics rather than salesmanship, and statistical distribution rather than promotion."
Look back at the QVC example. QVC knows exactly what its customers want, and it appeals to all their needs and desires. The marketing drives prospects to the "store" on television or on the Web. However, what makes it all sing is that the presentation and delivery is a complete recipe for a compelling offer, and thus sells through the products.
So, at the end of the day, QVC is really only on the hook for logistics — making sure that what is ordered arrives at the purchaser’s home quickly and in one piece.
What does this have to do with secondary market annuities?
The unique thing about secondary market annuities is that the basic marketing and sales principles mentioned above — principles that can rarely be used in the fixed income space — actually do apply to the SMA market.
I’ll start with marketing — with the importance of knowing your customers inside and out.
Many agents are out there selling, pushing hard to make a sale and earn a commission. Fail!
The truly great agents first learn all about their prospects' lives, desires, fears and needs.
Unfortunately, most annuity products fail to deliver on the prospect’s needs for satisfaction. The offer is not compelling, even if the
marketing is great. Another fail!
What are your annuity prospects' needs?
We’ve found that people love the idea of a guaranteed yield and protection from loss, but the reality of a 50+ page annuity contract just turns them off. The complexity and the contractual density cause the feel-good rapport an agent has built to fizzle.
Many prospects simply want certainty. They want to know, without a shadow of a doubt, what they are going to receive and when they will receive it. They want it in plain and simple terms, and they want a good yield.
Secondary market annuities deliver on all fronts — with guaranteed returns to your clients — in a simple and easy-to-understand manner.
Now, here’s the secret — the psychological leg up you have as an annuity producer presenting secondary market annuities to your clients.
Remember the four sales psychology’ principles: appeal, enthusiasm, urgency and pestering?
These really are not conditions you see very often in the world of annuities. Enthusiasm falls flat when there is very little urgency to buy an annuity. It often comes off as pushy, which makes closing difficult.
However, with SMAs, we have all four of the critical ingredients:
1. The offer is appealing. Purchase an SMA and receive all the benefits of guaranteed income, but with excellent, above average yields.
2. Enthusiasm. It’s easy to exude enthusiasm, particularly when you're offering an exclusive product that is different from all the other "sames." Compare a 15-year SMA at 5 percent to a 15-year fixed annuity at 3.9 percent. Enough said.
3. and 4. Urgency and permission to pester merge in the SMA market. Deals come and they go. Buyers have to act, and act now, to get their case. With SMAs, you have a duty to watch the market and follow up with your prospects. Remind them that
if they don’t buy it, someone else will. The asset class is all about urgency and buyers welcome the pestering when it helps them snag a great deal.
Now, don’t read this piece the wrong way. There is nothing wrong with being aware of how people think, and being in tune with the needs of your buyers. In fact, it’s entirely appropriate, if you are a marketer, not a seller. Think like a marketer and get inside your prospect’s head:
1. Understand your customers' needs
2. Speak directly to those needs
3. Fulfill those needs with a unique and compelling offer
When you do get inside your prospect’s mind, when you know their true pain points and needs, you can give them solutions.
For prospects craving simplicity, certainty, yield and guarantees, secondary market annuities can’t be beat. And when you present these to the right prospects, the psychological principles of sales take over. You can truly satisfy the needs of your clients and just stand back while the product sells itself.
See also: 9 cognitive biases that impede your sales — and how to overcome them
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