How spreadsheeting ruined long-term care
By Stephen D. Forman (LTCA)
Long Term Care Associates, Inc.
If we hope to see our industry mature and develop a deep market rich with innovation, then we must return to needs-based selling. A continued focus on price — enabled by spreadsheeting — will only further depress sales.
Do you remember how brisk long-term care insurance sales were in the 90s? Remember when we didn’t have DRA Training Requirements, and no Google ads offering FREE quotes? Remember when we didn’t have Potential Rate Increase Disclosure forms?
In the last 10 years, our industry has been buoyed by such powerful endorsements as the Own Your Future campaign, the annual Long Term Care Awareness Month and now, the pan-industry 3in4NeedMore platform. Yet the combined lift of all these CTAs has not been enough to counteract the downward force exuded by spreadsheeting.
Selling on value
The best agents have always been those who do right by their clients. This has traditionally been understood as promulgating and recommending the best LTC solution — no matter the price; or rather, where price is but one criteria among many. So-called “needs-based” selling requires that the client’s needs are evaluated and a plan tailored accordingly. From there, a broker can choose from among his arsenal of carriers to secure the most affordable bid. One doesn't sell towards a budget; one assists the client in addressing her needs.
The most passionate producers feel awful about walking away without closing on a plan — it means doing the customer a disservice because she is not properly insured. This motivating regret is the right way to feel.
Selling on price
Enter the spreadsheet. Producers love long-term care software products such as Stratecision and VitaLTC. In fact, they swear by them. I’m not here to disparage either product, the companies behind them, or their employees. (In fact, I use the generic term "spreadsheeting" because this trend extends even further back — all the way to Excel and its analogs.) However, no one can disagree these tools have changed the way LTCI is presented and sold.
Comparing multiple products side-by-side for your clients accomplishes many things, not least of which is a preemptive strike against them seeking out quotes from your competitors. It also signals your expertise through a mastery of many products and your trustworthiness, since you’re willing to be transparent with industry pricing. These are all positives.
At a glance, your clients can readily see which product is least expensive and which costs the most. Agents can wield this as a powerful tool, either for or against any particular carrier. And herein lies the problem.
The beginning of the end
Selling on price may have always been the crutch of the lazy agent, but spreadsheeting was the great enabler. Its proliferation over the last decade has led to several undesirable consequences for our industry:
The Motley Fool recently repeated an old saw that carriers deliberately underpriced products in an effort to buy business, only to later raise rates. There is no proof that this was the case, but as long as agents continue in a race to the bottom by rewarding the low-price leaders, there will be little defense. Disservice
By turning LTCI into a commodity sale, we fail our clients and ourselves. First, the benefit configurations we custom design begin to look like they came off a conveyor belt. If the plan design is no longer “needs-based,” then any cookie-cutter will do — and cookie-cutters are increasingly reproduced. Second, we begin to lose our fundamental sales ability over time — techniques such as selling need, telling stories, asking questions. If selling on price is the only tool in your toolbelt, then a fire sale is the only time you will make a sale. You could go broke waiting for the next one.
Loss of product innovation
Spreadsheets are great for comparing apples to apples, but what happens when you want to show an orange? Not so easy, is it? I would contend that one of the underlying causes behind the failure of Prudential's Evolution or MetLife's LifeStage Advantage was their lack of spreadsheet-ability. During the design stage of new products, carriers are conscious of this fact, and it has led to a rut in the "traditional" standalone LTCI product.
One of our flagship carriers recently introduced a revolutionary inflation feature, and its lack of spreadsheet-ability may prove an impediment to its widespread adoption.
As I've written elsewhere, any carrier marketing LTCI is only one bad product away from exiting the market. In the case of the carriers listed above, their market exits were directly preceded by non-spreadsheetable products. But there can be another reason: Live on price, die by price.
If a carrier wants to make its name by being the low-price leader, then it must be prepared to suffer the consequences when that day comes to an end. Agents will take their spreadsheets and flee. Is that the industry we want for ourselves?
In case you missed the story, Walmart is now selling life insurance in their stores, while Costco is doing the same with health insurance. Both are part of a larger trend to commoditize insurance and devalue the role of the agent. For the life of me, I have no idea why some agents would hasten their own demise! For our part, we have selected each carrier in our portfolio because its products boast a unique value proposition. If you're not promoting that value proposition, then you're vulnerable to any competitor who follows you into the home with a slightly cheaper product.
If we hope to see our industry mature and develop a deep market rich with innovation, then we must return to needs-based selling. A continued focus on price — enabled by spreadsheeting — will only further depress sales by amplifying the negative consequences outlined above. I exhort my hardworking colleagues to return to fundamentals. And as always, good selling!