11/2015 – The customer always has the last say
by Tan Thiam Hock
Saturday, 6 June 2015
I WAS a guest speaker at a life planner’s convention yesterday talking to over 3,000 life planners or life insurance agents as they are called 30 years ago. My topic was “Selling or Branding – which is more important?”
If you ask me what has a lipstick salesman got to offer to the toughest sales outfit across all industries, I will tell you – absolutely nothing!
Life insurance sales people work strictly on commissions and incentives, no basic salaries and no travelling or telephone allowance. They are highly motivated and highly skilled in the art of selling. And the successful agents make a load of money. The agency managers make more money than half the number of CEOs in our Bursa-listed companies.
The underlying motivation driving these super sales force is the spirit of entrepreneurship. You are your own boss. You report to no one. You earn based on how hard you work. Ok, to be more precise, the smarter you are, the more you earn.
Similar business model will be the direct selling businesses like Amway and Avon. But will the direct selling business be disrupted by e commerce or online sales in the coming years? It will be a matter of life and death choice as to which distribution channel the company wants to focus on in the near distant future.
We will see a margin compression as direct selling companies lower their selling prices to compete with similar lower priced items either in the traditional markets or online channels. The only solution is to reduce commissions to their agents which will be counter productive and demotivating to the entrepreneurial sales force.
In the long run, if you are selling commodities, there will be tremendous pressure to deliver the products directly to the consumers with the lowest possible price at the lowest possible cost. This is the future of the supply chain.
Taking the insurance industry as an example, general insurance sales like car, travel and medical insurance have gone online in major markets like the US and Europe. They are sold like commodities. You can compare insurance quotes online to get the best deal.
Locally, Tune Insurance has leveraged on the extensive online customer base of AirAsia to grow exponentially just mainly selling travel insurance. From insurance, Tan Sri Tony Fernandes leveraged further to his advantage by selling hotel rooms to the same customers which is further expanding to an Asean market of 600 million people.
Just absolutely brilliant. Tony will make more money from non-airline sales in the future and he can add more commodities and services through his online system. And guess what? He does not need a sales force!
So if you are planning to go on your own in direct selling business or insurance, you have to select non-commodity products or services that requires a high level of personal selling. Like life insurance for instance.
On your own, you will not go online to buy a life insurance policy. That is because you do not have a need to. Until an insurance agent or a life planner as they called them these days, points out to you the benefits of having life insurance coverage with medical riders for critical illness etc.
Your death benefits your beneficiaries, so you better buy an insurance policy benefiting each wife that you have. You pay now so that you can continue to provide maintenance for your family in your after life. Now I understand why they are called Life Planners.
While you are alive, just pray you are not afflicted with any of the critical illnesses without having an insurance cover. Speaking from experience, you can afford to die but you cannot afford to be critically sick like being stricken with cancer. Advanced stage of cancer might require different treatments like surgery, ablation etc and finally chemotherapy which has the most expensive drugs in the world.
The longer you live, the poorer you become. I have seen families being drained of their financial savings and resources just to treat their loved ones. So take my advice and get good insurance cover for critical illness.
Unfortunately, citizens are not able to buy insurance to protect against embezzlement and plundering of our national wealth. Previously widespread corruption and now blatant stealing of public money is spreading like cancer to such an advanced stage that no cure is possible. It is a hopeless situation of the guilty thief with a big hammer in his hand staring you in the eye and saying so what?
I guess the only last desperate solution left is to treat these parasites like cancer tumours. Cut them out, burn them deep and inject massive dosages of jail therapy. No I am not angry. I am furious. Just like you. It is too late to get insurance coverage. No life planner will want to insure a cancer patient. Our children will have to pay hefty premiums late into their life just to save this beloved country from financial ruins.
And still these thieves sell their lies and brand themselves as custodian of our future.
So which is more important? Selling or Branding? Push or Pull?
None of the above.
The customer carries the vote.