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My father was a home office field wholesaler back in the mid-1960s through the mid-70s. He did pretty well. The other day I was thinking about how he would have reacted if, like Austin Powers, in 1968, he could have gone into a time machine, transported himself to 2003 and spent one day as wholesaler for a life insurer or annuity company.
I think he would be amazed at the laptop computers and Palm Pilots everyone uses in the field to manage their time. The home office AS400 and IBM 390s would blow him away with their number-crunching capabilities. The variable and equity indexed life and annuity products would really impress him. And, I think he would be a bit confused at all the variations, guarantees and options found in traditional universal life policies and annuities.
He would also be amazed at the proliferation of new channels: independent broker-dealers, wirehouses, producer groups, independent financial advisors, national brokerage agencies, banks and life brokers.
Most of these new things would leave his head spinning, and I am sure he would realize that he was in very unfamiliar territory. That is, until he walked into the sales department in both the field agency and in the home office.
If he walked into a typical sales strategy session, he would hear the managers saying things like "we want to make sure our sales force gives the customer the right information at the right time so he will buy our product and not someone elses." Or, "we are trying to convince the client to buy from us and not from our competitors by showing how our product is better." Or, "we go out and tell the customer how good our products and services are and get him to buy from us."
He would know then that things havent really changed that much.
If he talked to wholesalers in 2003, he would hear how their territories have gotten larger, how their production quotas keep rising, how the level of field support has declined and how the rules of the game keep changing. Also, he would hear tales of good people losing their jobs during company mergers and distribution strategy shifts.
My father would feel right at home in the sales meetings because thats exactly how he sold back in the 60s and 70s. He told customers about product features and commissions, and he communicated the value of these products and his services with personal visits and mailings. He visited often, brought little gifts and made sure that all decision-makers liked him and had sufficient information about his products. He communicated details and information, and he was friendly and funny. He made a pretty good living at it and was able to buy me baseball mitts and sneakers when I was a kid.
But, I think he wouldnt be as successful as a home office marketer today, and he would be making a little less money each year while finding it harder and harder to establish a growing and sustainable business franchise. And, I wouldnt be getting my Sears Ted Williams baseball mitt each year.
If he looked around at other industries in 2003, like computer retailing, steel manufacturing and mobile telecommunications, he would see the same downward pressure on face-to-face wholesaling sales forces.
Sales forces are struggling to find and keep good customers, and home offices are discovering that they are not getting the returns they planned for. And, since they are not getting these returns, they are cutting back on expenses, training and support.
Whats changed?
For one, unprecedented product information is making customers more sophisticated to the trade-offs between price and advice. They have far more choices and, in many cases, they can easily substitute products. They are also busier and have less time to speak with wholesalers. Additionally, their businesses are under economic pressure as well as their customers are becoming more demanding and price-conscious.
For my father, his product created the value for his customers. His job was to communicate that value often and to the right people at the right time and to offer it with the right commission structure. Today, in order to be distinctive, he would have to create value for the customer during the selling process.
Its not enough to simply communicate the value, price and product features when people have access to this product information. Many of his customers wouldnt want to pay extra for information they could get themselves. Somehow, during the sales process, he would have to create enough value that his customers would be willing to pay extra for it.
