Tag Archives: math

4 Steps When Clients Only Care About Price

So you’ve developed a great rapport with a potential customer. She’s happy with the risk management solutions you’ve proposed. A sale seems imminent. Then you get to the price. Suddenly, your relationship-building efforts dissolve into a negotiation that might seem more about dollars than sense.

Don’t get discouraged. Cost is a sticking point for almost all customers and a common reason why deals of all kinds fail. But before you let price jeopardize your next sale, arm yourself with strategies to help customers understand that the bottom line shouldn’t always be the last word when they’re considering your proposals. Consider these four simple approaches:

1. Listen

Listening to the specifics of the potential customer’s objections is the first step in figuring out a strategy to overcome them. Two areas to which you should pay the closest attention are specifics about why the prospective customer is resisting your price and how he determined the competition’s prices. This will help you empathize with potential clients. It also allows you to introduce considerations besides price, such as the value of the peace of mind that comes from a stress-free claims process, the risk management resources your agency can offer, etc.

2. Do the Math for Customers

Prospective customers may not realize how producers and underwriters arrive at the price for a specific policy. That’s why it’s vital for you to explain it fully with concrete examples and — even more importantly — offer ways to potentially reduce costs down the road. Assure the potential customer you’ve personally checked for all potential discounts, keeping the fight for the sale alive while providing additional value and insight.

See also: Answer to a Better Customer Experience?  

3. Justify the Price

Lots of sales pros will tell you to never apologize for price. It’s sound advice. Your message should be that the price matches the value of what you’re offering and that you assume the potential buyer will agree.

For example, you can tout the benefits of your claims department and how the producer and adjusting teams will support the customer at every step of the process; give a specific example of a time when a current or past client benefited from your agency’s superior value and service; or emphasize that an insurance policy is a key part of protecting and preserving life’s most important purchases.

4. Stand Your Ground (or Walk Away)

Everyone’s idea of negotiation is a little different. In some cases, the right approach to a potential client balking at a price you’ve quoted is to stand your ground once you’ve demonstrated you believe in the value of your coverage and service. It just might be the tactic that gets the customer ready to buy.

See also: Payoff From Great Customer Experience?

Other times, a potential buyer will force you to really stand behind the value of your products… by giving up the sale. Some buyers have a maximum they’re willing or able to spend, while others will go with the cheapest option no matter how many different ways you spell out why that might be a bad idea. One of the key elements of being a successful seller is knowing when to give up on a prospect and move on to more lucrative opportunities.

Have you had success with potential customers who are only focused on price? Share your solutions in the comments section below.

How CDC Sparked the Wellness Legend

The wellness emphasis in the Affordable Care Act is built around the Centers for Disease Control and Prevention’s (CDC) call to action in 2009 about chronic disease: The Power to Prevent, the Call to Control. On the summary page, we learn some of what the CDC calls “arresting facts”:

  •  “Chronic diseases cause seven in 10 deaths each year in the U.S.”
  •   “About 133 million Americans — nearly one in two adults — live with at least one chronic illness.”
  •   “75% of our healthcare spending is on people with chronic conditions.”

Shocking — that is, in terms of how misleading or even false the claims are and of how they created the wellness legend.

Take the statement that “chronic diseases cause seven in 10 deaths.” We have to die of something. Would it be better to die of accidents? Suicides and homicides? Mercury poisoning? Side effects of measles vaccinations gone awry?

The second statistic is also a head-scratcher. Only 223 million Americans were old enough to drink in 2009; divide 133 million into that number, and you see that a whopping 60% of adults, not “nearly one in two,” live with at least one chronic illness. Sloppy math and wording is common on the CDC site, as elsewhere it says that almost one in five youths has a BMI in the 95th percentile or above, which, of course, is mathematically impossible, as is the CDC’s calculation of our risk of death.

More importantly, how is the CDC defining “chronic disease” so broadly that so many of us have at least one? Is the CDC counting back pain? Tooth decay? Dandruff? Ring around the collar? “The facts,” as the CDC calls them, are only slightly less fatuous. For instance, the CDC counts “stroke” as a chronic disease. Although a stroke is likely preceded by chronic disease (such as severe hypertension or diabetes), it is hard to imagine a more acute medical event than one in which every minute of delay in treatment increases your odds of ending up like the Kardashians.

The CDC also counts obesity, which was only designated as a chronic disease by the American Medical Association in 2013 — and even then many people don’t accept that definition. Cancer also receives this designation, even though many diagnosed cancers are anything but chronic — they either go into remission or cause death.   “Chronic disease” implies a need for continuing therapy and vigilance. If cancer were a chronic disease, instead of sponsoring “races for the cure,” cancer advocacy groups would sponsor “races for the control and management.” And you never hear anybody say, “I have lung cancer, but my doctor says we’re staying on top of it.”

That brings us to the last bullet point. Convention typically attributes more than 80% of healthcare costs to fewer than 20% of people, meaning that costly ailments are concentrated in a relatively small group. The implication would be that, if you address that small group, your savings are disproportionate. Instead, the CDC’s data attributes 75% of costs to about 50% of the adult population, implying almost the exact opposite of the 80-20 rule: The cost of chronic disease is widely dispersed. Indeed, if you remove the rare diseases that afflict about 1% of the population but account for about 7-8% of cost, you come very close to parity between the proportion of the population with chronic disease and the proportion of total health spending attributable to chronic disease.

So what?

This urban legend based on the CDC’s call to action, appearing verbatim more than a million times on Google, is among the single biggest causes of uncontrolled healthcare spending…and is responsible for essentially the entire wellness industry.

In reality, if you strip away the expenses of those chronically ill people unrelated to their chronic condition (which are included in the CDC’s 75% statistic); prevention and management of those conditions (ditto); those aforementioned rare diseases; and unpredictable or uncontrollable exacerbations: That 75% crumbles to about 4% of expenses that fit the category of wellness-sensitive medical events. Achieving a 10% reduction in those categories — a feat rarely accomplished, which is why vendors never disclose this figure — would reduce overall spending by 0.4%, or about $25 a year per employee or spouse. Hence, few employers would ever bother with wellness.

Instead, the CDC’s  wellness legend, suggesting that 75% of costs can be attacked, encourages employers and health plans to focus on the opposite of what they should focus on. Penn State, citing this 75% statistic as justification for its controversial wellness program, provides a classic example of this wrongheaded focus, with unfortunate consequences for the university’ reputation and employee relations, with no offsetting financial benefit.

Typical of the wellness industry’s embrace of this wellness legend is Bravo Wellness — also the first wellness company to brag about generating savings by punishing employees. The company takes this fallacy a step further. It deftly substitutes the words “lifestyle-related and preventable” conditions for the CDC’s language “chronic conditions”; that implies that everyone with a chronic condition, even a congenital or unavoidable, rare condition, has only his lifestyle to blame. Vendors like Bravo encourage employers to get more employees to view themselves as chronically ill, or about to become chronically ill — and encourages them to access the system.

Encouraging overdiagnosisovertreatment and overprescribing isn’t just a bad idea on its own. It distracts employers from real issues such as provider pricing disparities, hospital safety, outliers (the small percentage of employees who really do account for half the cost (usually not because of a chronic ailment, though) and pharmacy benefit managers (PBMs), whose per-drug margins are about twice what they would be if anyone spent any time weed-whacking their obfuscations of rebates, implementation fees, etc. and simply negotiated the margin directly.

What to do next?

It seems like all our posts end the same way: Stop poking your employees with needles.

We’ve debunked wellness’s science and math, its outcomes, its philosophy … and now its epidemiological premise. Even as their credibility is shredded, most wellness industry players have steadfastly refused to defend themselves at all. Instead, they avoid all debates on this site, because, although many of the vendors and consultants appear to be incapable of critical thinking, they are smart enough to realize that facts are their worst nightmare.