Burn Capital Burn – How To Shorten The Long Insurance Sales Cycle

It’s taken as consensus that B2B sales in insurance takes much much longer than most other enterprise sales cycles. It also seems as consensus that the reason for this is that companies in the insurance ecosystem are risk averse, so things just take longer for them to commit.

To that excuse I say:

 

 

 

 

 

 

I don’t say nay nay that insurance companies are risk averse…of course they are. But that is not why the sales cycles are painfully long. What I am saying nah nah to is the excuse. The sales cycle in B2B insurance is painfully long for one simple reason:

B2B COMPANIES STRUGGLE WITH QUALIFYING PROSPECTS!!!

For larger or more established B2B organizations, they can survive this (they also have an awful time of qualifying prospects too). Those firms have more brand power and financial resources to weather the storm. They’ve matured to the point where they have enough cash flow coming in that they can afford to continue poor practice of qualifying prospects.

Other firms just don’t have that luxury. Startups, younger firms and early stage VC backed firms have a time problem. Time is their most precious asset. These firms just can’t afford to have wasteful meetings. Yet, that what ends up naturally occurring. These B2B firms get stuck in meeting after meeting after meeting after meeting with their prospect. This process isn’t due to egregiousness. Even with a willing buyer on the other side, way too much time is spent just trying to figure out how the pieces need to come together. This is just enterprise sales.

THE ENTERPRISE SALES PROCESS IS TIME CONSUMING

The enterprise sales process (especially in the insurance ecosystem) is an extended due diligence process of vetting and qualification of the buyer and vendor with each other. By nature, there will be a lot of meetings – there has to be! The problem is likely complex, the solution is likely complex, the implementation is ALWAYS complex, so it follows that the engagement is quite risky to both parties. The longer it goes the riskier it gets. But the risk is not the same for both parties. For younger firms they take on a disproportionate amount of risk.

For example, in an enterprise insurance transaction, it may take longer than 12 months to come to an agreement and finalize a deal. Let’s say, in a 13 month engagement, an issue arises which kills the deal. Both parties have lost time and resources. It is unpleasant. But a larger, more well-established firm will have the resources to handle this. It is risk that can be absorbed. For the smaller firm (again, think startup) – this is a killer. Younger, less-established companies do NOT have the resources to withstand these setbacks. TIME IS THEIR MOST PRECIOUS ASSET…and they just burned a lot of it in this failed engagement. Now multiply that by however many business cards they collected at the last trade show and if you connect the dots you will see that these firms are just too financially vulnerable to be able to manage any significant volume of meetings and because they will take a meeting with anything with a pulse, their days, weeks and months are spend just managing pipeline meetings with their fingers crossed, often getting pot committed – they’ve invested juusst enough meeting time with the prospect that even when red flags appear, the sales team needs to keep adding meetings because they’ve already invested so much time and money that they can’t afford to pull-the-plug that far into the conversations.

THIS IS BOTH A SALES AND MARKETING PROBLEM

I tell people all the time, if you want to get leads, it is very EASY to do in B2B insurance. Getting meetings is the easy thing to do. Insurance companies will take your meetings. In fact, they will have meeting after meeting after meeting in a dog and pony show as they introduce you to the claims team, the underwriting team, the marketing team, loss control and maybe even HR. They are doing their due diligence and trying to see how you would fit in with them. Time is not a precious asset for these firms (it should be – but that’s the topic for another article). They’ve got plenty of people and time to throw at meetings. They are in meetings all day, all you need to do is find the next open slot.

But the above just kills time-sensitive firms. They can’t afford dog and pony shows. There needs to be an understanding BEFORE the first meeting of the sensitivity of the issue.

MARKETING NEEDS TO DO ONE THING RIGHT: PRE-VET THEIR OWN COMPANY

B2B marketing with these time sensitive firms spend much too much effort doing traditional marketing. These are cringe worthy efforts for these marketing teams:

  • trade shows
  • cold outreach of any kind (including the seemingly innocent network connecting on social media to get meetings)
  • advertising
  • advertising a “schedule a demo”

It is perfectly acceptable and necessary to strive to get attention via your marketing. What is NOT acceptable is needlessly trying to get call-to-action prematurely.

In my opinion, for time-sensitive firms, the marketing function has one job to do and that is to do the vetting and due diligence their buyers are likely to do and make that work freely available (I call it “show your work”). These time-sensitive firms need to establish 1. credibility and 2. eliminate wasteful prospecting. Any first meeting needs to be “warm”. The first meeting needs to have the right people, discussing the right things. The only way that happens is for the time-sensitive firm to market the heck out of the thought-leadership of the firm AND aggressively work the funnel to eliminate wasteful prospects. I will be spending a lot of time discussing how this can be done, but this is the one and only function of the marketing team for startups and other time-sensitive firms in insurance B2B activity (and I will also add that as the company matures does marketing’s job really change??).

SALES NEEDS TO DO TWO THINGS RIGHT

The sales function in a time-sensitive firms has two functions:

  1. make the sale
  2. make sure they only deal with qualified prospects (not in that order)

As with the marketing function, this topic will require much more discussion, but the sales team can’t do their job competently if they are selling to unqualified prospects. If the marketing team can hold up their end of the bargain, then sales needs to get the baton and continue to ruthlessly qualify that prospect. This is incredibly difficult to do with time-sensitive firms. I’ve seen startups with mature and seasoned leaders salivate over meetings with logo companies. They just had to have the meeting…I mean, look at the logo. The amount of qualifying…zilch.

That is a recipe for dog and pony shows.

That is a recipe for wasting a lot of time.

That is a recipe for loooong sales cycles.

That is like lighting capital on fire!

 

 

 

About Nick Lamparelli

Nick Lamparelli is a 20+ year veteran of the insurance wars. He has a unique vantage point on the insurance industry. From selling home & auto insurance, helping companies with commercial insurance, to being an underwriter with an excess & surplus lines wholesaler to catastrophe modeling Nick has wide experience in the industry. Over past 10 years, Nick has been focused on the insurance analytics of natural catastrophes and big data. Nick serves as our Chief Evangelist.

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