STATS WATCH

A study shows technology vendors often are too busy trying to sell products to listen to what insurance carriers feel are their true technology needs.

After interviewing vendors and insurance carriers on the subject of insurance IT sales practices, Celent Communications insurance group manager Matt Josefowicz concludes there is a widespread problem with a fairly simple solution. In a lot of cases, [the issue] comes down to communication and a willingness to listen to the customer, he says. The feedback we received from IT buyers is they are not getting the right information from the vendors.

If a vendor isnt helping its customers find the right solution to their technology needs, the consensus is the vendor is wasting its time and that of its customers. On the business-to-business side, Josefowicz suggests inverting the adage Insurance is sold, not bought. I think the exact opposite is true for insurance technology, he says. Insurance technology is bought, not sold. There is no way to persuade an insurer to buy technology [the insurer] doesnt think it wants.

The best strategy for vendors, he advises, is to ensure they have a clear message, they are providing their prospect with the right level of information for the clients role in the decision-making process, and they are communicating where their solution fits into both the insurance value chain and the IT infrastructure. Ive seen a lot of vendor pitches that are very high level, says Josefowicz. The vendor says, Our system solves business problems. But the vendor doesnt tell [the customer] exactly what the product is, exactly what it does, and exactly how [the customer] is going to implement it and give [the customer] at least a ballpark figure of what it is going to cost. Those are things that decision-makers up and down the decision chain need.

The person representing the product doesnt necessarily understand how the product will fit the customers needs, Josefowicz observed. This often happens with smaller technology companies where the founding team tends to be more product than sales oriented. While the product developers frequently come out of the insurance industry and know how the product is going to fit a customers needs, the designers usually are not selling. Typically, the director of sales tends to be the first outside hire, according to Josefowicz, and that sales person doesnt necessarily have an intimate knowledge of the product. A sales team is brought in with technology-sales expertise or even some kind of industry-sales expertise but usually doesnt have a deep familiarity with the product, he asserts. Companies underinvest in training their sales people.

One of the reasons vendors fail to spend much time listening to their clients, Josefowicz believes, is vendors are afraid they are going to talk themselves out of a sales opportunity. [Sales people] spend more time hammering away on what their product can do and less time listening to what it is the customer needs and whether [their product] can fulfill that need, he says.

IT vendors have to be realistic about understanding when there is no opportunity for a sale, Josefowicz adds, but he acknowledges it is a difficult proposition for sales people working on commission. When they have a meeting, they want to turn it into a sale, he explains. But the best thing [vendors] can do is be visible and clearly communicate their value proposition when customers are looking to buy a product in [the vendors] category.

One of the issues Josefowicz discovered during his research was vendors had a misunderstanding of what it means to research a prospective client. I talk to a lot of vendors that think if they read the SEC files and understand the financial situation of the company, that somehow gives them an important edge in the sales process, he says. Thats good background reading, but the best research you can do is to listen to your prospect and understand what its specific business issues are and how you can help.

ROBERT REGIS HYLE