Taking on Goliath: How Insurance Can Help
Using Insurance To Make Sales and Compete

by Peter Schlactus, AAI                                                  [ Back To Table of Contents ]

H ow many times have I heard a courier owner complain, "Peter, you're a nice guy, but this insurance is like a stone around 
my neck!"

"You're right," I nod. "Insurance is like a stone." Then I continue, "But it's like the stone that David carried into battle with his 
slingshot. It helped him defeat Goliath."

Insurance should be viewed not simply as a burdensome expense item, but as a strategic investment in your business that helps 
you compete more effectively.

In particular, insurance can be a great equalizer between you and your larger competitors. When used effectively in your sales 
presentations, insurance can help you portray yourself as more professional and more concerned about your customers' welfare. 

Consider King David for a moment. David's stones served to equalize the field between himself and the giant Goliath. By allowing 
David to attack from a distance, his stones transformed the gutsy shepherd boy into every bit the warrior that Goliath was. Despite 
Goliath's fearsome offensive abilities, he wore no armor, leaving him vulnerable. Little David unleashed his stone and felled the giant.

All courier owners -- not just those who are military buffs or biblical scholars -- can learn something from this parable. Your business 
may be small; it may be relatively new. Or you may be grossing $1 or $2 million but find yourself up against one of the courier giants. 
You may not have the latest and greatest computer dispatching system with satellite tracking.

Still you can effectively demonstrate your professionalism by presenting a well designed insurance portfolio. Without spending a 
fortune, you instantly gain a substantial measure of respect from prospective customers.

Insurance and Professionalism

Insurance is an important yardstick that customers use to measure your professionalism. Insurance does not directly indicate the 
quality of your delivery service, but it is a symbol of your professional commit-meat that customers can readily understand.

In addition, many larger prospects realize that your services put them at considerable risk. Not only is their property in your safe-
keeping, but also you are acting as their legal agent. They can and have been held responsible for injury or damage your drivers 
may cause.

Customers expect you to stand behind your service by taking financial responsibility for whatever may go wrong. For this reason, 
they request to see proof of insurance, such as a certificate. Many go so far as to have themselves named as an additional insured 
on your policy. Naturally they want that policy to provide adequate coverage.

How to Use Insurance to Equalize the Competition

Consider this scenario: You're bidding on a large account (X) currently controlled by ACME, one of your city's largest couriers. 
Your price is competitive, but you don't yet have the deal.

You: "Mr. X, you seem satisfied with my bid. Is there anything preventing you from trying out our service?

X: "The price is right, but I'm not yet convinced that your operation is geared to service an account like us."

"Fair enough. What I hear you saying is that we are much smaller than, ACME and maybe you're not sure if we're professional 

"Something like that, yes."

"As you know bigger is not always better. You were complaining that you haven't been getting the personal attention you 
want  from ACME. To them you may be just another customer, but to us you will be a VIP."

"Fine, but how will your VIP treatment measure up to their normal service?"

"Of course I can't prove to you how good we are until you try us, but I can show you that we take care of our customers like 
professionals. For example, take a look at our insurance porttolio. We make sure you are shielded from harm if anything should 
go wrong. We carry 51 million liability limits with A+ rated carriers and excess liability coverage above that. Our shipments 
are insured and bonded for up to $25,000. I think you'll find we compare well with the protection ACME is providing."

"Sounds good, but I think they have $1 million in cargo insurance."

"It could be ten million, but who cares if you never ship anything worth more than $10,000 or $20,000? And you should know 
that we use specialized insurance advisors, so if you need a higher limit -- even for a single shipment -- we can do that. It costs 
our customers less this way than to do it across the board."

"Impressive. I'll think about it."

"One more thing, is your current courier bonded?" "Yes, according to their certificate and advertising."

"But, like us, don't they do most of your deliveries using drivers who are independent contractors?"

"I think so. I'm not sure."

"It may be worth checking out. You see, 9930 of so-called bonded messengers have absolutely no coverage for contractors. (pause) 
Our top people are directly involved in our insurance and they are careful not to leave gaps. We obtained a special bonding policy 
so you would be protected. Look at our insurance portfolio. What does ACME show?"

"Their certificate doesn't say. You mean all this time when I thought they were bonded maybe they weren't?"

"I'm sure it's nothing intentional. Sometimes things slip through the cracks in a big organization. Maybe they don't use a courier 
insurance specialist. We are very serious about running a
professional operation."

"1 can see that."

"I'll tell you what. Call them up and ask them to get you a certificate today showing that their contractors are bonded. If they do, 
then you'll see we are equally professional. Think about our offer. If they can't produce the certificate, then tell me now that you'll 
give us your business and let us really sho
"I'll tell you what. Call them up and ask them to get you a certificate today showing that 
their contractors are bonded. If they do, then you'll see we are equally professional. Think about our offer. If they can't produce the 
certificate, then tell me now that you'll 
give us your business and let us really sho
w you what we can do."

{momentary pause} "It makes sense. You have a deal."

The Lesson

Whether or not every presentation goes this smoothly, the point is that smaller couriers can use insurance to appear every bit as 
professional as the biggest competitors -- and sometime
s more so. Some of the largest companies in the industry have weak links 
in their insurance armor, leaving themselves vulnerable to smaller couriers offering more personalized service and equal or better 
insurance protection.

Meeting Customer Expectations

What, then, do you need to satisfy the expectations of most customers? Consider the following minimum standards: 

A Shield and a Sword

Of course, to really differentiate yourself from other couriers you need to seek out additional features. The above example pointed 
to a few: A+ rated carriers, flexible cargo limits and bonding for independent contractors. Many other similarly valuable coverage 
enhancements exist.

Some courier owners still think of insurance as a commodity and focus on price alone. In today's competitive arena, they will lose 
out to those who realize insurance is a complex financial service. With this realization comes the power to use your insurance not 
only as a shield against financial ruin, but also as a sword {or, perhaps, a sling) for defeating competitors and capturing new business.

Long live King David! 

Peter Schlactus, a Certified Insurance Counselor and  Accredited Advisor in Insurance, is Co-President of KBS International Corp., which provides specialized  insurance programs, benefits, and  risk management services to courier companies and executives nationwide. Mr. Schlactus is available to answer inquiries  at 1-888-KBS-4321 or via e-mail at peter@courierinsurance.com.

COURIER MAGAZINE - October/December 1996        [ Back To Table of Contents ]

(c) copyright, 1999 by KBS International Corp.  All Rights Reserved.