Third Party Administrators (TPAs) are not your friends. Friends don’t let friends “go broke tired.” A common practice with TPAs is a 10% discount – and that’s just for starters! When you cut your price, what do you think actually happens to your bottom-line?
What ACTUALLY happens when you cut your price 10%
According to Lawrence L. Steinmentz, Ph.D. in his book, “How To Sell at Margins Higher Than Your Competitors,” a 10% discount in price can mean a 20% drop in your gross margin.
And It Gets Worse!
If you think you’re going to make it up in volume, let me ask you a question, “How much volume is that exactly?” When you do the math, according to Dr. Steinmentz, it can mean almost 2x as much work for the same bottom-line!
And It Gets Even Worse!
Cutting your price is just the beginning. There are lead fee$, line item restriction$, additional administrative burden$. How much are you really losing? A top 10 Property and Casualty Company reduced their cost by 30% through Vendor Programs in 2016.
Reality Check #1: YOU ARE NOT A HOSTAGE
TPAs are not going away anytime soon. They’re part of today’s reality. And there are a lot of positive points to them I’m not covering. But that doesn’t mean you can’t BREAK-FREE From Their Grip. I believe in time you can do so for life!
Reality Check #2: YOU NEED MORE BALANCED SALES
When you add up all your sales from all the TPAs you participate in and that number is more than 30% of your total gross sales you are at risk of being held hostage by TPAs. Only you can change that. Don’t be discouraged by the length of time it will take to restore balance in your sales, because the time will pass anyway.
Benefits To Restoring Balance
- Increased profit
- Reduced headaches
- Reduced administrative fatigue
- Increased energy
- Increased time
Reality Check #3: YOU NEED A PLAN
I’m not suggesting you just stop TPA work. I am saying there are alternatives to restore balance, and reduce your dependency on lead programs that turn you into a hostage.
Begin by admitting this is a problem that needs to be solved. Set small reasonable goals, such as: “Increase non-TPA work by 10% in the next 12 months.” You need an actionable plan, one that you can do, because anything you do will be infinitely better then everything you could do.
I really do want to help you begin your journey to BREAK-FREE from TPAs, beat the TPA job assignment “Roulette” Wheel, or maybe you just want to get more of your own insurance work, and stand out from your competitors. I’ve helped other restoration companies and if we are a good fit I can help you too.
Free One-On-One Call
The only way we can find out if we are a good fit for each other is to have a conversation, so I invite you to have a call with me at your convenience: Talk to Gerry
You might be thinking, “What’s the catch?” The catch is simple. I learned from Zig Ziglar if I help enough people get what they want, eventually I’ll get what I want: a customer I can help BREAK-FREE from TPAs for Life!