Welcome to the first installment of "The Consultative Brokerage® Series." Each month, this new feature will provide information and techniques that are used to attract and retain quality middle- and upper-middle market accounts. The issues discussed each month are real and have been tested by producers and their firms across North America.
Before we get started, please allow me to introduce myself. I started an insurance agency from scratch at the age of 24 during the mid-1970s. Later, I sold the agency and joined a major mega-brokerage firm. While with the mega-brokerage firm, I served in senior management and became a large producer, achieving the firm's Exceptional Producer Award. Over a three-year period, I was able to produce in excess of $650,000 new revenues.
Consultative Brokerage describes the techniques used by successful brokers in the production of quality accounts. It entails a number of details and nuances that when combined comprise a powerful production style. Ultimately, it is one of the only answers to the questions asked by most clients: Why should we choose you as our brokerage firm?
I recognize that some of you may be put off by the term "broker" or "brokerage." Let me address your concerns. In today's world of client service, a small part of your role is that of an agent. The term "agent" denotes your relationship with a carrier and regards placing insurance policies. It does not address all of the other issues and functions that a successful broker must perform. But don't take my word for it. The chart below (left) illustrates what you agents/brokers told Conning & Company in its recent study titled "Commercial Insurance Brokers: They Snooze, They Lose."
The brokerage firms who responded to this survey said it loud and clear: Placing insurance is a small part of the process of serving today's client. The role of an insurance agent who simply places and interprets coverage is no longer an effective way to attract and retain clients.
The clients are looking for firms that can provide them with a number of services and act in their best interests. They want consultative brokers! Their heads are no longer turned by agencies that approach them under the banner of "We are competitive and have policy expertise." Why? Because these firms are not going to speak with anyone whom they perceive as being non-competitive or lacking expertise. In other words, they just expect it, and it's not a differentiator. But again, don't take my word for it. The chart below (right) shows what clients told a survey conducted by the Quality Insurance Congress in 1998.
The bottom line is that clients are neutral on the subject of competitiveness, efficiency and expertise. They expect it from any firm with which they do business. Therefore, these issues are not considered a differentiator. Today's client wants to deal with problem solvers who are able to build relationships and trust. They want to deal with consultative brokers.
The knowledge of Consultative Brokerage is critical to the production and retention of middle- and upper-middle market revenues. These techniques are used and practiced by all highly skilled large producers and their organizations. It is through these techniques that clients are served, and a higher level of expectations is met. Consultative Brokerage provides a delivery system that allows producers to create win/win opportunities.
There are five principles to Consultative Brokerage. These principles are as follows:
Prospects--Quality opportunities are chosen and nurtured by consultative brokers. A "suspect" is not elevated to the level of a prospect until certain criteria have been met. The most important criterion is "Do we know all the suspect/prospect issues?" If not, they are not prospects.
Relationships--Consultative brokers understand that relationships are critical to the establishment of credibility. In order for clients to accept our capabilities, they first must know and trust us. Relation-ships are the vehicle of credibility, and that leads to trust and acceptance of our capability claims.
Resources--Consultative brokers accept the fact that their role is that of a "gatekeeper." They are gatekeepers of resources who provide solutions to client issues and problems. It is the ability to deploy resources that differentiates a brokerage firm. Many firms can obtain insurance policies, but very few know how to apply resources.
Institutionalization--Firms that practice Consultative Brokerage have established a culture that attracts clients who prefer approach. Therefore, consultative brokers know the importance of consistently reinforcing this "problem-solving" culture. They seek clients who understand that value is more than just price.
Broker control--Successful consultative brokers understand their primary roles. They are team leaders who meet and exceed client/prospect expectations through providing a disciplined approach to client service. They practice these Consultative Brokerage principles in all of their client/prospect interaction.
The five principles of Consultative Brokerage are under constant review by successful brokers and their organizations. They understand that the circumstances around these principles can change throughout the client service or prospecting cycle. They are constantly evaluating their position in these five areas.
In the prospecting cycle of new business, consultative brokers position themselves to be successful in a conceptual competition. They know that a conceptual competition involves problem-solving capabilities rather than a competition of "bid and quote." The goal of a consultative broker is to be appointed the broker by utilizing Broker of Record letters.
The development of an organization based upon the principles of Consultative Brokerage is the only way for agencies, brokerages and their producers to prosper in the coming years. We will look forward to bringing you important information on Consultative Brokerage in future issues of Rough Notes. Don't miss our next installment titled "How consultative brokers develop quality prospects." *