Become The Broker That Roars

I wish I had a hundred dollars for every brokerage who has said this to me:  'We’re just as good as any broker. We have great resources, a smart team, and we’re really focused on our clients. It seems like we have difficulty getting and keeping the attention of the larger buyers. It has become hard to actually differentiate ourselves.’

Or, how about this one: ‘We have excellent resources in risk control and claims. They are the best. But, when we compete against others, many have similar resources... so we all look the same.’

Does that sound familiar to you? Come on now, be honest.

Here is your solution . . . Become the Broker That Roars!

First let’s agree on one thing. Your firm is just as capable as any other broker, and in many cases better. You have all the resources, brokerage skills, marketplace leverage and expertise required to do a better job for your clients. At the end of the day, if the prospect or client understands this, you are the obvious choice because of your ability to act nimbly on their behalf.

But, here’s your problem… you can’t prove that, so your voice is being lost in the noise of other firms who sound like you!

I hate to tell you this, but just having solid resources doesn’t make you the best . . . it’s what you do with them that matters. That along with the ability to actually prove your results!

So, here is how you become the Broker that Roars...  

  • You show your prospects and biggest clients what the analytic results of your firm have been (or will be.)

  • You take away the resource ‘feature’ language and replace it with your quantifiable impact.  

  • You redesign your large account strategy around the proven and known results of your organization.

  • You take it to the competition and make THEM prove what they have done.

  • You seize the initiative by forcing them into a position where they just can’t compete.

  • You make it ‘put up or shut up’ time for them.

Of course, some of you may be thinking, ‘This all sounds great, but we just can’t achieve all that.’ Well, you might be thinking it, but remember one thing... This is not 1975. You DO actually have the ability to do this if you understand Analytic Brokerage™ and work with TCORCalc® as your source for Analytics and Client results.

If you chose not to, that is your concern. But, know this, you will chose to continue to fight the same way that you have for the past 30 years. How is that working for you now with the latest C-Suite expectations around metrics and results?

So, it is time for you to stand up on your two hind legs and ROAR! You have the ability to do it. You have made the investment in resources, expertise and have a stellar reputation.  Your firm is one of the top brokerages in your region. Now you just need the skills of Analytic Brokerage™ powered by TCORCalc® to amplify your voice!

Go get ‘em Tigers.

Best Regards to Analytic Brokers™

Rob Ekern, CAB (Certified Analytic Broker™)
Chairman, TCORCalc®

Straight Talk to Brokers

It’s time for some straight talk, OK? Many of you have been reading the Consultative Broker™ Briefing for years (now the Analytic Broker™ Briefing.) So, I hope by now you know that we are one of the few voices in the brokerage industry that has consistently provided you with meaningful information on larger account production.

Ready for some straight talk? OK, here it comes.

Those of you who intend to be in the middle and upper/middle market business better hop to it! You need to change your entire perspective and do it quickly. The world of outcomes and analytics are here to stay, and most of you don’t know yours. If you did, you would be hitting the ball over the fence right now.

Virtually every middle market broker can’t answer these important questions from a client: ‘How have you impacted our financial outcome over the past several years?’ Or, ‘What will your impact be on our firm if we appoint you as our broker?’

Some of you are saying, ‘Of course we can answer that question!’ Then you provide a litany of information that all revolves around loss ratios, coverages, carriers and terms. With a bit of ‘Value Added’ services thrown in for good measure. You and every other insurance broker within a 100 mile radius. Oh, come on!

Now look... I’m being hard on you for a reason. If you don’t wake up and smell the coffee, your time will have come and gone. Take it from a grizzled veteran of the insurance brokerage world. Your top clients and prospects are not going to allow you to continue to operate like it’s 1975.

So, I want you to think about this: Let’s say you’re sitting in your office and the phone rings from your largest client. Here’s what she says:

‘We have a new CFO and he would like you to demonstrate the financial impact you have made on our firm over the past 3 years. Please don’t make your presentation based on the marketplace or risk management strategies because he‘s interested in results.’

Here is what the CFO actually wants to know... ‘How has your representation impacted our firm in the following ways?

  • What was the impact on our profit?

  • How have you helped us reduce and recapture our Financial Leakage?

  • How have you added to our shareholder wealth?

  • What are your firm’s results with other clients like us?

If you can’t answer those questions, you’re doomed. Why? Because that same CFO is able to turn to his analytic dashboard and find a big hole in it. The hole is the information that you have not provided him. As a result, you have a client who feels under-served.  That is trouble for you!

How did this happen? Because, you did not make the effort to learn and grow in the business you are now in... Providing clients with a financial impact that is superior to your competitor’s. Period. If you can’t demonstrate your true impact, then as Dr. Deming says, ‘you are just another person with an opinion.’

Now, I know it’s not really your fault. Until recently, the technology and analytics simply did not exist for you to be able to consistently quantify your client impact and track record, and then demonstrate that to your largest prospects and clients in a meaningful way. Fortunately for you, times have changed.

You might have had the opportunity to do all the things that the ‘New CFO’ was asking for, you just didn’t have theability to do them. You didn’t have a way to get there . . . unless you were an Analytic Broker with TCORCalc®.

So, wake up. Smell the coffee. Those of you who keep up with your clients’ and prospects’ demands for knowing ‘what you are worth’ will prosper. This is selling to the highest degree.

Isn’t that what you have been trying to do for years?

Click here to watch a quick introductory video entitled 'Welcome to Analytic Brokerage™' and you're on your way. 

Best Regards to Analytic Brokers™

Rob Ekern, CAB (Certified Analytic Broker™)
Chairman, TCORCalc®

Throw Away Your Rock And Chisel

Today’s large account buyers have moved on. They are being asked to do more with less. They are constantly bombarded with emails, phone calls, text messages, and operational issues that require their time and attention. In order for your message to rise above the chatter in their connected world, you must be able to objectively demonstrate how you will improve their financial metrics.

It is clear we have entered a new era of client sophistication and expectations. I’ll talk more about the dramatic shift taking place in our industry below. But first, if you have been in the brokerage business long enough, see if you remember some of these “rock and chisel” gems:

  • Sitting at your desk, dialing for dollars with the yellow pages or your prospect list, hoping to talk to a buyer who would tell you when their x-dates are.

  • Trying to impress your prospects with the carriers you have access to, the coverages you can provide, where you play golf, and how you insure some of the more famous clients in town.

  • Spending countless hours creating a submission to an inferior carrier that was ‘assigned’ to you by the prospect, and then many more hours creating a presentation for the prospect to deliver your best attempt.

While these activities may have been an essential part of prospecting and selling in the past, their efficiency and value to today’s more sophisticated and increasingly-busy large prospects are on the downhill slide.

Today’s large account buyers have moved on.  They are being asked to do more with less. They are constantly bombarded with emails, phone calls, text messages, and operational issues that require their time and attention. In order for your message to rise above the chatter in their connected world, you must be able to objectively demonstrate how you will improve their financial metrics.

Here is how you do it:

  • Show them how your resources and track record with other large clients will translate into bottom-line benefits for them. You do this by 1) quantifying your impact on your existing large clients’ Total Cost of Risk, and then 2) showing the prospect how their firm’s metrics would improve if you were to deliver the same resources and services if they were your client.

  • Focus your message on delivering a financial outcome. Sure, your golf club, great smile and client list might be positive additions to your approach. But what these sophisticated buyers really need to know is how you are going to help them succeed in business. Show your projected impact in terms of ‘additional’ trucks added to their fleet, beds for their hospital, or widgets from their factory, and you will have their utmost respect and attention.

  • Talk to them about issues that are important. Any broker can talk about coverages, carriers and program design. For example, take it to the next level by discussing Indirect Loss Costs and how their financial statements are bleeding as a result. Show them how many trucks or beds or widgets you are going to contribute utilizing your firm’s resources and services. Your message will stand out because it brings value and objective results, not just a list of features and accolades.

  • Choose your battles wisely. If a prospect is only interested in price, look elsewhere. If your resource capabilities are of no use to them, or if the prospect won’t share their business metrics or discuss sophisticated issues with you, move on. Find the sophisticated prospects who have ditched the antiquated hammer and chisel method of insurance negotiations and have moved on to the new world of metrics, resources and quantifiable impacts.

We all have more than enough demands for our time and attention… but we will always find time and energy for someone who can make our lives and businesses more profitable, efficient and rewarding.

As you continue to elevate your conversations with your largest prospects and clients, you will further distance and differentiate yourself from the masses of mediocre salespeople and brokerages.

Your consistent message of quantifiable results and resources will pay tremendous dividends in our rapidly changing industry. The old Rock and Chisel will stay in the past, where they belong.

All the best to Consultative Brokers,

Rob Ekern
President/CEO
C.R. Ekern & Company

 


Take the 180-Day New Business Pledge

Today marks the beginning of the second quarter of 2014. What you do in the next 6 months will determine your success as a producer for the entire year. Many of your best prospects will make their buying decision in the fourth quarter. So, starting now, you have a 180-day window of opportunity.

Today marks the beginning of the second quarter of 2014.  What you do in the next 6 months will determine your success as a producer for the entire year.  Many of your best prospects will make their buying decision in the fourth quarter.  So, starting now, you have a 180-day window of opportunity.

First of all, let's agree that larger accounts are where your action is.  These accounts are the needle movers that can mean the difference between a great year and a so-so year.  Unfortunately, the loss of a really large account at year-end can make it a lousy one.

I need to talk for just a moment about why I continue to stress the need for prospecting larger accounts.  If you intend to continue to grow your book, here are some of the reasons your focus should move upstream in that direction:

  • Writing one larger account will soften the blow of competitive loss on many smaller ones

  • If you have resource capabilities, larger accounts will respond because they need them

  • There is less competition at the top than at the bottom

  • Larger accounts understand total cost reductions (rather than simply price)

  • Larger accounts utilize business metrics as an everyday part of their operation

Here are the 3 Objectives you need to focus on right now and for the next 180 days.  If you think strategically, this time can be used to really supercharge your larger account production:

  1. Pick your top 3 year-end renewals and plan a quantifiable Stewardship Report.  You should think of this as a placeholder/insurance policy.  While these reports may not make you more money at year-end, they will help guarantee your renewal stream.  It is better to spend a little time planning your cash flow than a lot of time trying to salvage it under competitive pressure.

  2. Focus on your top 5 year-end prospects.  Ask yourself this question: How can I differentiate myself using business outcomes?  On your next call, ask your prospect about their business metrics and key performance indicators (KPI's.) These will give you the answer to that test.  Continue the discussion for the next 180 days around their business outputs and your outcomes.  That will lead to Broker of Record letters instead of marketplace competitions in the fourth quarter.

  3. Launch 25 New Suspects.  This is your chance to tell a fresh story to 25 new large suspects and turn them into prospects.  When you approach these firms, tell them a much deeper story than the usual one about your firm.  Your story must now be about the results your organization has brought others and how you can improve their business model.  (By the way, our next briefing will focus on that critical subject.)

So, come on, take the 180-Day Pledge to focus on the 3 Objectives above.

If you do this, your new business results will be tremendous.  Not only will your production go through the roof, but the quality of your clients will continue to improve. Plus, there will be little or no churn inside your book and a higher degree of Broker of Record letter appointments.

All the best to Consultative Brokers,

Rob Ekern

President/CEO

C.R. Ekern & Company


3 Ways to Manage Prospect Expectations

One of the skills that successful Consultative Brokers learn at an early age is how to 'manage' prospect expectations. Your ability to do this on the front end of the transaction has a direct correlation to your success on the back end (i.e. your closing ratio on Broker of Record Letter appointments.)

One of the skills that successful Consultative Brokers learn at an early age is how to 'manage' prospect expectations.  Your ability to do this on the front end of the transaction has a direct correlation to your success on the back end (i.e. your closing ratio on Broker of Record Letter appointments.)

The need to manage expectations becomes critical when a prospect's requests and 'perceived' needs do not align themselves with your organization's strengths.  Here are some examples:

  • The prospect believes your organization is simply going to quote their business.

  • The prospect declines to provide you with full data (e.g. financial statements.)

  • The prospect shuts you out from other decision makers.

  • The prospect gives the incumbent broker a 'preferred' position.

  • The prospect will not use the Broker Selection Model over the Market Selection Model.

In each of these cases, your ability to re-focus and manage expectations requires that you substitute an outcome that is more meaningful to the prospect's business organization than the one they are choosing.

I can hear some of you thinking right now, "Are you telling me that I should not listen to my prospect's requests and give them what they want?"  Exactly.  In the case where they're going down the wrong path, you have to work differently.

One of my closest industry friends once told me, "Some prospects don't know what they don't know."  Think about it. What this means is, if a prospect has never seen something, been taught something or learned the advantage of something, then they will continue to go down the same path.

The basis of Consultative Brokerage is to provide a buyer a quantifiable impact that improves their business organization. How many of your prospects expect this outcome when you first call on them?  Not many I would guess.

So, to have a successful outcome, you need to understand the prospect's expectations and manage them effectively, thereby aligning their expectations with your deliverable outcomes. Isn't that the basis of all high level selling?

Here are 3 Ways to Manage Your Prospect's Expectations and help them decide on the best course of action (appointing you as the broker, of course):

1. Determine common areas of agreement and goals - From the initial conversation, always point to the ways you will look to help your clients improve their profits, capitalization, shareholder value and productivity.  This becomes your theme throughout the entire sales process.

2. Keep your focus on these quantifiable goals - By constantly featuring what you are looking to achieve, your prospect will stay engaged and look to your firm for guidance.  In many cases, you will achieve broker control by reminding the prospect of your goals.

3. Appeal to their sense of urgency - Every organization has a sense of urgency around important financial goals.  For-profit firms look to improve their financial position.  Not-for-profits are interested in serving more constituents.  Keep this in the forefront to keep their attention focused.

Managing a prospect's expectations is a critical part of attracting new accounts.  The brokers who master this skill are excellent communicators and have a confidence and reputation that transcend the basic insurance transactions.  

This is how they become Consultative Brokers who achieve tremendous hit ratios and success on large accounts.

All the best to Consultative Brokers,

Rob Ekern

President/CEO

C.R. Ekern & Company


Partnering With Investment Bankers (Part 2): 'Follow The Money'

In the previous edition of the Consultative Broker, we highlighted some of the important issues around working with Investment Bankers (AKA Private Equity Partners.)  Many of you are finding yourselves caught in the transition of ownership and expectations.  In this edition we will give you some specific thoughts on how to cement and grow this important segment of your large account book.

First of all, it goes without saying that your firm must be nimble and very skilled at placements across various geographic locations and industry segments.  That is a "given."  If you do not have these capabilities, it is best for you to spend your time elsewhere.

In the event you intend to stay relevant and "Follow the Money", here are some things you must do: 

  1. Elevate your business acumen.  It stuns me how many large account brokers do not understand EBITDA and Valuation Techniques.  In the event you intend to work with a sophisticated financial organization that represents investors, you need to know what they are trying to accomplish.  This is always translated into EBITDA and Valuation Multiples of Profit.

  2. Provide them the correct assessments of Cost Structure and Opportunities.  As you know, the purpose of their investment in most cases it to build the value of the company and then spin it off at a nice profit at some point in the future.   By providing the owners with an accurate Total Cost of Risk analysis, you can pinpoint areas of potential profit leakage or recapture.

  3. Translate your Value into EBITDA and Multiple Valuations.  Once you understand the goals of the Investment Bankers, it is imperative that you translate your outcomes to their terminology.  There is only one way to do this: through the application of Total Cost of Risk inside the firm's financial statement.  For example,  'What percentage of your EBITDA Goal have we contributed?',  or "How much have we increased your Ownership Value?

Here are several real examples of how Consultative Brokers have created value for new Investment Banking Owners:

Provided Negotiation Acquisition Savings to the Buyer.  Upon doing the due diligence of the new acquisition, the broker demonstrated the actual Total Cost of Risk for the acquisition to the Private Equity firm.  While the risk financing costs and retained loss costs were known, the indirect loss costs were not accounted for.  In this example, there were several million dollars of "unfunded" indirect loss costs.  The buyer was able to reduce the purchase price accordingly at the EBITDA multiple.  (For example, if there is $1M of unfunded indirect loss costs, and the multiple is 7 times EBITDA, the buyer should reduce its purchase price by $7M.)

Improved the Financial Performance of the Acquisition.  Once the acquisition was completed, the appointed brokerage firm used their resource capabilities to help the Investment Banker drive the TCOR costs out of their business model.  Through this reduction in costs, the new buyers increased their EBITDA percentage and business valuation.

Increased the Value for Sellers.  One of the key things that top flight Investment Banking organizations and their consulting partners look for is "business initiatives."  This is a main element in their assessment of going concern valuations.  Those firms who have ongoing business improvement initiatives command a higher valuation multiple.  They are perceived as developing a higher level of intellectual capital and growth opportunities than their competitors.

Here is a final thought around working with Investment Bankers and Private Equity Partners...  While your risk analysis, insurance and risk financing capabilities may be unquestioned, you must be able to support this inquiry:  How does your firm help us increase the valuation, income stream efficiency and EBITDA for our partners?

When you answer that question effectively, you will be able to "Follow the Money" with great success!

All the best to Consultative Brokers,

Rob Ekern
President/CEO
C.R. Ekern & Company


Partnering With Investment Bankers (Part 1)

Unless you've been living in a cave, your firm has probably been impacted by the acquisition of one of your largest accounts by Investment Bankers. You know the deal. You get a call from one of your largest accounts and they proudly tell you about how they just sold their firm to a major Investment Banking (or Private Equity) firm. It is a very happy day for everyone involved... except for you!

Unless you've been living in a cave, your firm has probably been impacted by the acquisition of one of your largest accounts by Investment Bankers.  You know the deal.  You get a call from one of your largest accounts and they proudly tell you about how they just sold their firm to a major Investment Banking (or Private Equity) firm.  It is a very happy day for everyone involved... except for you!

Now, that does not need to be the case.  There is hope.  But, it requires that you and your organization take a step back and understand the transaction. Rather than succumb to the hopeless situation of making a typical brokerage presentation, you will need to think like a business person.

Aside from the need to work with a brokerage firm that is nimble enough to place short fuse and geographically diverse acquisitions, here are some things you need to understand:

  1. The Investment Bankers see you as overhead and a frictional cost that sucks up cash flow.  While they understand that insurance is required to protect their investment, that is the extent of their interest.

  2. Your many years of meritorious service will mean nothing in the end.  The Investment Bankers are looking toward the future and will chose to work with the firm who can provide them the best results.

  3. The Investment Banker has one primary mission with the acquired company:  To increase their ROI, EBITDA and Ownership Valuation.

So, if we can all agree on the above, what is the answer?  It is very simple.  Show the Investment Bankers how your efforts have improved the business performance of the acquired organization.  Demonstrate to them in financial terms how this past performance is being carried into the future.  Then show them what percentage of EBITDA and Ownership Valuation can be attributed to your efforts.  Furthermore, give them a financial benchmark of your projected contribution to Key Performance Indicators (KPI's.)

When this happens, it provides the new owners with an overwhelming reason to maintain your relationship and expand upon it with additional new acquisitions.  You are now a firm that provides them with a solid ROI and improved EBITDA on all their investments.

Ok, I know that some of you might be scratching your heads right now and asking, "What does any of this have to do with being a good insurance broker?"  Or you might be saying; "EBITDA, KPI's, ROI and Ownership Valuations?  I never learned that in Insurance Brokerage 101, so, why bother with it now?"

Both are good questions, and here is the answer...  Unless you get with it and learn how your firm creates value as a Business Organization, you will be left in the dust.  There is a big difference between a good insurance brokerage and a great business organization.  The key is in understanding and communicating how your firm impacts the financial results of your client.

Here is the problem with most brokerage firms...  They have been steered as insurance brokerages for decades.  Everything they have developed is aimed at one primary thing... funding and reducing risk.  While many have sophisticated risk control and claims management facilities, they have aimed their results at premiums and claims.  These alone do not attract a sophisticated buyer who requires outcomes.  

Premiums and Claims Data are simply statistics, not financial results.

In our next Briefing we will discuss the specific methods by which to retain your Investment Bank-owned accounts and grow this important segment of your business.  We will provide you with the key information and real life examples of brokers who have successfully utilized these techniques.

In the meantime, please ask yourself this question.  "In the event one of our largest accounts is acquired, can we provide the new buyer with our established business outcomes, or simply statistics?"

If it is simply the statistics of premiums and claims outcomes... you will get fired!

All the best to Consultative Brokers,

Rob Ekern

President/CEO

C.R. Ekern & Company


No More Dogfights in 2014

Here is a truth that now exists inside our business... You have a choice as to whether or not you continue to participate in Dogfights. Perhaps you enjoy the racing pulses, sleeplessness, pots of coffee and constant stress. But, if you don't enjoy them, make the decision to do something different in 2014.
Now that the year-end renewal and new business season is finished, it's time to reflect on your results.   

I hope that all your renewals were put to bed profitably and that you wrote all the new deals you worked on.  I also hope for World Peace and the Cubs to win a World Series.

Unfortunately, some of you found yourselves in a Dogfight for your key renewal.  You know the one.  It is the account that pays you a huge income, is vital to your revenue stream, and is a prime target for your competition.

Maybe your firm has had it for many years and has done a good job managing it. It was with the right market and your premiums/fees were competitive.  Yet, this year, the buyer decided to keep your firm "honest" and placed you under competition.  

Even if you kept the account, the results were not optimal, as you likely experienced a reduced income and a much higher expense load.  Not to mention the impact on the morale and energy of your staff as they all focused on keeping this key account.

Had enough?  Are you tired of Dogfights?  Well, now you get to make a choice for the future.  You can decide right here and now that:

  • You will no longer be a participant in these Dogfight exercises

  • Your largest accounts will gladly renew with you at the price you require... and they won't shop you

  • Your top producers and rainmakers can focus on doing new large deals instead of putting out fires at renewal time

Here is the reason why you found yourself in a dogfight.  You did not give the buyer a quantifiable way to judge your performance throughout the year.  For whatever reason, you did not provide a Value Report (or Stewardship Report) that objectively demonstrated to the buyer how you had reduced their costs and increased their profitability.

Because of this neglect, your back door was left open!

So, let's make a New Year's Resolution that matters.  Here it is . . . No More Dogfights.

Here's how you do it:

  1. Select your largest accounts.  These are the ones that are consistent targets for other brokers and pay you the lion's share of your income.  In total they may add up to 40% of your revenues.

  2. From this point forward, plant the seed in your client's mind that helping them reduce their costs is your primary goal.  Discuss with them the TCOR Method of valuing a broker's impact on their financial metrics.

  3. Make certain that you have several legitimate projects working on behalf of your client.  These projects should be in the vein of Risk Control and Claims Management.  This takes you outside the insurance transaction.

  4. Do all the above with the intent to provide the client with a legitimate Value Report six months into the program period.  This Value Report is the key to securing the client's acceptance that the renewal is simply another project, not an event.

  5. Make certain that your Value Report is translated into the client's Key Performance Indicators such as equity valuation, productivity measurements or human capital ratios.  These are the things your clients truly care about, not the rate per thousand of insurance.

Here is a truth that now exists inside our business...  You have a choice as to whether or not you continue to participate in Dogfights.  Perhaps you enjoy the racing pulses, sleeplessness, pots of coffee and constant stress.  But, if you don't enjoy them, make the decision to do something different in 2014.

You can chose to continue the same way and expect the same Dogfight results.  Or, you can learn something different and enjoy the Holidays in 2014 with your key renewals and new business put to bed. It's your choice.

All the best to Consultative Brokers,

Rob Ekern
President/CEO
C.R. Ekern & Company


Beware the Rule of One!

The Rule of One says that most brokers and their firms are just one incident away from disaster on their largest accounts. These are the accounts that provide them their largest incomes. In some cases, they may be the single account that feeds a broker, or they may be the accounts that make up the firm’s Franchise Account revenue stream.

As some of you may be aware, there has recently been a great deal of press around the ‘near misses’ of comets and asteroids to our planet.  The scientists and media have made a big deal about how devastating it would be if a collision were to occur.  Some, if not most, believe that the dinosaurs fell victim to just one of these incidents.

I liken this to what I call the ‘Rule of One.’   Ready?  The Rule of One says that most brokers and their firms are just one incident away from disaster on their largest accounts.  These are the accounts that provide them their largest incomes.  In some cases, they may be the single account that feeds a broker, or they may be the accounts that make up the firm’s Franchise Account revenue stream (the 4% numerically that feeds 50% of their commercial revenue stream.)

Here’s how the Rule of One operates:  You will probably lose your largest account if just one of these things occurs:

    • A Large Unresolved Claim Problem – Creates a potential loss of trust

    • The New CFO – A new buyer who does not have any history with you

    • A Private Equity Firm appears or a Merger occurs – The other broker may be in the driver’s seat

    • An Economic Downturn – ‘Survival Mode’ means all former bets are off

Every working broker I know (including myself) has fallen victim to the Rule of One.  It happens in a heartbeat and some don’t see it coming.  That is because their entire business model is based solely around the commodity and the relationship. Therefore, when the Rule of One occurs, they have no safety net to cushion the blow.

Here is how a successful broker protects his or her largest accounts from the Rule of One:

  1. They take the spotlight off themselves – They utilize the resources of their firm and institutionalize the client, thereby creating a sense of trust that goes far beyond simply one relationship and the commodity.


  1. They deliver Stewardship ValueReports™ - By creating a Stewardship ValueReport for the new CFO, a successful broker is able to demonstrate how she has impacted the financial performance of the client.


  1. They tie their results to Shareholder Value Creation – They create a quantifiable Value Proposition that is tied to a number of KPI’s (Key Performance Indicators.)  One of the most important KPI’s is the Shareholder Value that is created by the multiple of the Value Proposition.


  1. They focus on the financial impact of Stewardship – During an economic downturn, many client CFO’s ask the question:  “How are you helping us with our margins?”  The brokers who can’t answer the question with quantifiable statistics and results will find themselves at risk.

Here is the bottom line...  The Rule of One is at work in many of your largest accounts.  Today, everything looks rosy and perfect and the stars are aligned in your favor.  But, there may be an asteroid headed your way.  If it hits, life as you know it may change.

So, protect yourself from the Rule of One.  Ask yourself, what quantified value have we created for our clients? How have we shown it to them? And possibly the most important question: Do they know it?

If you can’t answer those questions, then you better get out of the way.  

Those are not the stars you are seeing, but a line of comets hurtling toward you.  Don’t go out with the Dinosaurs!


All the best to Consultative Brokers®,

Rob Ekern

President/CEO

C.R. Ekern & Company


The Three Keys to Client Value

What is your actual Value Proposition? How do you demonstrate to clients, prospects, CFO's, risk managers, and other c-suite buyers the quantifiable impact of working with your firm? How are you currently showing your clients the impact you are having on their business organizations? How much shareholder and ownership equity did your organization create for clients this year?
The brokers who are establishing quantifiable Value Propositions now have a huge advantage over firms who are still in the 'Dark Ages.'  They are holding on to renewal accounts without having to cheapen their revenues and fees.  They are growing their books by gaining accounts based upon outcomes, not insurance prices.  Their hit ratios are higher and their production costs are lower.

The ability to create a demonstrable, quantifiable and credible Value Proposition is a recent development inside the brokerage industry.  It has been made possible by the advent of cloud computing and data sharing capabilities.
 
What is your actual Value Proposition?  How do you demonstrate to clients, prospects, CFO's, risk managers, and other c-suite buyers the quantifiable impact of working with your firm?  How are you currently showing your clients the impact you are having on their business organizations?  How much shareholder and ownership equity did your organization create for clients this year?

If you don't have the answers to these questions, you are already behind the curve.  Unfortunately, your organization is simply an insurance agency and will be out of the large account business shortly.  Sorry, but the Genie is now out of the bottle.

Everyone speaks about a Value Proposition, but most are not able to actually produce one.  A Value Proposition is not a list of features, resources, services or specialized insurance coverages.  An actual Value Proposition is the financial impact and outcome your clients obtain through working with your firm.

So, let's get specific about what a Consultative Brokerage Value Proposition looks like:

·  It is tied to client profits and EBITDA - Once you have established your actual quantifiable value proposition it becomes a factor that is embedded inside the buyers financial statement.  Thereby, proving the continued importance of the brokerage relationship.

·  It impacts client productivity - No matter what your client does, whether it be for profit or not for profit, they have productivity measurements.  Your Value Proposition must align with these important Key Performance Indicators, thereby showing how you have helped them reach or exceed their targets.

·  It creates shareholder value - This is the most important tangible result of a demonstrable Value Proposition.  Whether they be a public or privately owned company, shareholder value is created by a multiple of your EBITDA contribution to profits.

Virtually every other industry has focused on how its products and offerings create a tangible and quantifiable Value Proposition for clients.  Yet, we as property/casualty brokerage firms have decided to keep ourselves tethered to the ropes of commodity price and terms.  It is time to crawl out of the darkness and move into the light of the new age.

All the best to Consultative Brokers,

C.R. 'Rob' Ekern
President/CEO


C.R. Ekern & Company
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