Large Accounts: The Keys to Your Success

We have transitioned through both the soft and hard markets, seen a number of name brand carriers disappear, and experienced the expectations of our clients shift dramatically. All of this inside a business climate that went from boom to bust.I did not say that it is an unprofitable business or that it will not be financially rewarding in the future. That will come to those of you who understand how to create a value proposition that helps your clients improve their profits, competitiveness, human capital, and productivity (Business Risk).

It has been 15 years since we started C. R. Ekern and Company and coined the term Consultative Brokerage™.  I am personally very gratified for the friendship and reinforcement that many of you have provided us over the years.

Of course, since our inception the agency/brokerage business has changed dramatically.  We have transitioned through both the soft and hard markets, seen a number of name brand carriers disappear, and experienced the expectations of our clients shift dramatically.  All of this inside a business climate that went from boom to bust.

Here is the deal, and I know it will upset some of you: the property casualty insurance industry as we have known it, is a shrinking business.  Don’t believe me?  You can form your own opinions from the results of the past 40 years.  I know, I have been there for virtually all of it.


I did not say that it is an unprofitable business or that it will not be financially rewarding in the future.  That will come to those of you who understand how to create a value proposition that helps your clients improve their profits, competitiveness, human capital, and productivity (Business Risk).  Without that, you are simply in the insurance distribution business  . . . a constricting business model.

Oh don’t get me wrong.  There will continue to be blips of hard market pockets as your suppliers continue to put them and you out of business.  It will be possible for some of you to hang on from cycle to cycle.  But, remember the cycles will come further apart and they will return more quickly to a lower rate.  During the 37 years of my brokerage career, we have spent 81% of the time in a “soft market” environment. 

So, in my humble opinion, it is critical that you continue to grow your larger accounts.  These are what provide you with the highest level of profitability. If you are going to survive in this business, you will need to understand Business Risk and how to create a real Value Proposition.  That is what will give you traction for decades to come, not simply a few years.

So, it is time for you and your firm to get serious about creating a value proposition that is real.  Not just wrapped around the product.  Many of you are capable of it and must drop everything and make this your single most important task for the coming 24 months.

- Rob Ekern

For more information on how to quantify TCOR, manage projects, build a value proposition, and consistently deliver stewardship reports and new business presentations to your customers, check out the Major Account Development System (MADS), an on-line consultative broker's toolkit. Available now!

Ready to learn more about Consultative Brokerage Sales Training? Visit the Consultative Brokerage Academy.

To learn more about C.R. Ekern & Company, please visit our website

Stewardship Reports: Locking the Back Door

I was standing in front of a client group recently, when a bolt hit me out of the blue (it does happen occasionally!) We were discussing the importance of doing Stewardship Reports. Now, as many of you know, we first started talking about Stewardship over a decade ago. Today, Stewardship Reports are a well accepted key to Consultative Brokerage.

I was standing in front of a client group recently, when a bolt hit me out of the blue (it does happen occasionally!)  We were discussing the importance of doing Stewardship Reports.  Now, as many of you know, we first started talking about Stewardship over a decade ago.  Today, Stewardship Reports are a well accepted key to Consultative Brokerage.

But here is the dirty little secret that I know - while many other agents and brokers talk about Stewardship Reports, very few actually deliver them!  And unfortunately, most of the “reports” being offered do not qualify as true Stewardship Reports.  They are simply a rehash of the features offered to clients.

This is very frustrating to me.  Why?  Because I know that an effective Stewardship Report is the key to “Locking the Back Door.”  The amount of revenue that is lost for lack of a good Stewardship Report is staggering!  Without them, brokers are subject to both competitive and pricing pressures that can cut the guts out of their revenue stream.  All because they didn’t do a good job of making certain that the client understood their Value Proposition well prior to the renewal.

So, what was the bolt that hit me?  The reality that a good Stewardship Report is actually more important to your revenue stream than the renewal itself.  Why?  Because an effective Stewardship Report sets up the renewal correctly and makes it simply a project.  When a client already understands the benefit of your Value Proposition, it removes the tension around the renewal.

But don’t take my word for it.  Here is an actual example that happened last week.   A Consultative Broker delivered a renewal to his client’s CFO with a $125,000 premium increase (approx. $600,000 in renewal premium.) This meeting took place sixty days before the renewal date.  Because the Consultative Broker presented a solid Stewardship Report, the CFO understood their Value Proposition of close to $1,000,000.  The client accepted the increase because of this demonstrated value.  It happens all the time.

So, let me ask you a question:  Would you consider not delivering renewal terms to your clients?  Of course you wouldn’t.  Why?  Because you perceive that is when you earn your money.  I believe that you really earn your money with the delivery of a Stewardship Report.  The renewal is simply the time that you collect it.   Wow, what a concept!

So, why don’t more brokers do meaningful Stewardship Reports?  Simply because in most cases they either don’t know how to, or they can’t offer any ongoing value other than placing and servicing the insurance program.  So, either they ignore the Stewardship Period or present something that is simply a policy and claim review.  This doesn’t feed the bulldog.

If you want to provide a meaningful Stewardship Report to your key accounts, here is what you must do:

  1. Establish a Benchmark Stewardship Period – A true Stewardship Report should be presented six months in advance of the renewal.  It should include your projects and Value Proposition for the past eighteen months.  Every good Consultant uses a benchmark against which they can compare their outcomes and progress.
  1. Know your Value Proposition – Using the concept of Total Cost of Risk (TCOR), you must be able to demonstrate how you have impacted the client’s business model.  The ability to quantify your impact makes the Stewardship Report relevant as a demonstration of your business partnership.
  1. Understand Conceptual Impacts – As part of the Stewardship Report, you must show the client how you intend to impact their outcome over the next eighteen months.  This requires that you know how to utilize the TCOR methodology into the future with conceptual results.  This places you on the same side of the table as your client.
  1. Treat the Renewal as a Project – If you have done your Stewardship Report correctly, the renewal is simply a project that reflects the successful follow-up of your discussion.  In short, the entire sting is taken out of the transaction.   This is the natural conclusion of your plan and strategy in concert with your client and carriers.

Stewardship Reports are the most talked about and least utilized tools of the average agent or broker.  The term has become a buzzword touted by consultants who have never brokered a deal.  Most agents are unable to produce meaningful Stewardship Reports.  They therefore ignore the one project that would allow them to effectively “lock the back door” and focus their time on growing their business, rather than protecting it at renewal time.

- Rob Ekern

For more information on how to quantify TCOR, manage projects, build a value proposition, and consistently deliver stewardship reports and new business presentations to your customers, check out the Major Account Development System (MADS), an on-line consultative broker's toolkit. Available now!

Ready to learn more about Consultative Brokerage Sales Training? Visit the Consultative Brokerage Academy.

To learn more about C.R. Ekern & Company, please visit our website

It's a Top Line Game

I remember being in the depths of the last soft market . . .and it was worse. Our mission as successful brokers was to grow our books of business in spite of the marketplace trend. Some were capable of it, and some were not. The ones that were capable (I was one of them) adapted themselves to the marketplace and client expectations. As a Consultative Broker, here are some of the things that you must do to change gears...

Okay, I know that the industry is ripe with gloom and doom.  Everywhere we look there seems to be another horror story.  The economy is bad, industry prices are down, and our clients are all looking to cut back.  Some say that the worst isn’t even in sight.

But, Cheer UP Bucky!  It is the same industry that it has always been.  The Game is exactly the same.  It is all about the Top Line.  That hasn’t changed and it never will.  All that has changed is the imagination, focus, knowledge and intensity that is required to be successful.

I remember being in the depths of the last soft market . . .and it was worse.  Our mission as successful brokers was to grow our books of business in spite of the marketplace trend.  Some were capable of it, and some were not.  The ones that were capable (I was one of them) adapted themselves to the marketplace and client expectations.

As a Consultative Broker, here are some of the things that you must do to change gears:

1.) Anticipate the marketplace.  First of all, let’s all understand that this is the condition, and we can’t do anything about it.  We don’t control it, and it is what it is.  Do not expect it to rebound in the near future.

2.) Change your approach.  You must find the opportunities that lend themselves to resources and cost reduction techniques.  Find the prospects that have been under-served by brokers who rely solely on pricing as a method of proving their value.  (They are all over the place!).

3.) Stay on the cutting edge.  As the marketplace changes, there are always new products and techniques that begin to emerge.  Why?  Because the increasing capacity is looking for a home that is not price sensitive.

4.) Prospect Larger Accounts.  It is inevitable that the softening market will take the revenue guts out of the lower middle market accounts.  You have already seen it haven’t you?  So, anticipate that trend to continue.  Go upstream now!  Here is a little secret . . .there is less competition at the lower end than at the top.

5.) Become a Better Broker!  Learn and understand the Consultative Brokerage techniques that allow you to hold your revenue stream up.  Focus on Total Cost of Risk, Stewardship Reports, Fee Based Selling and Conceptual Presentations.

So, remember this, surviving the soft marketplace is still about the Top Line!  It is about growth and creating new opportunities while at the same time bringing more value to your current clients.  In a soft market there is only one way to do that:  Get better at what you do.  You will still prosper and grow if you focus on that.  I know this because I have seen 3 soft markets and the game has never changed, only the skill required of the players.

- Rob Ekern

For more information on how to quantify TCOR, manage projects, build a value proposition, and consistently deliver stewardship reports and new business presentations to your customers, check out the Major Account Development System (MADS), an on-line consultative broker's toolkit. Available now!

Ready to learn more about Consultative Brokerage Sales Training? Visit the Consultative Brokerage Academy.

To learn more abour C.R. Ekern & Company, please visit our website

The Oldest (And Dumbest) Trick in the Book

As many of you know, I do have just a little grey hair. With over 30 years of experience in the agency, mega brokerage and now consulting business, I have seen quite a bit. There are very few “new” tricks when it comes to beating the soft market cycle when you focus on the “price” of the policies. In fact, I am sad to report that I am beginning to hear about the resurgence of perhaps the worst and dumbest soft market strategy ever utilized in our industry. But first, a little personal history lesson . . . .

As many of you know, I do have just a little grey hair.  With over 30 years of experience in the agency, mega brokerage and now consulting business, I have seen quite a bit.  There are very few “new” tricks when it comes to beating the soft market cycle when you focus on the “price” of the policies.  In fact, I am sad to report that I am beginning to hear about the resurgence of perhaps the worst and dumbest soft market strategy ever utilized in our industry.  But first, a little personal history lesson . . . .

I remember as a fresh faced agent in my early 20’s sitting at the desk of a seasoned co-worker.   His dilemma was not unique in the “soft market” of the early 70’s.  Competitive pressure had forced him seek a further decrease in price from an underwriter in order to save one of his accounts.  "Watch and learn," he whispered to me as he waited for the underwriter to answer his phone.

“Say Bill,” he greeted the hapless underwriter, “I have a problem on this account and I hope you will help me out.  I need to find about 10% additional savings and wonder if you would agree to reduce your price by 5% if we reduce our commissions by 5% also.”

Well, in the flash of an eye, the underwriter agreed to this plan of saving the account.  Grinning like the Cheshire Cat, my intrepid mentor hung up the phone and proudly crowed, “See, Rob, that is how you do it!”

That is how you do it!!!  Are you joshin’ me?  That is exactly how you put yourself out of this business in one big hurry.  If I give up 5% will you give up 5%!  That is not what happened.  Here is what happened.  The agent gave up 33% of his income and the underwriter 0.  Not exactly an equal trade.

Notice how while telling the story I used the term “agent.”  As most of you know, we developed the term “Consultative Broker” to describe an entirely different way of retaining an account during the last devastating soft market.  Thank goodness that many of you have evolved in the past decade. 

So, when faced with the same dilemma as our agent friend in the early 70’s, here is how a Successful Consultative Broker would have handled the situation:

  1. A Consultative Broker never focuses a buyer on the price.  Once that occurs, they know that they will be unable to recapture the buyer’s attention.
  2. They focus the buyer on results.  They demonstrate the ability to impact a client’s balance sheet and embed themselves inside the “Business Risk” of the buyer.
  3. THEY NEVER GIVE UP REVENUE!!!  They understand that if they give up commissions, they will eventually be unable to pay their own bills.  They are not willing to jeopardize the financial future of their families and business.
  4. They understand how to sell fees.  We have said for a long time that there is no correlation between the commission structure and your compensation system.  The 2 are mutually exclusive and should not be tied to a product whose price, you do not control.
  5. They are always looking for the next client project.  A successful Consultative Broker knows that if the only project they tackle annually is a client renewal, eventually they will get fired.
  6. They don’t apologize for making a living.  They work with clients who understand the importance of margins in their own businesses.  These clients accept the fact that if they don’t allow their business partners to make a profit, they will get what they pay for!

Here are my final words on the subject of cutting your income to retain clients.  If you need to do it . . . .YOU HAVE THE WRONG CLIENTS!  A successful business person places themselves in a position to prosper.  A successful Consultative Broker surrounds themselves with successful business people!  The two feed upon each other.

Oh, and one last thought.  The concept of cutting commissions to negotiate with carriers has been around for about a century.  Has your income requirements increased since 1900?

- Rob Ekern

For more information on how to quantify TCOR, manage projects, build a value proposition, and consistently deliver stewardship reports and new business presentations to your customers, check out the Major Account Development System (MADS), an on-line consultative broker's toolkit. Available now!

Ready to learn more about Consultative Brokerage Sales Training? Visit the Consultative Brokerage Academy.

To learn more about C.R. Ekern & Company, please visit our website

  

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