Business Risk: The Final Frontier

One of the biggest misconceptions in our industry is around the concept of “Risk.” As insurance professionals, we believe the term risk to mean simply “hazard” risk to people, places or things. We assume that all of our clients and prospects find these hazard risks to be high priority problems. So, we deluge them with all our diatribes about our unique ability to handle and mitigate risk. We couldn't be more wrong!
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One of the biggest misconceptions in our industry is around the concept of “Risk.”   As insurance professionals, we believe the term risk to mean simply “hazard” risk to people, places or things.  We assume that all of our clients and prospects find these hazard risks to be high priority problems.  So, we deluge them with all our diatribes about our unique ability to handle and mitigate risk.  We couldn’t be more wrong!

Have you ever asked a CFO or business owner what their greatest risks are?  The answer will surprise you.  The astute ones will rebut your question with one of their own.  They will ask, “Are you talking about my insurance risks or the biggest risks to my business?”

When you confirm that you are more interested in their “Business Risk”, you will watch their eyes change.  They will then tell you about the competitive, financial, operational and productivity challenges they are facing.  They will also give you a perspective on the importance they place on the intellectual value of their human capital.  They will take the term risk and apply it inside their business model by discussing how it affects every major decision from choosing a new product, moving into new territory, adding new customers, and increasing capacity in a difficult business environment.

Why will they open up on these issues?  Because that is the reason they are in business; to generate profits by reducing the impact of Business Risk to their capital.

Every client you have, or prospect you call on, has five areas of Business Risk.  Your role as a Consultative Broker™ is to not just help them identify these areas, but to also show them how you can help reduce their impact.  These are the Five Points of Business Risk.  For you to be successful in the future, you must be knowledgeable about how these Five Points interact inside a client’s operation:

  1. Hazard Risks – The traditional insurance risks that we have all been trained to spot, mitigate and compete for by offering less expensive or more comprehensive insurance programs.
  2. Financial Risks – The various risks that can affect a client’s profitability.  Financial Risks include currency exchange, asset devaluation, accounts receivables, non-payment of contracts or banking lines of credit.  They directly impact a client’s profitability.
  3. Operational Risks – The risks a client experiences regarding their productivity.  Such risks include such things as their geographic environment, maintaining or improving their equipment, acquisitions, and supplier inefficiencies.
  4. Strategic Risks – There is a direct correlation between strategic risks and competiveness.  These risks include the loss of key customers, improper product positioning, regulatory hold-ups or customer pricing pressure.
  5. Human Capital Risks – Whether in good or bad economic times, a business’ most important asset is its people.  This is the intellectual capital that keeps everything else going.  The risk of loss includes not just the health of the workers, but their ability to contribute.  Such things as lay-offs or poor morale contribute to this risk.

Here are some final thoughts on the subject of Business Risk.  When you look at the Five Points of Business Risk above, there should be no doubt about their importance (If you don’t believe me, ask one of your clients or prospects.)  Why is it that most Insurance professionals focus primarily on Hazard Risk while they ignore their client’s most critical Business Risks?

There are several reasons:

  1. They are unable to carry on a business conversation with an astute client, so they focus only on what they know... the insurance program.
  2. They are unable to deliver a true Value Proposition through the application of TCOR (Total Cost of Risk) and Resource Capabilities.  Without a legitimate Value Proposition they will fail to provide funding alternatives to offset the client’s Business Risks.
  3. They are unwilling to learn the important business techniques that will allow them to generate and retain larger accounts in any business climate.
  4. They see themselves as insurance people, rather than as business consultants.  They are not capable of showing a client how to improve their financial position and business model.

Thank goodness that Consultative Brokers™ are able to ask a business executive the important question… “What are your biggest Business Risks?”  It usually leads them to a deeper discussion, a long-term relationship, and a quality client for many years!

- 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

 

The Golden Age of Producers

During the course of this year, I have spent a great amount of time on airplanes visiting regional brokerage clients across North America. There is one theme that I am constantly reinforcing in all my visits to these brokerage superstars. This is the best time ever for new business-focused producers. In fact, I consider this the Golden Age for top notch brokerage producers.

During the course of this year, I have spent a great amount of time on airplanes visiting regional brokerage clients across North America.  There is one theme that I am constantly reinforcing in all my visits to these brokerage superstars.  This is the best time ever for new business-focused producers.  In fact, I consider this the Golden Age for top notch brokerage producers.

"The Golden Age?  Are you kidding me, Ekern?  The economy is difficult, the marketplace is soft, our revenues are down and the carriers are in a feeding frenzy.  How can this be the Golden Age?"

Well, first of all, let’s get one thing straight.  All of the above issues focus in the wrong direction.  These are OUR problems, not the client’s and prospect’s issues.  When we do this, we miss the entire point of the situation.

If you are willing to focus on new accounts, you will find opportunity that has never existed before.  Frankly speaking, prospects who may have rejected your approach in the past may well now embrace you with open arms.  Why?  Because the economy has caused them to seek alternatives and listen to new ideas.  They need to, in order to survive.

These are the same firms that have been telling you for years that they are “well taken care of.”  Or, you have been hearing about their long-term loyalty to their existing broker.  In many cases, you have become de-sensitized to the point of no longer seeing these firms as prospects.

Well, guess what?  These are now the companies that are examining every business relationship that they have.  Not because of mean-spiritedness, but because of survival.  They are being forced to do this by owners, stockholders, bankers, and in some cases, customers.

But, remember, these firms will not call you . . . .you need to call on them!

If you intend to pursue some of this “low hanging fruit”, there are several things you must know:

  • You must use a different language.  In the event you approach these firms with the same language as every other insurance broker, including the incumbent, you will be rejected as not offering anything different
  • You must focus on Business Risk.  Remember that Hazard Risk is just one fifth of the prospect’s true risk.  You will need to discuss how your firm improves productivity, competiveness, profitability and human capital.  These are all addressed through a thorough understanding of Business Risk.
  • You must understand the prospect’s goals.  I KNOW this sounds simplistic; however a prospect’s goals can be different depending on the situation.  Some prospects will have the goal of just surviving, while others may have the goal of growing by taking advantage of their competitors’ weakness.
  • Look for the headlines.  Every week in each of your respective marketplaces you are reading and hearing about layoffs.  What does that tell you?  These companies are doing things that are usually distasteful to them.  They will welcome alternatives that may allow them to retain their intellectual capital and human capital.
  • Understand the prospect’s financials.  Aside from underwriting considerations, there is one more important issue.  Can they pay their bills?  This is not an endorsement of picking up distressed accounts.

Oh… one more thing you should be aware of.  This is a double-edged sword.  Many of your clients are thinking the same way.  If you are not constantly reminding them of your value and how you are impacting their business risk, you will fall victim to a Consultative Broker™ who gets it!

-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

Provide Clients With What They Really Want!

A successful Consultative Broker understands how to translate their value proposition to address all of the questions above. These are the issues that drive business decisions in virtually every industry. They are universal “needs” of any astute business person. For you to continue to be successful in 2009 and beyond, you and your firm must understand how to deliver this without being simply an insurance or risk management vendor.

Happy New Year to all Consultative Brokers!  If you are like most people, the New Year is a time for resolutions.  You know the deal: the diet we don’t stick with, the exercise program that lasts 3 weeks, and, of course, my favorite: the number of pounds I intend to lose!

Here is a resolution that I believe should be adopted and stuck with for all of 2009 and beyond.  Ready? Here it is …. “I resolve to be a better business person in 2009.”  Simple, eh? 

Why is this critical to your success as a professional broker in 2009?  Because “becoming a better business person” is the only way you can prosper in a down economy.  You will need to adopt an entirely new set of skills other than simply being able to discuss the ramifications of the policies, coverage, and price.  These will fall on deaf ears as your prospects and clients focus on the important issues facing them during these challenging economic times.

One of the greatest sales books ever written is entitled, "How I Raised Myself From Failure to Success in Selling."  It was written by Frank Bettinger in the 40’s, and the message is as relevant today as it was in the mid 70’s when as a young producer it helped provide a foundation for success. One of the key quotes of Mr. Bettinger’s is:  “Show a Person What They Want, and They Will Move Heaven and Earth to Get It!”  This is a basic tenet of Consultative Brokerage.  Helping a business person get what they want.

So, here are some questions you should ask yourself as a business person.  Which of these do my clients and prospects want?

  • Do they want to save money; or improve operations?
  • Do they want a reduced price; or increased efficiency?
  • Do they want a lower insurance cost; or increased productivity?
  • Do they want better communication; or reduced internal frictional costs?

A successful Consultative Broker understands how to translate their value proposition to address all of the questions above.  These are the issues that drive business decisions in virtually every industry.  They are universal “needs” of any astute business person.  For you to continue to be successful in 2009 and beyond, you and your firm must understand how to deliver this without being simply an insurance or risk management vendor.

To fully grasp this concept you must change the dynamics of your prospect and client approach. Focus on what they want . . . not what you want.  Again, this is a simple concept that many brokers and agents find hard to implement.  Over the years we have been brainwashed by constant pricing competition brought on by ourselves.  Why?  Because we have never had to “create a need” in the minds of the client.  So, we focused on what we knew; the commodity.  The whole time assuming that this was their real need!

For you to continue to have relevance with clients you must learn how to fill the real needs of astute buyers.  You will need to understand how to improve their Business Risk (productivity, profits, and operational efficiency).  That will require that you understand how to be a better business person and provide them with quantifiable value.  Then, you will need to be able to translate that inside their business operational model.  In a down economy, this is what business people are looking for.  So, show how you can bring it to them and “They will move heaven and earth to get it!”

- 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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