C.R. Ekern & Company - Developing A Consultative "Suspect" List Article

The Consultative Brokerage Series

Developing A Consultative "Suspect" List
By Rob Ekern
© Rough Notes Magazine, May, 2001

(This Rough Notes feature column is dedicated entirely to the production and retention of middle-market revenues. Each month we will discuss the techniques and practices of successful brokers/producers who excel in revenue creation for themselves and their firms.)

I spoke recently with a disciple of Consultative Brokerage®. His firm is based in the wine country of Northern California. He is an agent/broker who has been working diligently over the past year to master the Consultative Brokerage Techniques. Here is what he told me:

"I started practicing Consultative Brokerage a year ago, and it has changed my business life. It was difficult at first, because my prospects were used to agents/brokers bidding for their insurance. When we explained that our agency only worked on a conceptual basis, with broker of record appointments, many of our prospects were confused. However, once we educated the prospect about the process, and how our firm differentiates itself, we found a number were receptive.

"In fact, during the past six months I have been appointed as the broker on seven new accounts generating approximately $150,000 of new commissions. In working with these accounts I have found a new respect for our firm and have enjoyed this business like never before. It is fun, and very profitable!"

I can testify to the fact that Consultative Brokerage is effective. As a working broker I built a book of more than $650,000 in three years by working the Consultative Brokerage principles. All the highly successful producers I know work in this fashion, although some may not even know it!

One of the first important tasks of a Consultative Broker is to understand the buying style of his/her prospects. This is critical in the prospecting process because not all of your suspects will be good consultative prospects. Successful brokers know how to determine this in short order, as they do not "drill dry holes."

Imagine for a minute calling on a prospect for the first time. During this call you have a Rolodex flipping continuously in your mind. This Rolodex is constantly monitoring the buyer's style to determine whether or not this is a good fit for you and your firm. The Rolodex is checking such things as:

How often does this prospect entertain proposals from other firms?

When entertaining these proposals, how many firms will be interviewed?

What is the reason for the client to entertain alternative proposals?

A number of years ago, one of the major international brokerage firms commissioned a study of buyers and their respective styles. The purpose of the study was to ascertain what the demographics were of a successful sale to a prospect. Simply put, they wanted to know which buyers offered the best opportunities.

Assume for a minute that you have 100 suspects in your marketplace. Let's ask the question: How many of these will truly become prospects that we can close on a 75% hit-ratio? In order to answer that question, we need to know the answers to three other questions.

Question #1 - How Often Does this Suspect Entertain Proposals?

The study reflects the fact that under most circumstances (60%), the prospect will offer an opportunity every three to four years. This is important information for several reasons:

If the client offers the opportunity on a very frequent basis, he/she is not a loyal client. In this case you will be soliciting someone else's problem.

In the event the client is so loyal that he/she rarely offers an opportunity, your cost of prospecting this client may be prohibitive. You may never get a chance!

The majority of excellent clients offer the opportunity every three or four years. Therefore, you need to be developing these on a long-tail basis. Usually this means seasoning this client with issues, capabilities, and your specific expertise. This client will not respond to the old "Give us a chance to work on your policies this year" pitch.

If you started with 100 suspects, you now have 60!

Question #2 - How Many Brokers are Involved in the Process?

Of course the key here is to be among a select few firms competing for the client's program. The higher the number of brokers involved, the less attractive the opportunity. In fact, unless there are very special circumstances, most successful firms will not entertain a prospect that is involved with more than four presenters. Approximately 80% of the remaining suspects will fit into this category.

If you had 60 suspects, you now have 48!

Question #3 - What is the Reason for the Process?

Nearly two-thirds of the time, the prospect is holding a competition for the wrong reasons: Getting a cheaper price! Whether the reason is "To Induce Competition" or "Mandated Insurance Reevaluation," the impact is the same to brokers who proceed. You become the prospect and you rarely get paid.

If the suspect expresses "Dissatisfaction with Present Service" and "Other," then that suspect is looking for a broker with additional resources and capabilities. If you can show that you have those resources and capability, the suspect becomes a prospect who is thinking: "Perhaps we have outgrown our current broker."

If you had 48 suspects, you now have 18 prospects.

So, how do you implement a Consultative Brokerage prospect list? Make certain you develop the discipline to ask the above three questions. In the event you do not like the answers, move on to other suspects. After all, with a greatly enhanced hit-ratio you will not need a huge number of prospects to be successful. It is about the quality, not the quantity.

The key to success is to be the broker who has demonstrated the unique capabilities, resources and expertise that can be utilized by the prospect. That is the foundation of Consultative Brokerage. By doing so, a Consultative Broker has positioned himself/herself as the only selection that makes sense.

The Author:

Rob Ekern is president of C.R. Ekern & Company, located in Phoenix, Arizona. He formed C.R. Ekern & Company after 25 years as a highly successful broker. C.R. Ekern & Company works with regional and independent brokerages across North America providing Consultative Brokerage training. Consultative Brokerage is used to attract and retain quality middle-market clients.

Reproduced with permission from Rough Notes Magazine, May 2001 Edition. © Rough Notes Magazine.

Consultative Broker and Consultative Brokerage are registered trademarks of C.R. Ekern & Company.

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