C.R. Ekern & Company - Focus on Prospects

C.R. Ekern and Company

Focus on Prospects for Agency Success
By Rob Ekern
National Underwriter, November 1998
©C. R. Ekern & Company, 1998

Several years ago one of the leading brokers did a survey of its middle market prospects. The results were disturbing to senior management. This survey revealed that over 90% of the prospects that were currently in the pipeline were defective. Here was the definition of defective:

The account was purely price driven
The brokers had very little knowledge of the account
There were no relationships in place
The prospect had been in the pipeline for less that 90 days
The prospect came into the pipeline shortly before expiration

Based upon this information, the senior management concluded that they would have a very low hit ratio, and that the foreseeable future would not bode well for new production. They were right. The first quarter that year was very weak for new business, and the production staff was primarily involved in bid & quote opportunities.

As those of you who are familiar with Consultative Brokerage know, Prospects are the foundation of the 5 principles. (Prospects, Relationships, Resources, Institutionalization, and Broker Control) If the prospects have not been developed properly, you will find yourself in a bid & quote situation. The only thing you will be able to use to differentiate yourself is price. Not Good!

The Consultative Prospect is one who has been developed through issues, and the development of solutions to problems. Sometimes this revolves around the insurance policy but not often. The buyer of today has learned that most Agencies and Brokerages represent the same carriers. The ability to deliver an insurance policy with the Chubb, St. Paul, CNA, AIG, or others doe not differentiate you.

Skillful brokerage firms are learning how to compete and gain business through Broker of Record letters, and conceptual presentations. They have differentiated themselves outside of the commodity environment. They are not solely dependent on the carriers for price in order to obtain the client's business relationship.

How is this done?

These firms have increased their expectations from their producers. They recognize that all opportunities are not necessarily good opportunities. The prospecting system is based upon issues and the firm's ability to solve problems. Anything less, and the firm and its producers are in a price/commodity transaction.
These firms have increased their expectations of their prospects. It is called putting skin in the game. A successful firm understands that their prospects must see them to be of value. They have the right to expect their prospects to readily provide them with information. In the event a prospect does not provide the information, they have little chance of being perceived as a consultant or being successful.
These firms have an increased expectation of themselves. It is understood that quality production and client relationships are more than individual producer actions. The successful firms have institutionalized the process and culture. They target accounts that are being under-served by individual salespeople from other firms.
They understand that X-dates mean very little. In most cases these accounts change hands on Broker of Record letters in mid renewal. They do not peg activities to X-dates, only to problems. Issues, problems, and solutions are not tied to renewal dates. The Brokers who forget this do so at there own peril!
They are very skilled at consultative brokerage techniques. They know that their entire organization is being judged by its ability to be perceived as a consultant organization. The production people, client service personnel, and staff are committed to creating the right perception.
They choose their prospects wisely. The technology available today allows a sophisticated Brokerage/Agency to match its skills and expertise with virtually any prospect. By utilizing some of this technology they are able to qualify suspects before investing time and effort in the prospecting process.
They are constantly evaluating their position with their prospects. It is accepted that a firms' relationship is constantly changing with its' prospects. This is both good and bad. The successful firms know exactly where they are in the Consultative Brokerage prospect cycle. When they are weak they seek improvement, when they are strong they seek the Broker of Record Letter!

Here is how you can improve your pipeline for 1999 and beyond.

Analyze each of your prospects/suspects using the Consultative Brokerage Formula. Are they issue driven, do you know all the information, have you been perceived as valuable? Any prospects that do not achieve these criteria are not solid.
Target sophisticated accounts. An astute production organization has access to information, which has previously been difficult or impossible to obtain. The advances of technology now provide you with a tremendous amount of prospect data. This allows an organization of any size to learn issues that surround any account. These issues include environmental, financial, trade related, international, and human resources.
Build relationships. In order for your organization to be perceived as a consultant, you must have multilevel relationships. These relationships should be throughout your prospect organization at the highest level possible. The success that you have in this area is a direct indicator of your value to the prospect. If you have no value, it is a bid & quote exercise.
Test your relationships. Have your prospects put some skin in the game. Ask them for information on their firm, request regular meetings, and invite them to events. This is the best way to find out if you are drilling a dry hole. Remember Consultative Brokers have a higher expectation of themselves and their prospects.
Learn & practice Consultative Brokerage Techniques. These are the techniques that the major brokers understand and practice. They include the following 5 principles: Prospects, Relationships, Resources, Institutionalization, and Broker Control.

Effective production organizations and their staff have a solid understanding of the above issues. By practicing them, the successful firm is able to greatly increase its closing ratio versus bid and quote opportunities. Thereby creating significant revenues.

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