Consultative Broker Briefing - V. VI, No. 12 - Managing Client Expectations

The Consultative Broker™ Briefing
Volume VI, Number 12
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2004

Special Announcement – C. R. Ekern & Company just completed its second Consultative Brokerage University (CBU.) Once again our intensive 2-½ day producer training session was a tremendous success. We are pleased to offer our Private Clients this unique opportunity to learn and practice Consultative Brokerage and Total Cost of Risk (TCOR.) More information on the CBU and the Attendee Survey is available here.

And now, this edition of the Consultative Broker Briefing...

Managing Client Expectations

I was speaking last week with a very successful young broker. In the course of her first production year, she has generated six figures of income and is approaching the initial renewal of some of her key accounts. On her largest account she did an excellent job of helping her client anticipate the marketplace. In fact, the client agreed that if she could negotiate a “flat” renewal price, that would be very acceptable. And then along came the outside consultant!

“You should be receiving a 10% decrease in your premiums,” the consultant whispered in the client’s ear. “Let me finish the negotiations with the broker and I will see that you don’t get taken for a ride!”

But wise beyond her years, our intrepid broker held her ground. “See here,” she pointed out, “we had a business discussion several months ago and we all agreed that a flat renewal would be acceptable. Our firm delivered as promised and successfully accomplished our mutual goal. There is nothing more to discuss!” Attagirl! Now you still have broker control.

Here is a sad fact of the softening market: Prices may begin to fall monthly (just as they rose monthly in the hard market.) If you begin to react monthly, especially during a 90-day renewal process, your life will be miserable. Your credibility with clients and the markets will be destroyed, your income will fall, and you will sink back into the abyss of the commodity.

These are the keys to managing client expectations throughout the softening market:

Provide information early. This is more essential now than in the hard market. Why? Because the client now has other brokers calling on them singing the “siren song” of price. If you don’t have a business discussion early, another broker will make promises for later!

Have a pre-renewal meeting. Consultative Brokers have pre-renewal meetings with key clients 120 days in advance of the renewal date. They outline the potential alternatives with the client and discuss strategies for negotiation.

Make certain you mutually agree upon objectives. Once the objectives have been set, you have the basis of a solid business decision. This is something tangible that you can take to underwriters and later remind the client of. The successful accomplishment of these objectives is your safety net against outside interference.

See the renewal as a project. Consultative Brokers understand that the renewal is simply another project on behalf of the client. They approach it in that manner, providing the client with full disclosure of information and constant updates.

Trust your clients. Some brokers, especially in the soft market, run their books of business out of fear. They are constantly looking over their shoulders wondering when the cheaper market or another broker will appear. Frankly, they don’t have a very good relationship with their clients. Every renewal becomes an adversarial relationship. This is no way to “run a railroad” or client base!

Be strong. As the marketplace changes you will hear constant offers, promises, and perceived threats to your broker control (perceived by you.) You must stay consistent and not waffle. If you do, you will lose your broker control and find yourself chasing your own deal.

As the marketplace continues to change, your success in the retention of large accounts will depend upon your ability to manage client expectations. This is what separates the Consultative Brokers from the rest of the pack. Why? Because they are able to exercise broker control through quality information, issues, and relationships. These are the hallmarks of Consultative Brokerage.

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

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C.R. Ekern & Company