Consultative Broker Briefing - V. VI, No. 7

The Consultative Broker™ Briefing
Volume VI, Number 7
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2004

Chasing the Right Rabbit

I spoke last week with one of the top brokers in North America. He has built his career on the principles of Consultative Brokerage and successfully manages a seven-figure book of business. He spoke insightfully about one of the keys to success in our industry - Chasing the Right Rabbit.

Here is what he said. “The mega-broker studies have shown that the risk financing costs of most buyers are split 80/20. Only 20% of the buyer’s costs is insurance driven. The remaining 80% is from the cost of losses and expenses.” He explained, “Yet, most insurance brokers spend their time chasing the 20% of the buyer’s costs. They are chasing the wrong rabbit!”

Here is what he means. Let’s say that you are exclusively focusing your marketing efforts on reducing the buyer’s premiums. And let’s say that you are successful in reducing their premiums by 10%. In essence you have only reduced the buyer’s overall costs by 2% (a 10% reduction on 20% of the buyer’s overall costs!) However, if you focus your efforts on reducing a buyer’s losses and other costs by 10%, it amounts to an 8% overall cost reduction. These results are four times more valuable to the buyer.

Here are some of the things that Consultative Brokers know and practice when hunting the right rabbit:

The loss data is more important than the policies. They get a much better picture of the true client issues by initially focusing on the loss information. That is not to say the insurance program doesn’t come into play, but they usually don’t start there. Why? Because they want to show a higher impact.

They understand the importance of indirect loss costs. All losses have an indirect cost associated with them. This is the quantifiable impact of losses on a buyer’s financial statement. Consultative Brokers know that this is a pivotal point of Total Cost of Risk (TCOR.)

They are able to value their services. When providing resource capabilities, Consultative Brokers are able to demonstrate to the buyer the true impact they will have on their overall costs.

They are very skilled at conceptual selling. In some cases, the prospect/client may actually be unaware of the cost of losses and expenses. In this case an astute broker refocuses the buyer on the right rabbit. Failure to do this leaves them chasing a GOOSE!!

The ability to understand and communicate the buyer’s actual costs is a critical skill. It is the difference between being perceived as an insurance salesperson and as a consultant. Simply put: Consultants reduce the buyer’s costs and improve their financial performance. They chase the right rabbit!!

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

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C.R. Ekern & Company