Cultivating the Golden Files

Hey, what a show!” I was standing at the entrance of our city’s largest garden centre. Stretched out on all sides of me were thousands of tulips of every variety, in gently waving ranks, in every color of the rainbow. On this warm spring day, it was a beautiful and impressive sight.

Two of my favorite brokers were standing beside me: Harry, who ran a successful suburban brokerage in the city, and Al, who operated a mid-size and highly efficient office in a town 160 km outside the city. As my company’s senior marketing representative, I had prevailed on my broker friends to join me at this annual local tulip festival. It was organized and run by Joanne, who, with her partner Shirley, ran a successful brokerage close to the garden centre (which, naturally enough, she insured).

We took a quick tour of the tulips. As we walked towards the central patio, Joanne came bustling over and led us to one of the picnic tables set up for visitors.

“Thanks for coming, guys,” Joanne said. “I’ve got a bunch of tulips for each of your wives, so you’re going to win brownie points at home.”

“You’ve organized a terrific show, Joanne,” Harry said enthusiastically, as she brought us a tray of soft drinks. “All those bulbs you planted and nurtured have come up perfectly.”

That brought a small chuckle from Al. “I agree, and it seems to me this whole gardening business is a bit like us cultivating those client files we all have. They just sit there, with nothing at all showing on the outside; but inside, hidden deep down, there’s lots of good stuff. All it needs is a little effort to bring it to the surface and pay off.”

Al set down his soft drink. “In my experience, if you were to open up 30 or 40 current client files, you’d find at least half-a-dozen quite obvious leads that weren’t ever followed up. You’d see follow-up phone calls that were never made, useful contacts who were never approached, and potential business leads that were just left sitting in the Notes To File. All these unfinished tasks are left sitting there, because in the rush of our daily business we’re too anxious to close files and move on.”

I knew Al as one of the best-organized and most automated brokers in my territory, so I threw a question at him. “You regularly dig for gold in your files, don’t you?”

He nodded in my direction. “That I do, Dave. I don’t look at my client files as one big sinkhole of boring information. I look at them as a large ore body just waiting to be mined.” He gave us a short smile. “It’s been said before, but the truth of the matter is: ‘There’s gold in them thar files.'”

“I agree with you,” Joanne said. “But you also have to have a well-organized way to drill down into your client files to find paydirt. You need two things: first, you have to know what exactly you’re looking for; second, you need a good retrieval system.”

Al’s head nodded gently in assent. “You do indeed, Shirley. Fortunately, computerization has made that task simpler, faster and much more accurate. It’s really not that hard to identify and access items of information that are common to many of the clients in your files – like policy type and size, multiple properties, high household income, dual income with no children, clean driving records, renewal dates, and so on-“

“-True enough,” Harry added, warming to the subject. “Most software applications can do this sort of retrieval and segmentation for you and your staff.”

I held up one finger to get their attention. “Don’t forget, guys: you can always ask your carriers for additional information on your clients. All insurers have massive databases of information. They’ve been collecting this stuff for years. In recent times, they have used more sophisticated systems to analyze and categorize this information into more useful marketing data, because, as we’ve often said before, insurers realize it’s usually a whole lot cheaper to hold on to existing clients than dig for new ones. And knowing more about customers is key. So carriers can provide listings of orphan accounts, flat cancellations, high-end properties and so forth. My company, for instance, can offer demographic-type information for most brokers’ trading areas. Something to think about.”

They all nodded. “Good point, Dave,” Harry agreed. “But the sad reality is that for many brokers, mining client files means turning over a list of leads to a life insurance agent. In my view, that’s pretty pathetic.”

Joanne smacked her hand down on the picnic table. “I agree! Handing over leads like that is also being damn lazy. I think any well-organized office should not only have a good retrieval system but also a straightforward program of turning this information into business for the office. An incentive-rewards system is one way to do that….”

I could see Harry slowly shaking his head. “I tried that some years ago in my office, Joanne. As an incentive to my staff, I offered a flat, $20-per-piece of new business written on existing personal lines’ accounts. I’m sorry to say it wasn’t too successful-“

“Any special reason?” I quizzed.

Harry shrugged his shoulders. “Well, Dave, I found that a couple of my highly-motivated people made themselves some extra money. But the others obviously weren’t motivated enough to work at it.”

Across the table Al nodded, then held up his hand. “Can I just add a word of warning from someone who’s been down this path?” he said gently. “Some brokers I know have been scouring their client files for years, looking for those orphan accounts where they write only mono lines. Maybe they write the auto only and they simply try to add the home, or vice versa. But sometimes they miss the obvious, although it’s sitting there staring them in the face-“

“Like the multiple policy discount?” I interjected.

“Exactly!” Al responded. “As we all know, many insurers – like yours, Dave – offer discounts on auto insurance of up to 15% when clients place their home with them also. So let’s say you find an orphan client in your files who places only home insurance with you, but is paying maybe $4,000 for auto coverage with another broker or insurer. Now, you can tell this person that by moving his whole account to you, he or she saves 15%, or $450, so the client is essentially getting the home insurance free.”

“A convincing argument,” Harry agreed. “The fact is, in recent years, falling commission rates have convinced a lot of brokers to leave personal lines to themselves. They’d rather concentrate on the bigger returns that commercial lines’ business offers.”

Joanne gave her trademark throaty laugh. “You’ve been looking over my shoulder!” she said, and shook her head. “But seriously, our commercial lines’ client files are a big source of additional business in our office. Shirley and I segregate them personally, and we detail our two senior CSRs to go over them with a fine-tooth comb. We’re looking for gaps in coverage or increased valuations, particularly when you’re dealing with a fast-growing business – maybe one that’s expanding to new markets or is putting new products in play.”

Al tapped Joanne’s arm and smiled. “These are good mining techniques. And there’s an additional side benefit to doing this: when you go to that commercial lines’ client with this information, plus a proposal, the client realizes an important point – namely, that you don’t take his or her business for granted. Your little packet of information proves that you’re professional; that you’re staying on top of the account-“

“And there’s yet another benefit too,” I added. “A broker’s pro-active initiative like this could eliminate the sort of unfortunate oversight that might lead to an E&O claim. It’s happened before, especially when the broker has had the client for many years and should have known that the coverage had developed some gaps.”

At this point, a group of well-wishers interrupted us and thanked Joanne for the festival’s display. When she sat down again, she chuckled aloud. “These nice people used to represent orphan polici es in our office. Once we were able to turn them into rounded accounts, they got a lot more of our personal attention. And you know what? Our retention rate on these full accounts is almost 100%.”

Al nodded his head vigorously. “I can believe it. And that’s why smart brokers really go after referrals from existing clients. Why? Because the close ratio for these referrals is an amazing 80%. Hey, the principle here isn’t rocket science: it’s human nature and plain old common sense.”

There was a moment’s silence in our conversation. Then Harry spoke up. “Since we’re talking about business won and lost, you know what really blows my mind? I’m truly baffled that when many brokers lose a client, they never bother to contact the client to learn why they lost the account. They simply erase them from their database and forget they ever existed.” He shrugged his shoulders and flipped his hands up in front of him. “Maybe it’s simply that these brokers don’t handle rejection well-“

“What do you do in cases like that?” I queried.

Harry leaned forward and frowned as he concentrated on his answer. “Maybe it’s just my nature, but I want to know why they’re leaving me. Hey, I’m a professional: I’m well qualified, I’ve been in this business a long time, and I think I run a good and efficient office. I should know why a client finds some other shop more appealing, so I make it my business to find out. I call them and of course I stay very low-key. But I ask them: were they dissatisfied with my level of service? Was there a problem with how my staff treated them? Did I make any mistakes in the coverage I recommended? Or was it purely because they were lured by a lower price?”

He paused for a second. And then Al asked the question running through my mind. “Tell me, Harry: what do you say to clients who tell you it was simply a matter of dollars and cents?”

Harry smiled across the table. “I thought you might ask me that question. To clients who tell me that, I say this: ‘Thank you so much for being honest with me. I appreciate that. I’m sorry to lose you over price, and I will be looking at my insurance markets to see how I can be more price-competitive in the future.’ Then I tell them: ‘I’m glad it wasn’t some fundamental flaw in my operation that made you move to another supplier. It was purely a matter of dollars and cents. In the meantime, if you should ever be unhappy with your insurance service at any time in the future, I’d be privileged to hear from you.'”

Joanne punched him softly on the arm. “I like that approach, Harry. Can I steal your lines?”

Harry laughed and nodded his head. “Be my guest, because you know what? I’ve had several clients who left strictly over price come back to me when things didn’t work out to their satisfaction with another broker. If I hadn’t left the door open, I doubt if I would ever have seen them again.”

I rose to my feet and picked up one of the huge bunches of tulips that Joanne had wrapped for each of us. “Well, my wife is going to sing your praises, too, when I bring these home,” I said with a smile, as Al and Harry also rose and gave Joanne a hug. “We may not know how to grow flowers, but we have some pretty fair ideas on cultivating clients.”