Managing Customer Relations

September 30, 2004 | Last updated on October 1, 2024
5 min read

Do brokers spend more time selling insurance or managing relationships? Take a second and think of all the relationships that matter in your business. Of course, you have customers, and successful brokers know exactly how important certain clients are to their brokerage. You also have prospects, a list of potential customers that fit your model of profitability. Then there are the insurance company contacts, without whom you could not place coverage. And there is your staff, your team members who represent your brokerage and take responsibility for sales and service.

Many brokers forget about another category of relationship – what I call “centers of influence”. These are key people, or even groups of people, who are responsible for opening doors for your business. They have contacts and connections to valuable prospects or professional associations. For a relatively small group of people, they can have a disproportionate impact on the nature of your business, the clients you can reach, and the solutions you can offer.

ACHIEVING BALANCE

Now think about these relationships from a different perspective – like a bank account. Most bank accounts accept withdrawals and deposits. A solid account will feature a balance of both kinds of activity. This is how we think of relationships. If you constantly withdraw “currency” from a relationship, it will fold. Similarly, if you make no deposits to a customer relationship, the danger exists that a client will walk away. You have created no exit barriers for the customer to simply leave.

What is interesting is that if you take no withdrawals from your customers (and just offer deposits), they may become resentful. All relationships require the notion of giving and getting something, and the broker-client one is no different. In many cases, brokers are afraid to ask their customers for anything – a referral, a price increase. Yet if you meet their needs and approach them in the right way, clients are often willing to accept an increase in premiums or offer prospects for your brokerage.

PRO-ACTIVE ACTION

So how do you build strong and sustainable relationships in your customer base, prospects, companies, team members and centers of influence? It begins with the client. The first thing is to focus on your most important customers: the “A” and “B” accounts representing the top 20% of those accounting for 80%-plus of your brokerage’s revenue. How much service and attention do these clients currently receive? In most brokerages, the answer is simple: not nearly enough. In fact, some brokerages pride themselves on how fast they deal with complaints or how responsive they are to service requests. Yet, many of your top clients may actually make the least noise in terms of customer complaints, price shopping and frivolous claims. They also represent a “ticking time bomb” if their needs are not being met. These are the clients who can walk away quickly, leaving a huge hole in your brokerage’s revenues.

We recommend visiting – yes, actually going out and seeing the “A” accounts at least four times a year. For “B” accounts, we suggest three times a year. Great, so what the heck will you talk about – the hockey playoffs, the weather? No, this is your chance to sell the brokerage’s “value added services”. You can ask them about burning issues in their business, how your firm is meeting (or not meeting) their most important insurance needs, and what you have to do to keep their business. In fact, you should not be in the position to renew accounts, but continue relationships. The goal is to establish long-term relationships that make renewals non-events.

VALUE ADDED

An increasing number of brokers are defining their roles as outsourced risk managers. But, do you understand the businesses and industries of your “A” and “B” clients? How can you address their “total cost of risk” through effective risk transfer in terms of premiums, deductibles, risk management and loss prevention programs, and possibly self-insurance options?

It may seem ironic, but a broker’s role today may be to actually lessen the client’s need for insurance. When you have reached this level, you are doing more than selling insurance, you are managing relationships.

Most brokers know when it comes to new business, the best method for developing prospects is referrals. This is the easiest and most effective way to populate your “prospect pipeline”. Yet, many brokers are afraid to broach their relationship with current clients. They fear asking for referrals, but when a client needs something and another client provides that service, brokers immediately refer one to the other. Both clients are happy and thank the broker.

This is where understanding your current client relationships as a deposit or withdrawal really makes sense. If you are meeting your current customers’ needs (deposit), they should have no problem suggesting other like-minded clients for your business (withdrawal).

CLEAR FOCUS

Once you have developed a “prospect list”, the broker has to identify the relationship they represent to their existing brokerage. Will these prospects fire their current insurance provider? Do they have insurance needs that are not met by their incumbent broker? You have to have the discipline, the structure and the process to establish your brokerage as the next logical choice for prospective clients.

Insurance company representatives should be advocates for your brokerage, and active partners in helping you get to the next level. You provide them with a profitable, low-loss-ratio book of business. In return, you should have access to company decision-makers and knowledge of that insurer’s strategy, target markets, pricing and underwriting requirements. This cannot always be done over a telephone or through e-mail. Regular meetings with senior representatives is the best way to ensure the relationship between company and brokerage is well-managed.

And then there is your brokerage team. For staff members, brokers have to build a high-performance team. If you have properly divided sales and service activities and put the right people in the right jobs, you are headed in the right direction. However, there is more you can do to build a high-performance team. Ask yourself, do you make it easy for staff to build relationships with customers? Do you have parties or get-togethers to celebrate victories? Are day-to-day process changes made by staff, or managers?

TRUE RELATIONS

For centers of influence, the deposits may be greater, but so too are the potential withdrawals. A center of influence, for example, may be a professional or trade association. As a broker, cultivating this relationship may involve volunteer work or networking to become a valued member of that association. This demands time, but the rewards are worth it. If you are familiar, trustworthy and interested, the doors to your professional growth will open. Trust, honesty, mutual interest and communication can make the center of influence relationship one of the most valuable assets in a brokerage.

In fact, these are the characteristics that define all relationships in today’s brokerage community. And managing these relationships is the real business brokers are in. The next time someone asks you what you do for a living, do not say “I sell insurance”. Instead, tell them “I manage relationships.”