The Consultative Broker™ Briefing
Volume VII, Number 12
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2007

 

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Brokerage Darwinism Part Deux

The next time a buyer lumps you in with all the other brokers and tells you “You guys are all the same.  Just give me your price.”  Or, informs you that because they like you so much, they are willing to give you “first crack” at the markets.  You should stop them in their tracks with two words “Brokerage Darwinism.”

First of all, let’s be clear about something.  As an industry we are the ones who educated buyers that our main mission is to save them money by bidding one insurance company against the other.  Or, if we wanted to compete for an account, we told the buyer that we had a special program or “really hot” carrier that was hungry for their business.  We were the ones that created the price mentality (us and the carriers).  Now we must be the leaders in re-educating the buyers about how things have changed in our industry since the time of the Nixon Presidency. (See The Consultative Brokerage Briefing entitled, "Brokerage Darwinism Part One - The Richard Nixon Process".)

Here is the bottom line...  In the 70’s, 80’s, and part of the 90’s there was not much difference between one agency/brokerage and another.  The reason?   Most of us differentiated ourselves by the fleet of carriers we represented.   All of us spent our efforts on primarily two functions, the sale and service of insurance policies.

But, during the last decade subtle changes were occurring inside our industry.  Because many of us were so close to it, we missed the important changes (just like watching your children grow).  The carriers consolidated, the buyers became astute in the difference between price and cost, and many insurance agencies transformed themselves into brokerages by offering client cost reduction resources.  These resources are not related to their agent contracts with carriers.

But, here is the key… As we added these additional services (loss control, claims handling, emod calculators, benchmarking tools, etc…) we saw them as simply that - services.  Many of us missed the point.  These are not “value added” services.  They are important resources that help your clients reduce costs!  The firms that are learning how to differentiate themselves through the quantification of these resources are the ones that are passing through the evolution of Brokerage Darwinism.  They are developing a Consultative Brokerage Value Proposition.

In the last edition of the Consultative Brokerage Briefing, I promised to provide you with the ammunition needed to dissolve a buyer’s confidence in the Richard Nixon Process.  So, here it goes!  When a buyer asks you to participate in the antiquated marketplace selection process you must . . .

1. Explain the evolution of our industry, from one that was based upon a virtually unlimited number of carriers, to a select few.
2. Give examples of several cost reduction resources that your firm now utilizes.  Show the buyer how your clients have benefited outside of simply the insurance commodity.
3. Refuse to participate in the antiquated “Richard Nixon Process”.
4. Indicate that you are willing to compete, but only in a Brokerage Selection Process.
5. Make certain you fully understand how to create a unique value proposition for your prospect through a conceptual presentation.

Of course, all of the above presupposes one important point… that you have spent time learning how to increase your skills as a Consultative Broker.  That is the skill that allows you to prove your firm’s evolution and Brokerage Darwinism.  Without it, you and your organization may go the way of the Dinosaurs!

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

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Consultative Brokerage® Techniques are utilized by agents and brokers across North America in the development and retention of upper middle market revenues.  The Consultative Broker Briefing is delivered electronically free of charge to selected agents, brokers, and other insurance professionals across North America.  To subscribe to The Consultative Broker Briefing, please click here.

Copyright 2007 C.R. Ekern & Company