Every week I meet with many account executives, directors and brokerage proprietors and I ask them all the same question: ‘When you last lost or failed to win an account, what was the overriding reason?’ Nine times out of ten, the answer is ‘price’. However, using ‘price’ as the main reason for a lost account is just an excuse. Broadly speaking, all brokers have access to the same markets, so unless someone is playing around with the schedule, pricing should be somewhat similar.
Changing the traditional mindset
The reason commercial insurance brokers use ‘price’ as an excuse is because we have become accustomed to attributing our failure to attract or retain business to price—nobody ever questions it, it is just a given. We commonly say ‘they went to ABC Brokers because of price’ or ‘they stayed with ABC Brokers because they beat our price by 5%’.
This is a mindset we should and can change. Traditionally, commercial insurance buyers hold a ‘beauty parade’ once a year (or two) to establish the merits and finances associated with their current policy and its broker. Three or four account executives turn up and tell Mr. Buyer that they can’t be beaten on service, their expertise is second to none and that they are ever-so-nice people to do business with. Consequently, as every broker is pushing the same pitch, there is no way a Buyer can genuinely differentiate them. Therefore, the majority of the time, their purchasing decision comes down to which policy is the cheapest.
True broker differentiation
True differentiation comes from delivering more unique features and being able to demonstrate it not just at the point of sale but throughout the year. What are you providing your clients to truly differentiate your brokerage? Are you simply delivering an insurance policy, or are you supporting their business in other important areas? Do you provide value touches such as comprehensive written policies, industry specific health and safety manuals, business continuity plans or workplace risk insights to help them navigate their particular business risks and liabilities? How about monthly newsletter communications and legislative updates to keep your clients up-to-date on changing issues?
(By the way, if you say that insurers deliver some of this information to your client, think about how much value that is really giving you. Is your logo and brand on those resources?)
Imagine the next time that you meet with a client at renewal time or ask a prospect for their business, and you have been providing meaningful resources to support their business all year round. Your client or prospect will have seen the additional benefits of what your brokerage can provide and you will now truly stand out amongst those vying for their business. While ‘price’ is still a factor for buyers, you have now differentiated yourself from the marketplace and bring more value for the pound than other brokers. You are no longer simply providing an insurance policy – you are seen as a trusted business partner.
With the insurance market becoming increasingly competitive, differentiating through this consultative approach is absolutely vital to gaining business (and retaining the clients). Stop throwing your hat in the ring eleven months out of the year and give yourself a genuine chance of winning with value added service differentiation. And if you are looking for a partner to provide the types of resources your clients will value (shameless plug, I know), I recommend you check out our Broker Briefcase solution.