Brokers need to adopt sound marketing techniques to win all-important new business, argues Tony Cornell....
The days have passed when brokers could remain at their desks and wait for prospective clients to ring. One might have been able to get away with this behaviour in the 1970s and 1980s, but by the 1990s everything had changed.
And while the slightly more active approach of networking is still a good way to win business, let's face it, entrepreneurs today have much less time for socialising and joining clubs. Building a successful business is now a 24-hour, seven-day-a-week occupation. With wives or partners working as well, balancing the demands of work and home has become more difficult. Socialising outside the home is often the first thing to be struck from the diary.
So to find new customers, brokers need to be much more proactive and disciplined. They need to adopt a more marketing-led approach. Signing extra clients is particularly important in the current economic climate. Without a certain critical mass and access to markets, brokers cannot afford the range of services and products their clients increasingly expect.
An ambitious broker must consider 25% annual growth a minimum aspiration. If they control £4m premium income today, they need to produce £1m new business.
During the 1990s, there was no growth in the insurance market. Brokers struggled and premiums shrunk – not just because of the soft market but because of the decline of the manufacturing sector, too.
The legacy of this period means today's brokers have to work especially hard to make their business grow. Premiums are now rising from 1990s levels and some sectors, such as construction, are buoyant, but this has merely stemmed the decline. Real growth still only comes from new business – or possibly from acquiring other brokerages.
However, acquisition is a tricky business. It relies on the right brokerages becoming available and being prepared to sell. There are no guarantees that a deal will be clinched.
Furthermore, focusing on acquisitions tends to result in a process-driven company whose core skills are administration, cost-cutting, client servicing and a ruthless attitude to business. Often, this process-led approach means the company loses sales momentum. So I would argue that brokers should make marketing the central plank of their growth strategy.
To ensure a sustained focus, the principal or a director has to be completely committed and responsible for business development. For larger firms, a business development director, responsible to the board for all aspects of marketing and sales activity, is a must.
These business development directors need to ensure a marketing infrastructure is put in place and maintained. They need to develop a marketing strategy that is aligned to their company's strengths and aspirations. The strategy needs to reflect whether the broker is a full-service or business community broker, an added value service provider or a specialist player.
The ideal model
The most successful marketing-led brokers always have a team of sales people dedicated to new business. These are expert at following up and converting leads. They are hungry for success and paid by results. They are not necessarily career insurance people; some of the most successful ones have come from outside the industry. Once new business is won, it should be handed over to a services team, which needs to have a different set of skills.
Brokers who have this structure have no problems with clients in this hand-over situation.
The above business model is the ideal, but new business sales people are scarce and often difficult to recruit.
Another model is to recruit a joint service and sales person from a competitor or specialist and get them to build up a book of business. Initially, they focus solely on new business, but they continue servicing the business when acquired. They receive a percentage of income handled and therefore remain committed to growth. They should be expected to pay for themselves within two years. Yet another model is to reward existing account executives when they bring in new sales. Sadly, many brokers do not operate this obvious approach.
A marketing- and sales-led company is a winning business. It requires focus and different skills from those normally useful in insurance.
Few brokers can claim to be really successful in this area. Those who do shine out above their competitors are beginning to dominate the sector. The world will pass by those who sit back waiting for that phone to ring.
How to go about finding and signing new customers
Networking is still an important method of wooing new business, but the emphasis may have changed slightly these days to business clubs, local professionals and chambers of commerce. Targeted sponsorship and PR are other important activities that help to create a well-recognised brand. Seminars are an extremely useful way of building up a reputation in the community and obtaining leads. Newsletters are also an essential tool for increasing awareness of your business among potential clients.
However, these are the broad-brush approaches, on top of which specific targets need to be identified.
Brokers should be aware of the following: