For those of you that know me, I love broker growth stories. You cannot find a better group of capitalistic entrepreneurs who continually find better ways to grow and service their books of business.

A broker e-mailed me the other day and said she had difficulty getting deals closed. The presentations went fine, but after the big show she couldn’t seem to get enough interest to get the BOR (broker of record) letter. She has met other brokers through Zywave and saw their success, and wanted some advice on what they are doing.

First and foremost as brokers, we need to know what the prospect is looking for. The answer is money!  In our 2009 Broker Services survey, the number-one thing a company is looking for in their broker is the ability to negotiate the renewal. Makes sense, right? However, from the presentations I’ve seen, many brokers do not focus on this very important point. Think of your presentation — how do you emphasize why you are the best in this area?

One other point, firing people is no fun. I’m not going to fire my broker unless you give me a compelling reason. Typically people like their broker — let’s face it, we are very likeable people! So how are you going to motivate the prospect to get rid of this lovable lug of a broker? 

A Harvard study illustrated the two primary emotions that motivate buying behavior are fear and greed.   You want that BOR? You need to strike fear in the heart of the prospect that their current broker is not doing the job. You need to clearly illustrate in your hands (based on your knowledge) the prospect will save money.

To do that, the first thing I’ve noticed successful brokers do is to define the relationship financially. You must get on the table what the account is worth to the broker. You can use 5500 info, or simply ask what their premium is and use standard commission tables to figure it out. Make sure you get all lines of coverage. One other point, the prospect might try to confidently tell you they know exactly what their broker makes, but do the exercise anyway. When I was a rookie broker out on a call, I asked the CFO if he knew what the commissions were. “Of course I do” was the indignant response. I was about to move on when my boss (who was coaching me) pushed the CFO to check the 5500 for just the Long Term Disability. He had to push TWICE for him to do it. It was uncomfortable but the CFO finally picked up the phone to find out. The broker was making over $20,000 on the Long Term Disability alone and it completely and visibly surprised the CFO. I learned a lot that day.

This point is so important that I’m going to reiterate it again: Successful brokers define the current relationship financially. Do not move forward unless you have both satisfactorily determined what the current broker is making. While this may be a little uncomfortable at first, it can only help you. By the way, I did this once on a 600 life group only to find out the current broker was doing a lot of work for a total of $16,000. Let’s face it, there are some groups I’d rather let my competition service!

Once the relationship is financially defined, you need to illustrate through your knowledge why you are a better negotiator on the renewal than the current broker. At Zywave we have a tool designed to do exactly that, PlanAdvisor (a shameless plug, I know), however there are multiple ways to achieve this. Clearly most companies are money motivated so some sample positioning questions that should be asked out of the chute would be:

1. Does your current broker do a pre-renewal?
2. Does the current broker do an underwriting analysis or just take what the insurance company gives them? In other words, do they simply just go out to bid? Because with today’s technology, brokers can take a firm out to bid in literally minutes. (OK, another shameless plug for BrokerageBuilder but it should be positioned that going to bid is a small part of what we do for negotiating the renewal.)
3. How does the broker determine the value of plan design changes outside of what the carrier determines?
4. How do you measure the performance of your plans claim experience?

These are just a few sample questions but you get the idea. Now understand I was a large group broker and you might be saying I don’t get experience in my market. No problem, you still want to strike fear and greed in the heart of your prospect, just do it by asking different questions:

1. With all of the current, and potentially pending legislative intrusion between employer and employee, does your current broker keep you up to date on legislative compliance issues?
2. Does your current broker help to determine your plan design is competitive with today’s labor conditions? How?
3. Clearly claims still affect cost. Does the current broker put together a strategic plan to ensure your employees are good consumers of health care?
4. To ensure compliance, does your broker provide an employee handbook?  Would hate to have a lawsuit over simple miscommunication. (By the way, employment attorneys have no shortage of work in this downturn economy!)
5. To ensure you get the attention you deserve (especially for the $20,000 we determined the current broker is making), do they provide you with a stewardship report outlining everything they accomplished for you throughout the year?

Minimally you have done a few things. You have established the broker is making a decent wage on the account. You also illustrated through your knowledge some gaps that could save the prospect money. In addition, this opens up the door for you to uncover other important areas and discuss how you may help them. Focus on what is important, though, and continue to illustrate how you are better at reducing their cost and why.

Once you have done this effectively, it is the time to go for the BOR. Tell them you want to illustrate what you can do for 6 months. If they don’t see improvement, then they can fire you and hire the old broker back. (Yes, I lost a group to another broker with this 6 month strategy, so I did it to someone else! It does make it easier for the prospect to make that call to the current broker.)

If you employ this strategy correctly, it will bring you quick results. Keep plugging away, every CFO on the planet is looking for ways to improve costs!

If you do score business with this method, I want to hear about it! Send me an e-mail or post below. Oh, and if you are interested in hearing more about Plan Advisor or BrokerageBuilder, our salespeople would love to chat with you!