Last week David Estrada of Rain Maker Advisory introduced you to the governing principles for growing your book of business. In this second part, he examines key growth strategies and the economics of book building.
Defining the Ideal Prospect
I have always loved the saying, “An arrow without a target will never hit its mark.” A clear definition of your ideal client is key.
When we work with an agency’s production team, we always start with a diagnostic probing many aspects of how they manage and grow their book of business, and a typical shortcoming that is revealed is a fuzzy definition of what they view as an ideal client. Below are typical responses to the question, “How do you define your ideal client?”
“100 to 500 employees, fully insured.”
“Family owned and humble, looking for a professional.”
“Someone I enjoy working with, loyal and cares about their employees.”
“Someone who has an issue that we can clean up for them, bring value to.”
“100+ any industry.”
We recommend to our clients that they test their ideal client definition along four categories as a best practice.
The first is that the definition must be clear. Second, it must be in line with your firm’s desired business. Third, it should be in line with your own ability to successfully transact. Fourth, does it enable ease of introductions and referrals because it’s easy to remember? For example, suppose you meet an attorney with a large law firm at a social or networking event, and they expressed interest in sending some business your way. You couldn’t possibly say, “Here’s what we’re looking for: a family owned and humble businesses, looking for a professional.” But if you said, “I’m looking for a high-tech firm, with over fifty employees and growing quickly,” that would be a much easier characteristic for the attorney to identify within their own portfolio of clients or known relationships to refer to you.
That’s what you want to look for in terms of being specific. That degree of specificity helps our contacts assign resources appropriately, more easily garnishes effective support, and enables us to obtain introductions and referrals to people that fit within a specific ideal client definition we desire.
Make Research Work for You
The running start that research provides is everything. It clearly demonstrates that you’re a professional, because professionals do research. It differentiates you from the competition during the approach and will increase your chances of securing a first meeting. It will also help you shape your discovery questions, allowing you to not only obtain better information but increasing your viability as an alternative to the incumbent broker.
Research will apprise you of material events during the courtship process that may contribute to adjustments or to emphasizing different aspects of your value proposition to increase your chances of securing the business. And remember, research is fast becoming the price of admission for mid-market and large market business.
Before the internet, you could show up to a meeting and ask somebody, “What do you do for a living?” But now it just takes minutes through Google or LinkedIn or other mechanisms out there to get a sense of the career history of the person that we’re talking to which can provide clues to how they buy from vendors and what their preferences might be in doing so. Have they been with large firms and therefore tend to purchase from larger firms? Have they been with smaller firms and tend to purchase from smaller firms? Research enables you to reinforce your approach and make it more impactful and therefore more effective.
The Economics of Book Building
Let’s talk a little bit about the economics of building out a book out of business. Is it better to write 20% more clients each year or to write clients that are 20% larger each year?
Fundamentally, this is an issue of working smarter versus work harder. In a lot of sales environments the leadership says, “Just write more accounts! If you want to write twice as much business, make twice the calls and book twice the appointments.” But this can only get you so far. Inevitably you will hit a peak because there are only so many hours in the day.
When you look at successful producers over time, the reason they’ve been able to develop a multimillion-dollar book is because they have written progressively larger accounts over time – not more of them! In fact, most million-dollar+ book producer write significantly fewer accounts per year than they did in the beginning of their career, not more.
It comes down to the fact that there are only so many hours in the day. If you’re pursuing the course of action of increasing the number of accounts you write by 20% year over year, then you’re really just making the hamster run faster and faster in his little cage. Eventually he’s going to get tuckered out. What you want is to develop techniques, resources, and capabilities to write progressively larger pieces of business which are more complex and obviously more lucrative. That’s where it’s at, because at the end of the day, there is only so much time available.
Pay attention to your new business pipeline’s average case. If you are pursuing business that on average is lower than the average size case in your existing book of business, you are actually shrinking your book. If it is larger than the average size case, you are growing your book of business sustainably over time. As you navigate your career over time, always track and compare the average size case in both your existing book of business and your new business pipeline.
Pursuing this course of action—writing progressively larger pieces of business—will require you to work with your team differently and develop leadership and project management skills. You will also need to increase your technical expertise, networking, and maintain healthy center of influence development as well as many other skills, many of which are discussed in my book, ‘Shock the Topline’ available on Amazon.
Growth should never stop. If you think you will ever find a spot to rest and coast your way through I am sorry to have to tell you this, but, you’ve chosen the wrong occupation! If you are resting or just sitting on your book renewing your clients and not actively pursuing progressively larger accounts, then chances are you your book most likely is shrinking and you are essentially putting into play the long term liquidation of your book.
This article is from Insurance Business NZ.