As industries evolve, so do their insurance needs. The technology industry is no exception. Rapidly advancing technology is one of the best examples of the fact that nothing is as constant as change itself.
For brokers looking to excel at selling insurance products by setting themselves apart in the technology market, the first question that comes to mind is, "Do I have to become a specialist?" The answer is yes.
In the past, specializing gave successful brokers an edge over the competition. Today, specialization is a prerequisite to any measure of success, largely because technology customers have neither the time nor the inclination to operate internal "insurance departments" or educate a broker about their businesses. It's just not their job anymore.
The first task for the broker who aspires to success in the technology sector is to know the business. There is no way of getting around the requirement of doing one's homework.
This means not only obtaining a thorough understanding of the various subsectors within the industry, their potential exposures to loss and the top companies, or players, in this field, but also keeping abreast of the latest trends and innovations. This knowledge enables the best brokers to transcend mere vendor status to become real partners with customers who rely on them for risk management and transfer consulting.
Some will have more aptitude than others in understanding the complexities of the industry and communicating the nuances of specialized coverage. But as long as a broker is willing to invest his or her time in learning the ropes of the technology sector, expertise is within reach--over time. Continuing education by its very definition never ends.
Brokers must also gain access to their customers by inserting themselves into the spheres of influence surrounding their prospects to seek out referrals.
The days of cold-calling, at least when it comes to technology-based businesses, are over for the same reason that industry knowledge is critical. Prospects simply will not invest their time vetting brokers who happen to float across the transom. They will rely on referrals from trustworthy business partners such as venture capitalists, lawyers and accountants. These are the people with whom brokers must first establish relationships. Through them flow leads to hot prospects.
Professional associations are another good place to build relationships. Even in the digital age where communication is faster and easier than ever before, no software has yet been written to replace the ancient art of networking. People who work in technology have specialized in their given fields and usually choose to outsource any business function that falls outside their core competencies. They expect their partners to be specialists as well. Savvy technology prospects will try to avoid a generalist who is simply offering a standard policy not tailored to their individual needs. Even with a referral, the broker who does not first demonstrate specialized knowledge will not get a second chance.
Networking serves as an important component of a broker's continuing education. No amount of book learning or Internet research can replace access to the specialized knowledge of industry veterans. And while this knowledge is being acquired, the interpersonal relationships with these key contacts improve, ultimately to the point of generating valuable referrals.
STRIVING FOR EXCELLENCE
Industry knowledge and a detailed understanding of the internal structure of the customer's business help facilitate the evolution of real partnerships. After gaining the trust of all the players within a company, exceptional brokers will attain the status and credibility necessary to make recommendations on managing or transferring risk.
For example, chief financial officers, who are specialists in their own right within a company, often do not appreciate various risk control or risk transfer issues facing their firms. This can lead to overlooking potential savings, and failing to recognize and address emerging exposures.
As a trusted partner, the best broker cultivates a close relationship with the CFO and is able to serve as a liaison, thereby instigating changes that result in better risk transfer solutions for the customer, and an enhanced reputation for the broker.
The most successful technology brokers understand and are able to communicate the value of their products and services to this specific set of customers.
While price is important, it should always be presented as secondary to value or total cost of risk. After all, a client could pay less for an inadequate policy that leaves them exposed or end up with an insurer that does not provide the needed claims or risk control services.
By the same token, they could pay more for a tailored policy that meets their specific needs while providing superior coverage, claims and risk control services. Shrewd businessmen and women do not automatically follow the rules. They will not assume that because something costs less it is the best "value" for their client.
This level of client sophistication must be met with a thorough presentation of information relevant to the purchase decision. Brokers who try to fake it will fail. They must know exactly what they're talking about at all times, especially at the beginning of a business relationship. Failure to demonstrate specific knowledge and credible insight will always result in the loss of business. All the positives a broker can rack up during initial meetings with a customer can be wiped out by one glaring example of inferior knowledge and understanding.
People who sincerely want to be the best at what they do accept the fact that there is no substitute for hard work. Elite athletes train endlessly for the moment when they will pit their strength and endurance against their opponents. Great actors spend years perfecting their craft to prepare for the few minutes of stage or screen time during which they have the chance to capture the hearts of their audience.
By the same token, technology insurance brokers who aim for the top of the heap do not shirk the prerequisites to success. The best brokers constantly educate themselves about the industry. They acquaint themselves with the venture capitalists, lawyers and accountants who can get them through the prospect's door, and they present value as their primary message, with price as a close second.
In short, brokers who aim high and hit the mark prepare themselves by doing their homework and always understand the value proposition of their clients.
is senior vice president of strategic development for the Global Technology Underwriting business unit of St. Paul Travelers.
February 1, 2006
Copyright 2006© LRP Publications