Chapter 7 - Building Long Term Relationships

Question 1

4 types of relationships

Answer 1

1. Hands-on/High involvement.
   - doctor, hair dresser.
2. Face-to-face.
   - insurance broker.
3. Distant.
   - ATM’s, email.
4. Brand.
   - brand loyalty.

Question 2

3 factors that make a client profitable over time

Answer 2

1. Clients spend more money the longer they deal with a business.
2. Less price sensitive
3. Referrals to friends and family.

Question 3

3 R’s for building solid client relationships.

Answer 3

1. Retention
2. Referrals
3. Recovery
   - use mistakes to impress client.

Question 4

Client Relationship Management - 4 ways to measure employee activity

Answer 4

1. By Client
   - who bought what, when, why.
2. By Product
   - tracking product sales.
3. By Employee
   - which employees are best at building relationships.
4. By Branch
   - track profitability for each branch.

Question 5

Process Effectiveness: Brokerages should review the following areas:

Answer 5

1. Employee mix
   - the right people in the right place.
2. Tasks and division of duties
   - clear roles and efficient distribution of tasks.
3. Client needs and perception
   - what do your clients need?
4. Office design
   - layout of brokerage must be convenient.
5. Phone system protocol
   - are clients being transferred a lot?

Question 6

What is the “Stream of earnings”

Answer 6

• client’s profit making potential.
• referrals.
• cheaper to renew an existing client than a new one.
• even a small increase in client loyalty can double profitability.

Question 7

Why are loyal clients less price sensitive?

Answer 7

• more importance on how knowledgeable broker is, how well they are treated, and efficiency of service.
• they trust their broker to provide the right coverage at the right price.

Question 8

The most important clients.

Answer 8

• not always the ones who spend the most money.

- clients who speak well of the brokerage and can influence people are very valuable.

Question 9

When clients spread their business around, this indicates a relationship at risk. How do you recover?

Answer 9

• find out the source of dissatisfaction.

- if possible, make an attractive counter offer.

Question 10

What is internal quality service?

Answer 10

includes:

• employee selection and development
• workplace design
• job design
• rewards and recognition for employees
• employee satisfaction = client satisfaction
• tools and freedom given to employees will improve client satisfaction
• clients perceive value when they feel the broker does more than expected.

Question 11

Client Relationship Management - Success factors

Answer 11

1. Client Activity.
   - what products/services do clients currently use.
2. Employee activity.
   can be measured: -by client -by product -by branch -by employee
3. Process Effectiveness.
   - how effective is your office?
4. Loyalty Recognition.
   - bottle of scotch at christmas.
5. Consultative selling.
   - not a “hard sell”
6. Financial Management.
7. Commitment.