The Holy Trinity of the Master Broker

[This essay is about sales and is adapted from a talk I gave to actuaries and modelers at our internal analytics conference. Sales skill is incredibly underappreciated, if it’s acknowledged at all. Perhaps the most underrated profession in the world. I try to changes minds where I can!

Remember that all of my sales experience comes from being a reinsurance broker where we facilitate transactions between sophisticated financial institutions. I’d say investment bankers probably face similar forces. Mileage may vary for people in other industries.]

Let’s first talk about what sales is not: Sales is not manipulative. It’s not a version of Gelengarry, Glenross, for those who have seen that film. Just thinking about those despicable sleezebags makes my skin crawl.

Truly great salespeople care only about finding out what the customer needs and giving it to them.  They like and respect their customers and genuinely want to help them succeed. So great salespeople sell great products. The strategic answer to getting better at sales is to just find better stuff to sell. Well, that makes it easy, you might say. Exactly! 

In some ways, sales is miraculous, particularly at specialist intermediaries like mine. You just have hire people with phones and bam, you start generating revenue. I think that generates feelings of empowerment and self-control and fuels the optimism of sales culture: the universe is full of opportunity. There are only two categories of obstacles: poor product fit (unsurmountable) and cognitive bias (surmountable).

The worst salespeople overdetect problem #1 (nobody wants to buy so I won’t try) and the second worst overdetect problem #2 (everyone will buy if I just try harder). It’s that second worst group that bothers people because they won’t go away. But at least they make money for their company.

So a great salesperson is armed with a great product and an earnest desire to make money doing the right thing. What else?

[remember all the tactics below presuppose good customer/product fit]

Preamble: the reframe

Called also the ‘spin’. The most basic and well known sales tactic. The caricature of the salesman is one that awkwardly forces an implausible narrative over weak evidence to try to ‘pull a fast one’ on someone. There is of course such a thing as a flawed narrative that should be corrected and this is an important tool.

But we’re talking about the tools of the master broker today. Journeyman brokers work on the reframe. To the master, frame detection and correction is second nature and hardly worth discussion.

Tool 1: The Breakdown

We need to cut through complexity. 

Overwhelmed buyer: “It’s too hard, we can’t get there” (everyone on my committee will have problems with this)

MASTER BROKER: “What exactly are the problems?”

Overwhelmed: “Well, A, B, C, D”

MASTER BROKER: “Ok, let’s go through those”

Psychology addressed: the most common cause of (first world) misery is feelings of overwhelm. 5 small problems = 100x the emotional load of one small problem. This is ridiculous, of course, but inescapable. Breaking the problem down lightens the load.

Inevitably what you find is that 3 of the 5 can be solved very quickly leaving only one or two really tricky ones. But one or two things can be focused on much more effectively.

Tactic 2: The Anti-Broke

We need to build trust. 

MASTER BROKER: “I’ve got a tough one here. A, B, C, D make it suck. There are some redeeming features but I’m not sure they make it up.”

Intrigued Reinsurer: (shields down) “Why? Let’s have a look”

MASTER BROKER: [cleared to talk about all the good points]

Psychology addressed: key to most human conflict is a need to feel heard and understood. Our bias is to hunt out negatives against the current of constant positive framing by (journeyman) brokers.

Emphasis of shared perspective encourages a search for agreement. If they feel like you understand their need for vigilance, they’ll be more open minded. Some of my colleagues are terrified of the anti-broke because you don’t ever really spend time talking about the virtues of a deal unless asked directly. Others are full-time anti-brokers and their success seems like magic. Everyone good uses it from time to time.

At a minimum, anti-broking is optimal when you want to have quick, low-engagement conversations with people to feel them out. The failure rate is probably a bit higher (including false negatives!) but that effect can be mitigated by an experienced anti-broker. The prize is many fewer false positive leads and deeper engagement.

Tactic 3: The Stall

We need to build focus. 

Busy reinsurer: “We can’t do this deal because of [stupid reason x]. Decline”

MASTER BROKER [one week later]: “hey, we addressed [stupid reason] like this, have a read of the attached (long-ish document)”

Busy reinsurer [one week later]: “we can’t do this”

MASTER BROKER: “did you read my note?”

Busy Reinsurer: “um, no” [Bingo!]

MASTER BROKER: “let’s have a call to go through it. When are you available?”

Busy Reinsurer: “ok, how about two weeks from now?”

MASTER BROKER: “great”

Psychology addressed: often a value-adding but (apparently) borderline deal is just not worth their time now. If they don’t want to say so explicitly, they try to shove the broker off.

Don’t stop the process, slow it down. Let it play out. Eventually the pressure changes from “I don’t want to put this on my desk” to “let’s just get this off my desk”.

[Four weeks later]
Busy Reinsurer: “Are we still talking about this?”

MASTER BROKER: “Yep, you had this concern and that and we’ve addressed this way and that”

Busy Reinsurer: “Ok, sounds good. What’s next?”

This is a delicate one because you’re being a bit of a pest, which is a critical skill in getting things done with busy people. Let them lead, be patient and vigilant. Windows of magnanimity open from time to time. Wait for one.

Epilogue: A Few More Forces at Work

A good relationship is critical to all sales; it increases engagement and motivation to come to the *right* resolution quicker.

The best way to build relationships? Doing a deal! Doing a difficult deal creates a special kind of bond that makes the next one much easier.

This is why financial middlemen exist: we are repositories of negotiating success. Those that deal direct with financial markets don’t have the relationships that we do because they don’t do deals all the time. Those relationships foster better outcomes.

Politics matter, too. Deal decisions are made in committees by several layers of an organization. A good broker has relationships with all of those layers. This is often too much for one individual broker to handle so we have a “my boss calls your boss and his boss calls her boss” situation. 

I think this drove a lot of consolidation of intermediaries over the last twenty years. The clients and market organizations consolidated and grew more layers so we did, too. The structure of broking organizations reflects the deal-making structure of their counterparties. That has seriously raised the costs to new entrants, which are more or less nonexistent. More on that another day.

Sales is about overcoming many barriers: informational (do you have what you need?), psychological (are you giving this an honest shot?) and political (can you sell internally?). These are life skills. Everyone gets better at their job by getting better at sales.

Advertisements
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s