April 13, 2021 by David Gambrill
Brokers don’t appear to be as enthusiastic about generating new business through referrals as they were before the pandemic, according to Canadian Underwriter’s 2021 National Broker Survey.
In fact, brokers’ support for almost all traditional means to generate new business has waned over the past three years, the 2021 survey results show.
And while the numbers can be interpreted in many ways, there is likely a story to be told about whether brokers are just holding their own to retain existing business during the pandemic. This would be in contrast to drumming up new business from clients, which — especially in light of the economic recession spawned by the pandemic — seems akin to drawing blood from a stone.
Of course, all brokers want to generate new business all the time. Asking existing consumers for a referral remains the top-rated way to generate new business, the survey responses suggest.
Overall, 63% of the 234 brokers surveyed in 2021 rated customer referrals as a best practice (i.e. scored it a 4 or 5 out of 5). Networking was second at 51% while asking other professionals, such as accountants or lawyers, for a referral rated third overall (at 37%).
“Asking other professionals [for referrals] can build long-term referrals and great business-to-business relationships,” one male broker from a small brokerage commented in the survey. “Most of my business comes from referrals, although I do need to ask more.”
But the pandemic seems to have had a dampening effect on brokers’ enthusiasm for referrals as a way to grow the business organically. The downward trend over the past three years is clear: Whereas asking existing customers for referrals garnered 72% of support from brokers in 2019, the number fell to 67% in September 2020 (the second wave of the COVID-19 pandemic in Canada), down to just 63% in our most recent survey (during the pandemic’s third wave).
Asking other professionals for referrals (i.e. such as accountants and lawyers) suffered an even more precipitous drop over the past three years. Half (51%) brokers in 2019 rated this a best practice, which then slipped to 46% during the pandemic in September 2020. During the third wave of COVID-19 in Canada, in the spring of 2021, the number fell just 37%, tied with maintaining an active social media presence.
The National Broker Survey statistics don’t really point to where the new business is coming from, if not from referrals. It’s not just the popularity of referrals that’s dropping — almost all methods of generating new business have garnered less interest from brokers over the past three years.
For example, brokers’ support for other traditional forms of gaining new clients — including social media, personal advertising, videoconferencing, and cold calling — have cooled off as well.
One comment by a broker in the survey speaks to the possibility that brokers are now focused on retaining existing business, as opposed to finding new clients.
“I have done almost zero prospecting this year, relying solely on client referrals,” a male with less than 16 years of experience in a large brokerage reported. “I have no time to prospect.”
But are referrals really the best way to generate new business?
It depends upon whom you ask.
The 2021 National Broker Survey shows a huge gender divide among those who prefer to generate new business through referrals from existing customers. Three-in-four men (74%) said this was a best practice, while only 56% of women did. And when it came to asking other professionals for a referral, 43% of men said this was a best practice, while only 36% of women did.
In fact, keeping an active presence on social media appears to be a more popular way for women brokers to find new clients. Forty-one per cent of women scored this a best practice in our 2021 survey, as opposed to just 34% of men.
Perhaps not surprisingly, the youngest cohort of brokers (those with less than 16 years of experience in the business), were least likely to choose “asking existing customers for referrals” as a best practice, perhaps because they were in the early phase of their career and still building a referral network.
Fifty-two per cent of brokers with less than 16 years of experience endorsed client referrals as a best practice, as opposed to 74% in the 16-30 years of experience category and 64% in the 31+ years of experience demographic.
Feature image courtesy of iStock.ca/vitranc