CAIB 4 Chapter 7 Questions and Answers Already Passed

CAIB 4 Chapter 7 Questions and Answers Already Passed Identify and briefly explain the four different types of relationships that can exist at different levels. Hands-on/High Involvement - These relationships are among the closest of relationships that clients can have with service providers. I.e. doctor, dentist, massage therapist. Face-to-face - This is another type of relationship that is characterized by client interaction with the company on a regular basis and in a personal environment. I.e. Most independant insurance brokers in Canada. Distant - More distant client relationships involce less frequent contact and less likelihood of meeting face-to-face. Contact with the client is being made through technology, either over the phone, ATM's, voice mail, email and the internet. Brand - This type of relationship involves the connection that consumers have with major brands. Well-establishied brand like Nike, Kraft, and Kellogg have meaning for consumers. Attracting new clients can be a costly process. A brokerage does not realize the potential profits from clients who leave after a year or two. The key to long-term success and profitability lies in attracting the right clients, keeping them happy, and retaining them. Identify three factors that make a client profitable over time. 1. Clients tend to spend more money with a business the longer they deal with it. 2. Their comfort level and their lack of price sensitivity. When clients stay with an insurance broker for several years they are less likely to shop around for small price decreases provided they are satisfied. 3. Loyal clients also make referrals to friends and family. These are powerful endorsement for a company's products and services. Give two reasons clients have given when asked why they consider price so unimportant. 1. There are more important things, such as how knowledgeable the broker is, how well they are treated, and how quickly employees respond when contacted. 2. Loyal clients often comment that they trust their brokerage to give them the coverage they need at the best price. Another factor it time. The effort it takes to switch to another brokerage takes time. Briefly explain what the 'steam of earnings' means. When clients leave a brokerage they take their profit-making potential with them. The longer clients stay, the more they spend, and the greater becomes the potential income they they may influence. the 'steam of earnings' that a loyal client accounts for will last for many years and , in fact, represent the future of the brokerage. It is a mistake to think that a brokerage's most valuable clients are those who spend the greatest amount of money. Briefly discuss the validity of this statement. Some clients have the ability, because of their position in the community, to influence others. Those clients who speak positively about the brokerage are among the brokerage's most valuable assets. Identify two things a brokerage might do when they recognize 'relationships at risk'. 1. Lapse or reduce their coverage 2. When they insure a new acquisition with another company. Briefly explain the concept of the service-profit chain. See illustration on pg 7-6. The concept of the Service-Profit Chain shows how internal quality service and employee satisfaction contribute to client satisfaction and, ultimately, to the profitability of the brokerage. The objective of client relationship management is to ensure that purchasers become long-term multiple product and service users. Once clients begin to feel that they can trust the brokerage and can rely on it to provide reliable insurance