|Copyright:||(c) 2011 Rough Notes Co., Inc.|
Sales vs. service
Ifit’s true that an agency’s value is the largest personal asset of most agency owners (and it probably is), it would be prudent to aggressively manage it just like any other investment. But that doesn’t seem to be happening at the average agency these days. In fact, we have found that the value of most independent agencies has grown very little, if at all, due to the lack of net new revenue growth and aggressive bottom-line management. Naturally, there are exceptions.
In examining the business practices of the members of
First and foremost, the top agencies have a culture dedicated to sales, rather than service. This culture demands performance driven by various factors and influences that reinforce productive behaviors.
* Peer pressure. Whether they’re insurance agents, athletes or entertainers, most top professionals are pushed to excel in part by peer pressure. They’re always competing against someone-teammates, as well as industry rivals. For instance, if you’re an actor, you want to win an Oscar. If you’re an athlete in a team sport, you’re competing against others on your team to be a starter and against players on other teams to be all-pro. If you play an individual sport, such as golf or tennis, you’re constantly competing against everyone else.
Similarly, competing in an agency is like “keeping up with the Joneses.” Everyone on your team can see how you’re doing, which should motivate you (and them) to continually strive to do better. A true sales culture requires you to compete in order to win. Are you competing to win?
* Internal structure. The internal structure must drive the producers to be in the game. After all, they can’t score points if they’re on the sideline addressing service, accounting and other issues. In order to obtain and retain clients, producers must be in the game of selling at least 80% of the time. That’s why it is imperative to maintain a distinct division between sales and service responsibilities.
* Accountability system. Upward accountability reinforces appropriate behaviors in producers by making them responsible for their actions. This system says that you, as an individual salesperson, must go to your sales manager on a monthly basis and report the results of your activities, rather than wait for your boss to question you about the reports you submit.
Upwardly accountable producers proactively provide information such as the number of appointments they made, their closing ratio, conversion ratio and revenue per sale, among other things. Proactive reporting and the mentoring that follows help fortify the behaviors that drive the desired results.
The best producers are well aware that there’s more to the total cost of risk than the price of the insurance product. Because they understand the overall cost at a deeper level, their focus in talking with clients isn’t just on the insurance and the services they can provide.
* Communication skills. A number of studies have shown that insurance premiums comprise only 45% to 50% of the total cost of risk. Top salespeople know this and can communicate as much to their clients. Rather than simply say, “Here are your insurance premiums,” they can clearly explain all the direct, indirect and preventive costs that affect the total cost of risk. We refer to this strategy as The Risk Reduction Plan(TM). This allows the commercial client to understand its total cost of risk and implement Risk Reducing Strategies.
* Peer-to-peer approach. The best salespeople put themselves on a peerto- peer level with prospective clients. They never put the prospect on a pedestal or embark on a sales call from a subservient position. Doing so is a big mistake because right away, the producer becomes a broker of a commodity, often losing the respect of the prospect in the process.
* Business acumen. The best of the best have the business insight and ability to talk at the “C level” (as in CEO, CFO and COO). They understand business and possess the acumen to discuss almost any pertinent aspect of it intelligently with corporate executives. They can read a balance sheet and a P&L statement, and they know the difference between an
* Confidence. Top producers exude confidence. They are confident that they can help their prospects. They are confident that the prospect will become a new client and will have a better risk management plan than they had before, especially when all they had were some insurance products. This confidence comes from experience and ongoing study. Although it may take time to develop, confidence can be learned and is well within the reach of any producer who is willing to work for it.
Having said that, I’d be remiss if I didn’t put in an enthusiastic plug for
Our best agency members have true sales leadership-not necessarily a full-time sales manager, but true leadership. In fact, very few top agencies today have full-time sales managers, but they do have someone leading the sales effort.
* Offensive coordinator. The best of our best have a designated Offensive Coordinator who is working with producers to establish upward accountability and drive low-risk practice.
* Sales leader. All of them have a sales leader who is a substantial rainmaker and/or is personally in the game. These are people who take full advantage of their pipelines and outsell everyone in the organization.
* Senior rainmakers. Who has the best-and often the most underutilized- pipeline in your agency? It probably belongs to the senior producer, such as the owner/manager. All too often, however, this valuable pipeline is underutilized because senior producers don’t want to do the work. That’s why having CEOs and senior producers actively engaged in rainmaking is critical to an agency’s success.
The best of the best manage their prospect pipelines proactively and purposefully.
* Non-optional pipelines. They realize they need an inventory of potential clients to talk to because they understand that it all comes down to at-bats.
* Monetized pipelines. One of the most important aspects of a purposeful pipeline is that it is monetized to at least twice the annual sales goal. This gives you the total potential commission income in your pipeline (not your wish list, but actual prospects). To determine the true monetized value of your pipeline, multiply your current potential commission income in your pipeline by your conversion rate (percentage of first appointments that move forward to the second) by your closing ratio (what percentage of prospects say “yes” and what percentage say “no”).
For example, let’s say I have
Keep in mind that you can have a phenomenal closing ratio and still not reach your annual sales goal if your conversion rate is lacking. I know of one agency that had a 92% closing ratio and yet they missed their annual sales goal by almost 50% because their conversion rate was only 32%. If you don’t measure your conversion rate, you could have a false sense of security about how well you’re doing
* Quarterly pipeline retreats. If you’re not getting all the sales staff together once a quarter to discuss your pipelines, figure out whom to add, whom to delete, and so on, you’re not really a sales organization. One of our members just held its 28th quarterly pipeline retreat-that’s seven years of pipeline retreats! As a result, they’ve enjoyed 16% growth every year for the last three years. That’s fantastic, particularly at a time when most agencies are struggling to get any sort of organic growth at all.
In the last few years, all of the best agencies we work with have invested in new producers. They are continually on the lookout for the next star “running backs” to put in the game. That’s why they’re winners!
Conversely, many agencies are struggling because they’ve grown complacent about investing in new blood and have ignored the obvious problems associated with an aging producer group. Typically, these agencies have too many R.I.P. Producers (Retired in Place and forgot to tell anyone) and Plateaued Producers. Producers who have stopped growing and are simply biding their time until retirement not only can diminish an agency’s value, they can kill it altogether.
The best agencies remain on top by demanding consistent growth from all producers and by hiring new producers who will add vitality and energy to the organization. They aren’t pretending to be working while they wait for the next hard market to materialize because they’re too busy getting results!
Not surprisingly, a results-based culture is at the heart of today’s most successful agencies. Everything comes down to getting positive, proactive results.
If you’re not getting results, why aren’t you? Does your agency share the characteristics and behaviors of the most successful agencies? What will you do differently in order to be the best of the best? Anything? Nothing?
As always, it’s your choice.
The best agencies remain on top by demanding consistent growth from all producers and by hiring new producers who will add vitality and energy to the organization.