ACG - Agency Consulting Group

The PIPELINE

A national monthly newsletter for agency principals dedicated to agency management topic

How to Achieve The Goal

By now you already know "THE GOAL". It is not meant to be kept secret -- spread it around. Maybe more agents will realize "THE GOAL" if we repeat it often.

Measuring Sales and Sales Expense is our method of gauging the achievement of "THE GOAL". But what are you to do if ('when' for most agents) you determine that your lack of profit and cashflow results from a lack of sales and sales efforts?

Sorry, the answer is not a quick fix.

In order to create a sales organization you need four ingredients:

1. Hire salespeople. Your three choices are to hire insurance professionals, hire professional salespeople, or hire new employees with sales skills to be trained into the insurance business.

Insurance Professionals are generally technically competent people, well-grounded in the insurance products. Unfortunately, the talents that permit people to absorb and become qualified underwriters are different than the talents required to become skilled salespeople. That's why most insurance agents can analyze and explain insurance coverages and proposals, but they cannot "sell" themselves or the product. Most agents, unfortunately, rely on price to sell their products.

Professional salespeople from other industries (including the Life Insurance industry) must "sell" themselves every day to make a living. Repeat sales are very desirable, but much less frequent than insurance renewals. The primary source of imported salespeople in the insurance business are the journeymen salespeople in other industries. Successful salespeople in other fields generally don't need to transfer into new industries. Unsuccessful salespeople will be similarly unsuccessful in technically oriented industry like insurance. The target is the moderately successful salesperson who can see bigger success (and rewards) from a transition that include annual renewals.

The best source of new salespeople for the insurance industry is in the high schools and colleges of the United States. The following statement will not surprise most people -- "You don't have to be a brain surgeon to sell insurance." You must be relatively intelligent (due to the technical aspects of the products) and you must be able to sell yourself. Insurance is more difficult to sell than tangible products because people can't "fall in love" with an insurance product. You can "fall in love" with a car or a computer or a house. But no one "loves" the idea of losing all of his assets, dying or being sued. So the only methods of sales that are effective in insurance are "scare tactics" or convincing the prospect that he can have confidence in you to protect him. Price is not a sales tactic because it is so transitory.

One of every six high school and college graduates has the personality and characteristics to become a salesperson. Tests are available to identify these people. Not all people who test well will be capable of becoming insurance salespeople, but I'll suggest that 95% of the people who do not qualify as a strong sales personality will not become successful salespeople.

Graduates are having difficult times getting jobs and breaking into careers. If we begin to strongly recruit the schools for the personality types who will be successful salespeople in their business lives, we can pump new blood into the independent agency system.

2. Train in both sales and insurance simultaneously and regularly. You can not become proficient in any profession without continuing education. We are finally becoming aware of that in the insurance industry and are requiring continuing education in a growing number of states in order to keep insurance licenses. Sales training must be created and targeted toward the insurance business. Continuing training must be a part of every salesperson's career in order to keep the "edge" in his/her selling skills. This is our industry's greatest challenge. We're great at insurance skills training. We "stink" in initial and continuing sales training. This training would be best generated by our agents associations on local, state or national levels. Lacking this initiative, groups of agents can develop and use the same skills training and continuing education to help themselves and their producers. A few hundred agencies in the United States could devote the resources to the development and continuing sales training of their producers -- if they acknowledge the long term importance of this function.

However, we have noticed that most agents, associations and carriers have become so concerned with the short term that they are willing to disregard the long term effects of their actions (or inactions). If this course continues, the direct writers (who do require aggressive sales training) will continue to gain market share from the independent agency system. More importantly, the carriers, who see these trends clearly, will give more serious thought to becoming direct writers themselves. Many will support the independent agency system, but without a strong commitment by the agents, how long should we expect the carriers to sacrifice their market share?

3. Manage your salespeople aggressively. Every agent seeks self-managed, self-starters as producers. Everyone has some of these traits. But no one can be expected to operate at a high efficiency level in any profession without management, motivation and recognition. The rejection aspect of sales makes management critical to maintain the equilibrium of our producers in a challenging marketplace. One of our greatest problems is that most agencies can not afford a Sales Manager. The agency owner is often required to play that role -- whether or not he is suited to it. This is akin to asking a Podiatrist to perform brain surgery -- after all, he is a doctor!! The Podiatrist may be excellent at his trade, but, forced into another part of the profession, he will kill the patient. The agency owner may be a great salesperson (or may not). He may be a great technician (or he may not). He may be a great manager (or he may not). If he is not a great sales manager, he will fail and so will his producers. Being the owner, the excuse will be that the producers couldn't (or simply didn't) sell. They were lazy, unmotivated, etc. (we've all heard the myriad of excuses). But the real reason for the lack of sales success of the agency is the lack of professional and stringent sales management.

Those agents who can afford and are committed to sales management will be successful. Yes, you may hire and replace a number of salespeople, but it won't take years to realize that a producer isn't working. Any agency dedicating a position to the hiring, motivation, training, management and the results of a sales force will enjoy long term success in sales.

If you can't afford a sales manager, consider developing a cluster of agencies whose central function is sales management. Hire a sales manager for a number of agencies.

4. Spend money on the sales efforts. Note that the previous sentence does not imply "throwing" money at the sales efforts. I suggest the development of targeted, telemarketing efforts, whether manual or automated, utilizing the immense variety of prospect data bases available to businesses in our automated information society. Perform a cost/benefit analysis of every marketing effort with stringent measurement of results to determine if an effort is successful, requires fine tuning, or should be discarded in favor of another program.

You will be successful in sales when you combine the recruitment, training and management of the right people with the intelligent, consistent and confidential expenditure of capital in the sales efforts of your business.

Call us if you would like help establishing a sales function in your agency. "ONLY THE STRONGEST WILL SURVIVE INTO THE NEXT MILLENNIUM."