This may sound familiar to many agencies around the U.S. and brokerages in Canada. Most producers will stay with their agencies for a long, long time. Some RIP (Retire-In-Place) when they earn enough to sponsor their lifestyles and no longer feel the urge to sell. They replace what is lost and generally become Account Executives. Some advance to ownership positions and become the successors to the older generation. And many producer stay producers until their retirement. These are valuable assets to the agencies.
And, every year, some producers decide to leave the agency for another or to start their own businesses. The ones that tell the agency owners what they plan to do are actually a blessing. But the ones who don’t can cause an agency severe financial hardship and a retraction of their sales attitude. This can be avoided by learning the signs of impending producer departure.
You hire a producer. The person may be a bright-eyed and bushy-tailed beginner with a good attitude and great contacts, a salesperson from your niche market who is smart enough to learn insurance and already personally knows every prospect in the target market or an experienced P&C producer (with or without a book of business).
During the initial three years of service you are paying dearly while the producers learn the ropes, learn insurance or wait out their non-competition/non-piracy agreements. The producers are grateful for your support and spend their time taking your time and the time of your managers and staff helping them learn through their mistakes into a productive sales role at your agency.
Finally (usually between years 2 and 3) they generate enough income to support their compensation and may even generate enough to begin paying back your investment in their development. By the end of the third year, they should be relatively independent and penetrating prospects to build relationships that are maturing into client relationships. Within a few more years they are making the kind of money that they expected to make and appear on ‘cruise control’.
Then some strange things begin to happen. One or more of these occur:
They either ask to or simply stop providing the detailed call reports and activity reports that they so eagerly gave you previously to prove to you that they were as active as you expected and projected for the money you were paying them.
They don’t RIP Retire-In-Place and spend all their time in the office. They actually spend most of their time outside the office but you aren’t sure where they are or what they are doing. When asked they will tell you they are out with “clients”.
The producer adopts a more ‘hands-on’ attitude with “their” clients, taking client calls and relaying them to the CSRs, as needed. Your CSRs will tell you that they only get service calls second-hand from the producer. The producer will tell you that the client would rather deal with them direct.
Even if you have marketing support staff or service staff, the producer spends their valuable sales time completing submissions, marketing their clients to the underwriters and doing their own proposals.
Producers represent themselves to their clients in their names instead of as representatives of the agency. Sometimes they will create their marketing to prospects as representatives of the insurance companies.
These are only a handful of indicators that producers are preparing to separate themselves from the agency.
Rarely does a producer leave without the agency owners knowing that the producer is dissatisfied. Just like a client claiming that cost is the only reason he is leaving you when the difference in a minor amount, a producer suggesting that he is leaving for higher commission or compensation alone is usually a false reason.
Of course premium IS important to a client and compensation is important to a producer. But any client that leaves over a minor difference is indicating to you that there were no good reasons for him to stay – the relationship with the agency was not strong enough to withstand the normal variance year-by-year of premium levels from one company to the next. Similarly, unless a producer can see his compensation rising dramatically, most would never risk the uncertainty of customer loyalty, litigation potential for any theft of accounts and the separation from his support team unless other, more important, reasons existed prompting his exit.
The principal reason that a producer leaves an agency is EGO. A young or new producer is eager to learn and expects all the good things that were told to him by the agency management when the producer was hired. Whether for reasons within the agency or because of the producer, him or herself, sometimes those promises are not met. The great support staff promised may turn out to be mediocre (or busy helping the owners or more productive producers). The steady flow of referrals and prospects may not be as consistent or valuable as the producer was led to expect. The relationship with the owner or Sales Manager that was so tight and close at the outset of the relationship may change as the producer becomes self-sufficient. Even if the producer causes the change in the relationship, he will feel slighted, especially if a new producer is hired who takes up all of the time that was previously used to support and to ‘stroke’ the new veteran.
As soon as the producer feels that the agency is no longer benefitting him more than he is benefitting the agency you risk an ego-driven change of attitude. The producer becomes more amenable to speaking to other agents and exploring other possibilities. This would rarely happen for a producer who felt valued and a valuable asset to his employer. We have spoken to many producers who have been courted by other entities and called us for verification that their situation was so strong from a long term standpoint that they could be flattered to be courted but are not interested in even dating, let alone leaving their agency for another opportunity.
How do you avoid that ego-driven pull to try something else? PAY ATTENTION TO THE PRODUCERS!! You don’t need to ‘coddle’ producers. The good ones will bristle at specious praise. It’s not praise they are seeking; it is communications and attention to their needs.
We have been in hundreds of agencies over several decades and we speak to the producers in each of them. The universal feelings are loyalty to agencies who understand, support and communicate regularly with the producers and lack of trust and disaffection for agencies from whom the producers feel segregated and alone.
Most of the time the initial change of feelings about a producer actually come from the agency owner or manager, not from the producer. If activity dips or results falter, instead of expressing concern and helping the producer overcome the issues, agency owners tend to withdraw to a wait-and-see attitude, hoping the cause for concern diminishes. It rarely does without some communications and one of the skills of a good producer is the ability to sense when someone else is uncomfortable. Without the line of communications open, the producer begins to feel segregated from the person in the agency who used to be his biggest supporter, the manager or owner who trained and nurtured him. Then the loyalty to the agency wanes and the producer becomes interested in other ventures, seeking reasons (beside the emotional one that caused the rift) for expressing his own dissatisfaction.
Over time one or more of the indicators, above occur. The staff realizes the change well before the owner and, sometimes, the owner doesn’t realize this is happening until a resignation letter appears. The owner then chastises himself and everyone around him for “letting this happen” and often the problem by blaming the producer for disloyalty. While the producer is not guilt-free, there is enough blame to go around to everyone.
If you haven’t regularly paid attention to every producer, begin NOW! Express an interest in them and what they are doing. Ask for regular reports again, not because you are ‘checking up’ on the producer but to identify opportunities for the agency that you can help propel with the producer. Your role as an agency owner/manager is to make it as easy as possible for your producers to succeed. The more they do for you, the more money they make for both the agency and for them.
If you read any of the indicators above in the producer staff, call us and let’s try to reverse the process before the agency suffers the result.