Are you paying producers – NOT TO PRODUCE?
Are you paying employees to just show up every day?
American industry pays people to show up to work every day. We even keep track of “hours”. Thousands of insurance agencies hire and pay people to come to work whether they are productive or not.
On the other hand, Producers historically have typically been paid based on their production. May producers are paid based on New and Renewal commissions, whether as a percentage of collected commissions or as a draw or salary balanced on an annual or more frequent basis based on their production numbers.
In fact, as service staff transitions from simple transaction processors to relationship managers the retention of clients becomes their greatest value to you as an agency. While a salesman is needed to close a sale in many cases, the way the client is handled in their post-sale activities with the agency determines whether they stay for a prolonged period or only until someone else wows them with better price or product. The producer certainly has an effect on retention – but so does the staff who answer the phones and handle routine transactions, including claims.
So why don’t we pay our staff based on what we know is most important to their productivity to the agency – retention of clients?
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Over the years and decades our producers have converted from the wise, insurance gurus to become price quoters and fast talkers – getting the prospects to like us enough to try us and convincing them that we are different from the other producers and agencies. We tell them that we will be there for them and will pay attention to them. Then, in most agencies, we ignore the clients until and unless they complain – and we pay enough attention to them to keep them as clients.
Yet a certain percentage of clients are treated more favorably and become “friends” as well as customers. We see them more often and form strong relationships that are more likely to last many years. Why don’t we treat more of our customers like friends?
If the answer is that we are hustling new business we have different solutions. But, in reality, most producers are firmly planted in the office from 9:00 AM to 5:00 PM Monday through Friday, only leaving to deliver policies or make the occasional sales call. Once their books of business have grown sufficiently to sponsor their lifestyles with renewal commissions, they RIP (Retire in Place) and New Business production slows to a crawl (or less).
We visit agencies every week. The majority of agency producers struggle to replace lost business and consider themselves successes when they write $10,000 or $20,000 of new commissions annually. In most cases, this amounts to a relative few new business accounts that are generated from unexpected referrals.
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So, what’s the answer to the dilemma of hourly wage-earning service staff and non-productive producers? INCENTIVE COMPENSATION PROGRAMS for non-producer employees that respond to the retention of clients and the creation of PRODUCER COMPENSATION PROGRAMS that provide strong incentives for growth and dis-incentives for lack of growth.
As most agency owners know, Agency Consulting Group, Inc. designs Incentive Compensation Programs tailored to each agency based on the personalities already in place in the agency but designed to differentiate compensation toward the most productive employees. We also design and manage Producer Compensation Programs that monitor Sales Activities and make producers much more active than they have been for years with growth incentives and dis-incentives for lack of growth. These programs will attract employees who enjoy higher salaries for more productivity and will enrich producers who are not satisfied with the renewal commissions generated from a stagnant book of business. The Producer Compensation Programs attract young, aggressive sales professionals from the insurance industry and from outside the industry because successful insurance producers can still make a very good living compared to other industries.
Call Al Diamond, President, Agency Consulting Group, Inc. at 856 779 2430 (al@agencyconsulting.com ; www.agencyconsulting.com ) to discuss an analysis for your agency that will result in an ICP or a Producer Compensation Program that will jump-start your agency’s growth again.
Don’t complain about lack of growth if you are not willing to do that which will change your organization’s path. Continuing to do the same thing that has failed in the past and expecting different results in the future is the classic definition of insanity.