WHAT'S THE MOST IMPORTANT ISSUE TO AN AGENCY ABOUT PRODUCERS
HOW TO SELECT THEM?
HOW TO PAY THEM?
HOW TO MANAGE THEM?
HOW TO MOTIVATE THEM?
ALL OF THE ABOVE?
I don’t know about you, but “Producers” have been the bane of my existence. I love them and I hate them.
I know I had to have them in order to get new customers. But every dog I pet seems to have some “hair” on him. If he was experienced, he was a “re-tread” going from agency to agency every few years or burning out and looking for a place to retire. If he was young, he didn’t know my business or he didn’t know how to sell or he heard that our business was a ready source of income because of renewals and he just wanted to get in on the gravy.
When I found experienced producers they usually defined themselves as insurance “professionals” prouder of their intimate knowledge of the products than their knowledge of selling.
If I was too discriminating, I didn’t get any employees. If not, I found weaknesses in every selection for the months (and sometimes years) that they lasted before they or we determined that this wasn’t going to work. The success stories were few and those were exceptions rather than the rule. THERE HAD TO BE A BETTER WAY TO GET PRODUCERS AND TO AVOID VERY COSTLY MISTAKES!!
So I started building a PRODUCER SELECTION AND COMPENSATION SYSTEM for myself starting with The Selection Process:
I defined the traits I was seeking and put them on paper
I defined the industry knowledge I sought (whether from within our industry as a technician) or about the industries I wanted a sales professional to penetrate.
I sought out testing systems that would test, not for insurance knowledge, but for the traits I sought and the drive and personality to sell. There are some really good ones out there (and some very mediocre systems, too).
I pre-wrote the interview questions because, frankly, I tended to talk too much and listen too little if I wasn’t working from a prepared set of questions.
This solidified in my mind exactly the kind of person I was seeking and gave me two tools to determine if the candidates were appropriate for my needs; the testing assessment and the interview questions that concentrated on the skills and traits that I sought. I even went so far as to note (for myself) the kind of answers I was seeking to the interview questions if the prospect was the right one.
I decided not to look for the producers until after I had the Selection Process defined. That helped me determine where I would seek experienced salespeople, whether I wanted experienced insurance professionals or salespeople from other industries and whether or not I wanted talented people new to sales or completely new to business.
Every owner will have different needs, desires and capabilities for insurance training, sales training, and management. Those owners’ traits, strengths and weaknesses really define the kind of person best suited for the agency.
If you are a strong agent, a personal performer but not a great manager, you may have to get an experienced insurance professional motivated by income potential or ownership potential.
If you are a strong planner and manager, you may want a “fresh face” to train in your way, both in insurance and in sales and market toward the strengths of the agency.
If you have target industries, you might want to find sales professionals from those industries and train them in the technical insurance products.
At different times, I needed different types of people and geared my search toward the type of producer I needed. A warning about insurance company people: Many agents have come from the company ranks. Some have become successful salespeople. However, most company people are better technicians than they are salespeople. They can certainly maintain a book of business and, if asked, they can generate an insurance proposal that is wonderful. Go after them if the most important thing to you is insurance knowledge. But test them carefully if you are seeking a high energy sales professional to make sure you don’t disappoint the employee and yourself with the results.
How To Pay Them
I’m not trying to equate producers with pets or test animals, but if you want a pet to learn a new trick you reward them for doing it well and withhold the reward for non-performance. Pavlov taught us that in his famous tests. You don’t reward a teetotaler for performance with free liquor and if candy is all you have to offer as a reward, I wouldn’t suggest hiring any diabetics, not matter how much they would enjoy the reward – it would be destructive.
What I am trying to get across is that you must hire producers who are motivated by money because that is the most appropriate reward we have for the sales of insurance products. The producer can and should be deeply concerned with the well-being of and service to the end-client. That’s why we labeled our successful relationship sales program, the Asset Protection Model – we are and should be interested in protecting the assets of our clients. However, the producer must both need and want growing financial rewards for their successes.
This sounds pretty simplistic. But, while everyone NEEDS money to sponsor their lifestyles, many people are not motivated by money. Producers should be selected because they see money more as a measure of their success than as a fulfillment of basic needs. That’s why the great salespeople don’t stop selling just because they are making a lot of money.
So the obvious way to pay a producer is based on commission income generated. However, we have learned that most producers, even the most successful, like most non-producers, need a steady income source to protect and pay for their families and their own lives. So we translated the commission income they generated into salaries that are sensitive to the size of the book of business that they generate.
How To Manage Them
While money is the great motivator and measuring stick, we found that the best producers are the ones who are not in the office. They spend all of their time with people that we do not yet insure. They also spend time with our clients, but that time is limited to a) making sure that the client is happy with our service, b)remains a loyal customer, c) purchases all other forms of insurance from us, and d) gives us the names of his friends and business associates for us to contact using him as a reference.
So the management process we use concentrates on defining the activity needed for the producer to achieve the number of sales (and corresponding commission to the agency and compensation to himself) and managing the producer to that level of activity.
Our marketing efforts are totally created to generate the leads that keep our producers’ Sales Funnels full of leads. Our marketing program involves a 15 Step, 3 Year marketing program to every prospect that only matures when the prospect becomes our client or when the producer disqualifies the prospect from his Prospect Bank
How to Motivate Them
Remember our example of Pavlov’s experiment and the training of our pets? A part of that formula that most agents forget is that treats are withheld if the desired activity does not take place. So we created a Self-Terminating Producer contract that works in two directions. It generously rewards producers for growth through a Base and Growth model of compensation (instead of through our grandparent’s antiquated “New and Renewal” commission model.) and it lowers compensation when the sales call activity drops below the level that would normally generate sufficient new clients to provide the producers their expected or desired compensation levels.
Instead of an agent becoming more frustrated every month as he views his producers sitting in the office doing work that the service staff could and should do (probably more accurately), if a producer is not tracking the appropriate activity levels over a sustained period, the compensation is automatically decreased (until and unless the activity level resumes acceptable levels). The theory is that we can fix the problem of a producer not being able to sell through coaching, counseling and training. But we can’t fix a lack of motivation for (or the actual fear of) making prospect calls. After all, the entire role of a producer is to MAKE FRIENDS on behalf of the agency. If he makes friends and is knowledgeable, helpful and more useful than the prospects current insurance provider, it makes sense that we would eventually become his agent.
If you have any questions or would like Al Diamond to visit you to analyze and tailor a Producer Compensation Plan specifically for your agency call Agency Consulting Group, Inc. at 800-779-2430.