WINNING STRATEGIES
"Things I don't understand" about the ways many producers work
By Roger Sitkins
Iwould like to share with you my TIDU list. This stands for "Things I Don't Understand."
Although I have been a performance coach to independent insurance agencies for more than 23 years now, there are still tons of things I don't understand. Can you explain any of them?
First, I don't understand why producers are so guilty of practice quoting. Why do they allow themselves to work on accounts for which they have not developed a clear understanding of the "Rules of the Game"? They never ask, "What will it take for us to do business?" They don't have an understanding of the relationship with the current agency. They never ask, "Can you see yourself firing your current agency?" These are accounts about which their gut is screaming, "Get out and get out fast!"
Too often the "Practice Quoters" operate under the old method of selling insurance: Look, Copy, Quote, Pray. They look at the current policies; they make copies of the policies; they quote the account; and they pray they've got a market and the lowest price!
I just don't understand--do you?
The second thing I don't understand is why most producers don't ask for referrals, thus leaving their "prospect pipelines" basically empty. They have a fear of asking for referrals; yet when one of their clients needs something and another client provides the needed item, they immediately refer one to the other. Both clients are happy and thank the producer! Yet when it comes to asking for a referral, they feel they can't ask--that it's below them--or, worse, they feel they aren't "worthy."
Every producer will tell you that the best lead one can possibly have is a referral. Yet they do not have the discipline, the structure, the process or the self-management that makes referrals truly a non-optional behavior.
I just don't understand--do you?
The next thing I don't understand is the low closing ratio that agencies and producers experience. At a recent speaking engagement, I asked the attendees what their agency's closing ratio was. As always, only about 10% of the attendees knew! They don't even know their "batting average"!!
Most will guess and say, "Oh, we have around a 20% to 25% closing ratio."
How can you maximize your agency's value or, as a producer, your personal income when you are closing only two or three out of 10 that you quote? YOU CAN'T!
I just don't understand--do you?
How about this one--why is it that the average producer has no true "prospect pipeline"? Again, at the same speaking engagement, I asked the crowd about their prospect pipelines and whether they had a "Top 20 Prospect" program in place in their agency. This time about 20% could answer positively.
I've received some great comments when asking about prospecting activities. I asked one producer who his prospects were for the next year and his response was, "I don't know; they haven't called me yet." Another one told me that they always answer the phone by the third ring! Another told me that they "aggressively wait for the phone to ring."
They were kidding a bit. However, weren't they really telling the truth?
How can you be in sales and not have a targeted list of the businesses you want as long-term clients for your agency?
I just don't understand--do you?
Here is one of my favorite ones: no division between sales and service activities. I call this the SHO--Service Hand Off. Why do producers allow themselves to spend so much time in the office doing handling-related items? Other than the fact that producers love to confuse activities with results, they simply don't focus on the fact the service staff is paid to handle the service items so that producers can be freed up to focus on sales! Why should the agency make this financial commitment to servicing people and then also invest producers' time in the same function?
I just don't understand--do you?
What about focusing on the Vital Few (top 20%) clients vs. the Trivial Many (bottom 80%) clients? I have mentioned Pareto's Principle, the 80/20 Rule, many times. If it is true that the top 20% of your accounts will generate 80% of your commission income (do you know these numbers for your agency or book of business?), you'd darn well better focus on them. The reality is that in the vast majority of independent insurance agencies, the top 20% of the clients are subsidizing the bottom 80% of the clients!
If you are going to over-service someone, it had better be the top 20%. Yet most agencies and producers do not have a formal relationship management program in place that forces them to actively manage their most important clients.
I just don't understand--do you?
Dovetailing with Vital Few vs. the Trivial Many, why is it that producers fight so hard against the trading down of clients? Why do they believe that they have to be all things to all people? Why are they so protective of their really small accounts?
The average producer will not trade down accounts, believing that every commission dollar is a good dollar. I must admit that when I first started out selling insurance (motorcycle insurance from my dorm room in college), I felt the same way.
I can tell you that never has a producer in our program make less money as a result of trading down clients! At a minimum, producers should trade down at least the bottom 20% of their clients. This will represent only about 3% of their total commissions and will allow them to focus more energy on their best clients.
I just don't understand--do you?
One of the really great things about being in this business is renewals. How many other sales jobs offer a product or service that the client buys every year? Yet, I see that most agencies and producers do not have a formal process of maximizing their renewals.
I still see producers who mail the renewal policies! I firmly believe that all "A" and "B" account policies should be hand-delivered to the client and that the producer should take the account manager (CSR) along on the appointment. During this appointment, the producer should determine the "Renewal Rules of the Game" for the following policy year. We teach our producers to ask the following question: "What has to happen over the next 12 months for you to guarantee me that we'll continue our relationship again next year?"
Notice I said "continue our relation-ship." I believe that you don't renew accounts; you continue relationships. Yet the average producer simply hopes to renew without ever really knowing what the client's expectations are.
I just don't understand--do you?
What about the lack of a formal sales system in the majority of agencies? Independent insurance agencies need to understand that they are sales organizations that provide excellent customer service. But it does start with being a proactive sales organization.
How can you say that you are in the insurance sales business and not have a formal sales process that all of your sales people follow?
In the past, we have taught the basic Solutions Oriented Selling approach to our clients. It consisted of a Diagnostic Appointment, followed by a ProView (Professional Review) appointment and finally the Presentation of Solutions Appointment.
The bottom line is that you need to have a selling process in your firm, not hysterical activity on the way to the grave! Only about 10% of agencies have one.
I just don't understand--do you?
Maybe the real answer to the TIDU list is that sales people in the independent insurance agency business can quickly get to a comfort level and then coast for the remainder of their careers!
Let's face it; the average producer has between $250,000 to $300,000 of gross commission on his or her books of business. Depending upon the compensation system in their agency, these producers can earn somewhere in the neighborhood of $100,000 a year. Now I don't believe that gets you to financial freedom (which I define as doing what you want to do, when you want to do it, and with whom you want to do it). However, it certainly puts you in the top 10% of income earners in America.
The real problem is that when producers start coasting, they start burning up the agency's energy! They hang around the office way too much and get involved in things they never should touch. I mean--what the heck--they've got to be able to tell everyone how "busy" they were at the office!! The other problem with coasting is that the law of gravity says you can coast in only one direction--down hill!
I just don't understand--do you?
The author
Roger Sitkins is the president of Sitkins Group, Inc., of Fort Myers, Florida. Sitkins Group has provided services to more than 2,000 independent insurance agencies, helping them to "force vertical growth" in their sales and marketing arenas, while quantum leaping profitability. Sitkins offers a Producer Training Camp where graduates have increased their closing ratio by 69% and their revenue per sale by 71% in one year. Sitkins also offers a CEO Training Camp, aimed at helping owners to manage their agency to a 25% plus profit by implementing business, management and financial planning for controlled, profitable growth.