PRODUCER-RELATED ISSUES
Expending time and effort on the
right kind of relationship-building pays off
By Michael J. Weinberg
Successful networking ... seems to elude all but the
very best in our profession.
One truism that has always held fast throughout my career both as an agent and as a sales manager is that in order to succeed in this business, one must either know a lot of people or call on a lot of people. Success in the sale of insurance requires a high volume of relationships.
For me, and for all of the dozens of agents whom I have managed over the years, getting to know lots of people is a true joy while cold-calling on a lot of people (prospects) is ultimately a burnout.
Let's first look at the numbers. After tracking the successes (and failures) of our agency's sales force for the last 14 years, we know that an agent must make 100 cold calls (actual calls where an agent speaks with a potential prospect--not just dials) in order to set 10 appointments. Further, we know that from 10 appointments the agent will yield three prospects with whom we want to work (and who want to work with us on our terms). In a perfect world, we will then make 1.5 to two sales from those three presentations.
An examination of these numbers quickly unveils the problem of burnout for the agent who constantly works exclusively on a cold-call basis. At the base of that sales model is 100 cold calls each week. Even if the agent loves making cold calls (and what agent really does?), success will require 5,000 new prospects per year (100 weekly for 50 weeks each year). Even in our large metropolitan area, there aren't 5,000 prospects of appropriate size in enough target industries to satisfy a moderately sized sales force. Second, there are hardly enough hours in any given day for an agent to identify and contact that many prospects on a consistent weekly basis.
Given those discouraging facts--is asking an agent to make 10 new preliminary prospect appointments each week, in order to generate two new sales each week, an unrealistic goal? I honestly don't think so.
To an outsider, asking a salaried new agent to economically justify his or her existence by having one half-hour appointment each morning and a second half-hour appointment each afternoon seems like an almost laughably small goal. Yet, in all my years, I have never managed to hire a new agent who could generate two new prospect appointments each day on a consistent basis over time.
The reason for this lack of success in the cold-calling area is really quite obvious. To call 100 new people each week in hopes of yielding two new sales is asking an agent to endure a 98% failure (or turndown) rate. In this society where any individual's primary goal is "acceptance," is it no wonder that agents--especially new agents--cannot handle this amazingly high rejection rate for extended periods of time?
Is there an answer with an acceptable alternative to cold-calling? You bet there is! It's called successful networking--a simplistic answer and solution that mysteriously seems to elude all but the very best in our profession.
Before you write me about all of the networking that you and your agents do, with or without success, let's examine the real world.
I have met few agents who truly network effectively. Going to a Chamber of Commerce function as one of 300 salespeople in a marathon to see who can hand out the most business cards during cocktail hour does not meet my definition of successful networking. Working on a small committee within the Chamber with 10 other members, each of whom has the ability to control the purchase of insurance within his or her own firm, does constitute successful networking. In that cocktail hour of 300, no one really gets to know anyone else. In a committee of 10, you have the opportunity to work hard and have your efforts shine among the other members. You have a chance to showcase your talents in such a way that other committee members might say, "Here's a hardworking professional I'd like to have on my corporate team as a trusted insurance advisor."
One mystery to me is why so many sales agents seem to think that networking is limited to business hours and business-related activities. For me, networking (defined as meeting potential new clients) is something that I rarely have time to do during the day. Yet, I have never made a sale from a cold call in my entire career. In my world, networking is best done in a social setting with my wife and sometimes with my entire family.
No, I don't go out on a Saturday night and "work" every cocktail party I go to. But I do make sure that when we do go out, it's often in situations where I have an opportunity to meet new people who might be good prospective clients. Agents constantly amaze me when they complain that they never seem to meet the "right" kind of people to whom they can sell the "big case." Yet when I talk with them at length, it seems that every Saturday night they are going out with the same people to the same places. No wonder they don't meet anyone new! This is especially true if they visit places that aren't frequented by those individuals who are large buyers of insurance.
Perhaps one of the best stories I ever heard was about Willie Sutton, the notorious bank robber. When asked why he robbed banks, he replied, "Because that's where the money is!" And when I relay this story to my agents, I tell them they have to be where the money is, as well.
A postscript for our readers to my article on producer compensation in the February issue of Rough Notes:
While attending the Rough Notes editorial board meeting in February, I heard a sensational idea for producer compensation that I believe is worth sharing.
An agent at he meeting told of an agency that "star" rates each account. This is a rating system based solely on the commission income generated by the account. An account that was below the agency's normal "minimum" would have a one-star rating, and the very largest accounts would have a five-star rating. Then the agency might then assign a commission split of "0" for a one-star and a much higher-than-average commission split for a five-star account. A three-star account would have the agency's current commission split with two- and four-star accounts carrying commission splits that are slightly below and slightly above average splits.
I really like this system because it rewards the agents who write the largest (and therefore the most profitable) accounts with larger commission splits. *
The author
Michael J. Weinberg, nationally known columnist, speaker and seminar leader, is the managing director of Gateway Insurance Agency where he spearheads the agency's marketing/
sales and automation efforts. He invites reader participation and feedback through his e-mail address (mweinberg@gatewayins.com).