PRODUCER-RELATED ISSUES
Think big to earn big
By Michael J. Weinberg
Walt Disney once said, "If you can imagine it, you can achieve it!" . . . Imagine being a six-figure earner and start thinking and acting like one.
One of the first questions that I pondered in my career as a new producer was how I might upgrade my book of business and move into the world of big sales. After all, I had entered the insurance industry because it would give me the opportunity to increase my income tenfold by merely adding a zero to the end of every one of my sales. So, when I finally had the opportunity to do so, I was faced with the "how."
I hadn't been at the agency very long before I posed that question to David Stanton, the agency principal who hired me in 1975. (David subsequently became my best friend and partner as well as my mentor--a role and/or burden he is destined to bear forever!) In his own unique bottom-line style, David simply asked me how much money I wanted to earn each year. I replied, "At least $100,000."
"No problem," said David; and quickly doing the math in his head, he continued, "Just don't ever do anything in your sales role that doesn't pay you at least $50 per hour."
The genius of David's advice lies in its simplicity. All too often agents chase accounts that don't generate enough commission dollars to pay for their gas, let alone adequately compensate them for their time.
Let's look at a mathematical example. Suppose a producer goes after a $2,500 commercial lines account with a gross commission of 10% to the agency. Assuming that the producer is on a 35% split, the producer's gross commission is $87.50 a year or $7.29 per month pre-tax or approximately $6.00 per month after tax. Frankly, I don't know of any account that I propose and write and then service for $6.00 per month or even for two or three times that commission amount. In the best (not a typo) case scenario, you visit the client two or three times and don't write the account. In the worst (again, not a typo) case scenario, you actually write the account and are burdened with a client whom you can't afford to service. And heaven forbid you write many of those types of accounts. Pretty soon your entire book consumes all of your available time with hundreds of small accounts that are keeping you from achieving your real goals.
I believe that it was Walt Disney who once said, "If you can imagine it, you can achieve it!" David helped me to imagine being a six-figure earner and to start thinking and acting like one, including limiting my activities to working on those accounts that would help to achieve my goals rather than keep from them. By starting out in the right direction, I had a much easier time getting to where I wanted to go. By now I probably have alienated all of the producers and principals whose agencies thrive on writing "small commercial" accounts. Just for the record, I am not necessarily against agencies that write these accounts; I just don't believe that either the agency or the producer can afford producer involvement unless there is the potential for a small account to mushroom into a larger one. (While I know that we all have our examples of times in the past when this has happened, historically the overwhelming majority of small accounts stay small!)
So this hypothesis begs two obvious questions, the first of which is, "Is it better for a producer to struggle to find larger, more profitable accounts, often writing none, than to fill his or her day writing smaller accounts that might otherwise be unprofitable?" My answer to this is an unconditional "yes." My reasoning for this goes back to when I first tried to learn to play tennis at the age of 40 (a sport I still haven't mastered almost 15 years later). The first thing that the tennis pro tried to teach me was that it was better not to practice at all than to continue practicing "bad form." The same goes for the sales process.
The second obvious question that this hypothesis begs is how does one go about selling "larger" accounts? Volumes of books, countless articles, and hundreds of seminars have been dedicated to this question. While time and space do not allow me to even scratch the surface of that question, I can give you two quick tips.
First, be the most knowledgeable insurance agent in your field of expertise. In the last century we sold products (in our case, policies), but in this century we are selling knowledge and creativity. Clients have come to realize that most policies are very similar, and they are challenging us to differentiate ourselves in other areas and with value-added services.
Second--and this is so critical--make sure that you place yourself in the center of groups that attract large clients. Large businesses do not send their employees to bars or bowling alleys to meet potential business partners, but they do send them to trade and industry groups and conventions. Join and attend groups that are made up of the types of prospects that you want to target.
I am sure that I will get numerous e-mails extolling the virtues of writing small businesses. If it works for you and your agency, I am happy for you. But I have never met an agent or agency owner who specialized in small accounts that made as much money as those who limited their clientele to larger accounts that generated larger commissions.
No matter what segment of the market place that you target, make sure that you can efficiently and profitably provide a high level of service to your client base in order to ensure a high persistency percentage. And, network with your target market prospects as often as you can. Good luck! *
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).