PRODUCER-RELATED ISSUES
Agents need to know what sales-related expenses
the agency is willing to pick up
By Michael J. Weinberg
Recently, I received an e-mail from one of our readers suggesting that I write an article on how the agency and its producers can work together to share expenses for direct mail, marketing, and other promotional activities. Hence, the genesis of this month's column.
I think that all agencies struggle with marketing expenses in general and not just as it relates to sharing expenses with producers. I am constantly astonished at how little money most principals budget for general marketing initiatives. Ask many agency owners to invest $1,000 in a new program and most will dodge the issue. But ask those same agency owners to spend $5,000 for a meeting in Hawaii and many will whip out their checkbooks.
I am also amazed at how unsophisticated most of us are in deciding how to spend our marketing dollars. Show us a slick marketing program and we are, for the most part, a skeptical group of buyers. But let the little neighbor kid ask us to sponsor a soccer team with the promise that a dozen or so eight-year-olds will proudly display our name on their jersey and we immediately agree.
The issue becomes even more clouded when producers are involved and want us to pay for or participate with them in their own marketing efforts. Again, decisions are often made in a haphazard and inconsistent manner.
Over the years, our agency has developed some fairly rigid guidelines on what we will and will not pay for when it comes to an agent's marketing expenses. Here are some of those basic guidelines:
Business meals
The first issue we always have to address is the "three martini lunch." The agency's primary rule is that we do not pay for any of the agent's meals (or those of their clients and prospects) even when they are entertaining to win or keep a large account. However, as you will learn by the end of this article, we make exceptions to almost every rule and we pride ourselves on being flexible enough to agree to virtually anything that "makes business sense."
For example--and this is especially true for new agents--I believe one of the most effective ways an agent can build relationships is to have lunch with a prospect or center of influence and really get to know that person. For that reason, I often run a "promotion" in which I agree to pay for all prospect and client lunches (including the agent's share) for the current month. However, this offer usually garners little response, which is disappointing to me. I know that when I was first starting out, if someone had said to me, "Take anyone you want to lunch and bring the bill to me," I would have scheduled at least two lunches per day and maybe three!
The other "exception" deals primarily with newer agents. New agents often meet prospects whom they want to know better, but just aren't comfortable asking the prospect out for a Saturday night dinner. We counter this problem by offering the agent a gift certificate for four to a local upscale restaurant. This gives the agent a "comfortable" reason to invite the prospect and spouse out rather than just saying, 'Let's go out to dinner.' It also entices the prospect with a lovely, upscale evening that will not cost the prospect a single dollar.
Community organizations
An area that has always presented a challenge is paying for both advertis-ing and dues in local organizations (Lions Club, Rotary, etc.). Many years ago, we paid the entire cost of all advertising and of all dues.
Under that policy, everything imaginable was "critical" to an agent's success. Advertising in the agent's church or synagogue newsletter was always critical. Joining a dozen or more organizations was guaranteed to bring in lots of new business. The only problem was that since the agent had no investment in the process, there was very little incentive on the part of the agent to maximize the agency's investment in these various endeavors. We then changed our strategy and now we will pay half of any such expenses. It is amazing how few of these initiatives still seem to be so critical to a producer's success once they have to invest their own money.
Again, we always make exceptions. If an organization is beneficial to the entire agency (e.g., the Chamber of Commerce) and many producers can profit from our membership, then we will typically pay the entire cost of joining such an organization. Often times I will agree to reimburse the agent's half of the expenses for a particular project if a certain minimum sales level is achieved. The challenge is to encourage the producers to seek out new marketing and sales opportunities while keeping costs in check and not wasting the finite marketing dollars that the agency has budgeted.
Direct mail
Direct mail is another interesting area. Our position is that we will pay for the cost of direct mail that an agent sends out providing--and this is big one--the agent will call each prospect or client personally. We feel that if an agent is not willing to follow up with a call, then the mailing isn't worth the agent sponsorship. And if we are going to do a large mailing with no follow-up by an agent, then the responses will not be owned by any one producer.
Telemarketing
Whether internally generated or through an outsourced service, all telemarketing leads are paid for entirely by the agency and then are distributed as the agency sees fit. Typically, we give the telemarketing leads to the agents we believe can best handle them based on industry classification, account size and experience.
Obviously, there is no single answer that is right for everyone and, as always, if you have a system that works for you, then that's good. In fact, it is probably so good that I'd like to hear about it.
Thanks to reader Mark Hendrix for suggesting this article. *
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).