By the time this article goes to press, many of you will have begun the planning process for the new year. I routinely ask people if they have a marketing and business plan and a defined method for selling insurance that can be measured and quantified. The answers are alarming. Only 10% of respondents have business plans, and just 3% have defined marketing and sales plans for new business. In today's market, carriers demand results from their agents and eliminate the poor performers (as well they should). It is our responsibility as business owners to formulate business plans and communicate those plans to our company partners.

During the third quarter of 2003, SIAA wrote $53 million in new business nationwide. How? We followed a marketing plan, a new-business plan and a defined sales process. Here are six suggestions to help you plan for your own success in 2004.

1. Know your numbers. The agency principal should have a list of every producer's accounts and of those accounts assigned to "the house." Meet with each producer to review his or her accounts. Focus on the top 10% and develop a referral plan for finding more "A" accounts. Get rid of the bottom 10%-the slow-pay and no-pay accounts and those with claims problems that cost you bonuses and overrides-by nonrenewing them or shifting them to "the house" for service. Doing so will save producers time so they can pursue profitable new business.
2. Plan your activity. Each producer needs to know his or her conversion rates of (1) suspect to prospect, (2) prospect to diagnostic appointment, (3) diagnostic appointment to developing the presentation, and (4) presentation to close. After reviewing previous activity, you'll understand the math behind success. A low conversion rate in any category indicates a qualification problem. You should also calculate your average commission per account per producer and the average for the agency. Many producers want more money, and they can earn it by getting more "A" prospects, which pay above-average premiums. The agency should also determine the cost of each presentation. Look closely at the average commission and the average cost to acquire new business. A typical agency spends up to three years' commission to land larger accounts, when the average shelf life of such an account is seven years. Develop an activity plan for every day of the year, excluding holidays, vacation days, sick days, time spent on continuing education and days reserved for servicing current clients. (You'll be amazed at how few days are left for selling.) Compile the data before meeting with the sales team.
3. Meet with producers. Meet privately with each producer to review his or her action plan. Determine the changes necessary to help them achieve their production goals. Review sales skills and formulate a realistic self-development plan for each person, based on his or her own sales skills and activity. Do not hand them goals in which they have no ownership. Many producers will need encouragement to rid themselves of their bottom 10% accounts, but they're likely to buy in once they understand current activity and how to make the required changes. Each producer should assign a renewal factor for his or her top accounts, the largest clients that collectively account for 25% of the producer's revenue. In a recent annual-planning session, we determined that 60% of a producer's top accounts were in serious jeopardy at renewal. Plan early for such risks!
4. Review prospect lists. We continue to see agencies managing the old-fashioned way. That is, they start with a list of prospects and try to develop a list of carriers to match it. The result is low hit ratios and the need to broker business through friends or go to surplus-lines markets. That cuts commissions and eliminates profit-sharing while increasing overhead. A more modern approach is to "go where the appetite is" and, until the market changes, focus on accounts in the classes of business your carriers prefer. From each producer's master list, develop a target list for 2004 and forget about the other prospects for now. For each prospect or class, assign a success percentage factor (reflecting the likelihood of writing this account) that you can track for the coming year. If that factor is less than 65%, move on to the next prospect.
5. Meet with your carriers. Compile a presentation, preferably in PowerPoint, for your carriers. Include your successes during the past year, your hit ratio and your average account size and class. Show each carrier the agency's overall results and its results with that particular carrier. After establishing that you are a productive partner, reveal your new business plan. Ask how much of your projected business they wish to write and how they will help you write it. During the meeting, complete a production plan with the carrier and review its current target lists. Carriers' appetites change often, so we must change accordingly. Achieving your carriers' objectives likely will yield additional compensation.
6. Hold regular agency reviews. Sales meetings should not focus on placement issues or what the marketing department is doing. Sales meetings should be about sales and how to improve sales skills. At least monthly, conduct a true sales meeting to review conversion percentages, hit ratios, the average commission rate, acquisition expenses and the success percentage assigned to prospects during planning versus your actual success rate in writing them. Post the success rate for all producers to see. If you are off-track, this exercise will let you find out early and allow you to make modifications. Also, develop key-account role-playing scenarios for producers to practice, and review your sales process within the agency. My organization follows the above planning procedures in all of its 1,300 offices. The result is $2.7 billion in total sales, with over $200 million in new business this year alone. If you would like to discuss your sales plan for 2004, feel free to e-mail me at [email protected]. It's your future, and you are 100% in control of it. Good selling!

   Tom Barrett, CIC, AAI, is president of the Midwest and Southeast regions of SIAA Inc., a partnership of 1,300 independent agencies. Tom also serves on the National Faculty for Dynamics of Selling and Ruble Seminars for the National Alliance for Insurance Education & Research. For more information on Dynamics of Selling, call (800) 633-2165 or visit www.The National Alliance.com.