“Strictly Sales” is written by the faculty of the Dynamicsof Selling program. This month's column is from Tom Barrett, CIC,AAI.

A FEW weeks ago, a vice president of a large agency in NewEngland called me to ask for help with her “wacko marketingmanager.” This VP and the agency owners were convinced that therewas a correct method for making submissions attractive to theircarriers, and that the agency's marketing manager was responsiblefor figuring out what “trick” would accomplish this. Thinking aboutthis phone call led me to consider some important questions:

o Why do agencies call their placement department themarketing department? An agency's sales effort involves threedistinct functions:

-The agency needs a marketing department to market the agency'sname; create a recognizable “brand,” or reputation; and stimulatethe interest and desire of sales prospects. At few agencies do wefind anyone who understands marketing in this true sense.

-An agency's placement department markets agency-carrierrelationships and places accounts with carriers. The VP who calledme was really describing the placement function within her agency,and that's where she was convinced her agency's problem was.

-The agency's sales department should be run by a leader who hasthe skills to implement a consistent sales process and use coachingand accountability to make sales superstars out of even moderatelytalented people.

o What does your agency spend to acquire a new account?Our caller couldn't answer that question, but every agency leadershould have this information. How can you pursue new clients if youhave no idea how much your agency has budgeted for the task?

o What is your closing ratio? The average closing ratiofor middle-market insurance agencies is in the range of 25% to 30%.Agencies that can't do better than this have major problems withsales skills, aren't qualifying prospects as they should be, andprobably aren't going after the business classes that match theircarriers' appetite. Agencies that write policies for one of everyfour prospects are spending 75% of their time just practicing. Howwould you feel if heart surgeons settled for such poor performance,and your surgery was tomorrow?

o What is the agency's average commission per account ineach department? Whether evaluating our own agency partners orconsulting for other agencies, we always ask, “How do you changethe numbers?” You have to know what the numbers are-such as theaverage commission per account in each department-before you canchange them.

Although our caller couldn't answer any of these questionsimmediately, the answers are the basic information that everyagency should always have at hand. From this information, the nextstep is to discuss sales-management issues, including asking thefollowing questions:
o Is your sales manager following a consistent marketing andsales process? The agency in question had no consistentprocess. We determined that the primary problem with this agency'smarketing efforts wasn't their marketing manager. Rather, theagency's sales manager demonstrated no leadership, and themarketing manager was in constant reaction mode for the productionstaff. With no consistent marketing or sales plan, the agency wasquoting some undesirable risks and demanding that the marketingmanager dress them up for presentation to carriers. Does this soundfamiliar?

o Are your producers super-qualifying risks? The agencythat called us for help had failed to set the “rules of the game”and was not asking some important questions before preparingproposals for prospects: Do we have a carrier that wants thisprospect at a preferred commission rate? Is the prospect willing toterminate its current agent? What will it take to make that happen?If we agree on common rules of engagement, is there anything theincumbent agent can do to convince the prospect not to carrythrough with their commitment to us?

o Have your producers quantified the prospect's relationshipwith the incumbent agent? Agencies offer three things toprospects: price, product and relationship. The relationship may bethe most important. Determine what type of relationship theprospect has with the incumbent agent before investing anyresources on the account. If a prospect really loves its agent, nomatter how poor that agent's service, move on.

As we discussed these questions with our caller, it began toshine through: Her problem wasn't the marketing department at all.The agency's producers were not qualifying risks, not asking theright questions, not following the appetite guides of theircarriers and not following a sales process. Then they had theaudacity to consider terminating their marketing (placement)manager for poor performance. We didn't get far enough into theconversation to determine the value of this agency's marketingmanager. But we did determine that the agency (40 people and $25million in sales) struggled with placing accounts because they hadno up-front qualifying.

That such a large agency could overlook such an obvious problemdemonstrates an important lesson. Agency owners typically buildincredible relationships and are immaculate order-takers. Theyoften have limited sales skills and poor business knowledge,however, and yet their relationships pull them through-to a point.Make sure your agency is doing everything necessary to compete inyour marketplace, putting the systems and disciplines in place toassure success.

Good Selling!

Tom Barrett is president of the Midwest and Southeast regions ofSIAA Inc., a partnering of 1,675+ agencies writing $3.25 billionannually in property-casualty premium. Tom also serves on thenational faculty for Dynamics of Selling, and Marketing & Salesand Mega Ruble Seminars for The National Alliance for InsuranceEducation & Research. For more information on Dynamics ofSelling, Dynamics of Sales Management, and the School for ProducerDevelopment, contact The National Alliance for Insurance Education& Research at www. TheNationalAlliance.com or call (800)633-2165.