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

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

o Why do agencies call their placement department the marketing department? An agency's sales effort involves three distinct functions:

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

-An agency's placement department markets agency-carrier relationships and places accounts with carriers. The VP who called me 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 has the skills to implement a consistent sales process and use coaching and accountability to make sales superstars out of even moderately talented people.

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

o What is your closing ratio? The average closing ratio for middle-market insurance agencies is in the range of 25% to 30%. Agencies that can't do better than this have major problems with sales skills, aren't qualifying prospects as they should be, and probably aren't going after the business classes that match their carriers' appetite. Agencies that write policies for one of every four prospects are spending 75% of their time just practicing. How would 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 in each department? Whether evaluating our own agency partners or consulting for other agencies, we always ask, “How do you change the numbers?” You have to know what the numbers are-such as the average commission per account in each department-before you can change them.

Although our caller couldn't answer any of these questions immediately, the answers are the basic information that every agency should always have at hand. From this information, the next step is to discuss sales-management issues, including asking the following questions:
o Is your sales manager following a consistent marketing and sales process? The agency in question had no consistent process. We determined that the primary problem with this agency's marketing efforts wasn't their marketing manager. Rather, the agency's sales manager demonstrated no leadership, and the marketing manager was in constant reaction mode for the production staff. With no consistent marketing or sales plan, the agency was quoting some undesirable risks and demanding that the marketing manager dress them up for presentation to carriers. Does this sound familiar?

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

o Have your producers quantified the prospect's relationship with the incumbent agent? Agencies offer three things to prospects: price, product and relationship. The relationship may be the most important. Determine what type of relationship the prospect has with the incumbent agent before investing any resources on the account. If a prospect really loves its agent, no matter how poor that agent's service, move on.

As we discussed these questions with our caller, it began to shine through: Her problem wasn't the marketing department at all. The agency's producers were not qualifying risks, not asking the right questions, not following the appetite guides of their carriers and not following a sales process. Then they had the audacity to consider terminating their marketing (placement) manager for poor performance. We didn't get far enough into the conversation to determine the value of this agency's marketing manager. But we did determine that the agency (40 people and $25 million in sales) struggled with placing accounts because they had no up-front qualifying.

That such a large agency could overlook such an obvious problem demonstrates an important lesson. Agency owners typically build incredible relationships and are immaculate order-takers. They often 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 in your marketplace, putting the systems and disciplines in place to assure success.

Good Selling!

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

Special Reports /

Strictly Sales: Placement departments can't fix agency sales problems

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