(“Strictly Sales” is written by the faculty of the Dynamicsof Selling program. This month's column is from ThomasBarrett.)

WITH A softening market leading to declining premiums, youragency might be 10% to 15% smaller than it was in 2004. The timehas come to bring in new production sources to make up that gap,and that could mean hiring a new producer.

The rate of success for newly hired salespeople varies greatlyfrom agency to agency. We hear of failure rates of 50%, 75% andeven 90%. One large bank-owned agency has a “stick rate” of 25%,which we find to be the norm in our business. The No. 1 reasonproducers fail? Lack of training.

Chris Burand, who writes the “For the Manager” column forAmerican Agent & Broker, suggests that unless your agencygenerates more than $5 million in revenue, you should hire andtrain producers one at a time. We tend to agree with Chris. Eachagency should have a development budget (unless you're sellingout), and you should keep your eyes open for opportunities to hirenew salespeople. When those opportunities present themselves, youshould have the resources to act.

No matter how much you like a candidate, if he or she doesn'tpossess a sales aptitude (which you can determine by testing), thenyou'll never make him or her a success. Good producers areaggressive, money-motivated, self-starters with a desire to competeand win. They have enormous egos and handle rejection well. Theylove taking chances, enjoy new challenges and quickly become boredwith the mundane task of servicing accounts. They do not have tocome from our industry or be renowned for their ability to quotepolicy language.

Conducting the interview

Selecting new producers starts with interviewing and evaluatingcandidates. Here are some tools that should be used in theseprocesses.

–The telephone interview: This interview enables the interviewerto screen out unqualified prospects. The interviewer should workfrom a script with all the necessary questions. We suggest that thesales manager make these calls. Besides enabling the interviewer toscreen out unqualified candidates, the phone interview allows thescreener to assess three crucial qualities: poise, phone voice andaggressiveness.

–The face-to-face interview: This interview enables the salesmanager to gauge the candidate's sales skills. The interview shouldbe scripted and should use open-ended questions to elicit extendedresponses.

–The r?sum?: Look for gaps in employment histories and partialinformation. Look for information about prior positions held andthe candidate's performance. Check the references.

–Testing: Use a service like Omni or Caliper that can provide anunbiased assessment of the candidate's personality traits and rawintellect.

Issues surrounding the offer

Either at the time you offer a candidate a position, or afterthe candidate accepts, there are many issues to discuss, includingthe following:

oPosition title.
oStart date.
oBenefits.
oCompensation.
oEmployment agreement.
oOwnership of accounts.
oNon-piracy provision.
oDeferred compensation.
oEmployee manual review.
oVacation or military leave.
oTravel expense policy.
oEducation expense policy.
oEntertainment expense policy.
oOffice and support.
oStandards of performance.
oReview of procedures.
oProduction goals and validation schedule.
oTraining.
oIntroduction to office team.
The training process

Develop a formal training process before you hire a producer;from the outset, you must plan for his or her success. Manycarriers have producer-training programs (e.g., Chubb), as doorganizations like The National Alliance. Once new producers returnfrom school, they need a structured work environment. You'll investalmost $200,000 in each before you know if they'll work out, sowhat's a few more thousand to assure they have the training to givethem the foundation they need?
Someone needs to manage new producers. While larger agenciesusually have sales managers, smaller ones tend to rely on anexisting principal or producer. Either way, managers should have aplan outlining their responsibilities, which can includeidentifying the niches in which new producers will work, choosingmentors for the new producers, helping them with phone and salesskills, planning for joint sales calls (after which managerscritique new producers' performance) and going with them on theirfirst few presentations, to make sure they have the skills toclose.

Jeff Wodicka, national program director for the Dynamics ofSelling program, has determined that only 2% of potentialcandidates have the necessary traits and skills to become “superproducers.” Another 18% couldn't become successful if you investeda million dollars in their training. The remaining 80% are in the“average” category. Candidates in this group probably aren't likeyou, so remember to identify the core skills needed for producersuccess, and understand that with training you may get them intothe top 20%. Don't spend your career looking for the top 2%–mostalready have jobs.

The return on investment in a new producer doesn't comeovernight. You'll have 24 months and more than $200,000 invested ina candidate before you know whether he or she will make it. All themore reason to make sure you have a plan to train the new producer.Your expectations for new producers will vary, depending on whatthey are selling (e.g., personal lines, commercial lines, benefits,financial services). Usually new producers are started off on asalary. If so, they need to at least validate their positions. Forinstance, if you pay producers 40% of commissions, and start a newproducer at a $40,000 annual salary, the producer must bring in atleast $100,000 in commissions to validate his position.

Identify the classes in which you want the producer to work. Welive in a world of specialists. If you train producers inparticular industries and have them work only on accounts in thoseniches, you increase their chances for success. Identify a businessclass, introduce a new producer to current clients you already havein that class, and encourage him to develop relationships andreferrals. Help the producer learn the niche inside out. Besidesknowledge, the producer will gain a working vocabulary of thebusiness and the confidence to approach prospects.

A recap of the process

The key to hiring and developing successful producers is having apro-cess. Here is a checklist of the major steps.

oDefine the specific goal.
oState the steps needed to achieve the goal.
oAssign the individual responsible for managing the producer.
oDetermine the dates on which each step will be accomplished (atimeline).
oDetermine the agency needs.
oCreate a position description.
oEstablish a budget.
oCreate documents (producer agree-ment, agency training materials,sales and marketing track).
oCreate an action plan.
oCommunicate the action plan.
oIdentify recruiting sources and methods.
oBegin the recruiting process.
oImplement the selection process.
oDeliver the job offer.

Training and marketing are the agency's responsibility. Atraining program should get your producer productive within sixmonths, and you should see validation within 24 months. Now is thetime to get your agency into the growth mode, if you expect toincrease in size and compete with those acquiring yourcompetitors.

Good selling!

Tom Barrett is president of the Midwest and Southeastregions of SIAA Inc., a partnering of more than 1,600 agencieswriting $3.5 billion annually in property-casualty premium. He alsoserves on the national faculties for the Dynamics of Sellingprogram, Marketing & Sales Ruble Seminars and the MEGA Seminarsfor the National Alliance. He welcomes correspondence [email protected]. For more information on Dynamics of Selling, call(800) 633-2165 or visit www.TheNationalAlliance.com.