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

In preparing for the 12% to 15% decline in revenue that's beenwidely predicted in the coming year, as falling rates catch up withrenewals, we reviewed our agency operations and made some changes.Our plan included several sales strategies that your agency woulddo well to adopt, too:

1) Review revenue per CSR. We discovered that severalof our newer producers (hired within the last two years) wereworking with CSRs who simply could not process their accounts fastenough. The average new CSR was handling $300,000 to $350,000 inrevenue, and we felt they could do no more. We then identified thelarger accounts that pay 80% of the producers' revenue andinitiated a plan for them to call on accounts of that size orlarger. Our seasoned producers had CSRs handling around $500,000 inrevenue. If you write smaller accounts, your staffing costs willeat into your profits, so write larger accounts!

2) Change telemarketers' focus. Instead of gatheringexpiration dates from prospects and then qualifying the accounts,we asked each producer to use two key criteria for qualifyingprospects: (a) number of employees, and (b) annual sales. Thetelemarketer now asks for these two items to “update ourinformation.” Any prospect that falls below the agreed target sizeis deleted from the producer's list. This approach allows us tocontrol the size of producers' accounts and increase the revenueper CSR. (See strategy No. 1.) Our goal is to have no new businesswith any accounts generating less than $2,500 in commission. Wedon't want just any activity; we want qualified activity. Work onthe right accounts!

3) Consider lowering renewal commissions to 20% or so.As producers and CSRs try to “keep what they have,” they oftenincrease their renewal activity–at the expense of new-businessactivity. Other industries sometimes overstaff by 20% to 25% toreach their sales targets, and we may need to do likewise. Considerlowering renewal commissions to fund the hiring of new producersand to encourage the sales staff to focus on new sales.

4) Declare a benchmark for paying commission on new andrenewal accounts. To foster greater producer and CSRproductivity, we established a minimum threshold for earningcommissions. A new account must generate at least $2,500 incommission, and a renewal account must generate at least $1,500 forthe producer to receive compensation for it. Our sales team doesn'tlike to work for free and therefore no longer seeks out accountsbelow the established commission threshold. To generate morerevenue, counteract the commission reduction brought on by the softmarket and reduce the number of CSRs needed to service an agency'sclients, write larger accounts!

5) Identify producers' bottom 10% and get rid of thoseaccounts. They are the source of most of our service, billing,loss-ratio and payment problems. They're the accounts we have toreinstate and rewrite. Most of them should never have been writtenin the first place. With our CSRs' input–because producers tend tohold on to anything that puts money in their pockets, especiallywhen the service team does most of the work on it–we established avalue for each account based on the amount of service it requires,rather than the amount of revenue it generates. The ones with thelowest value we either nonrenewed or made house accounts. Eliminateyour bottom 10%!

6) Grant “emeritus” status to producers generating $500,000or more in annual revenue. They already know how to earn moneyfor themselves and for the agency, so allow them to skip routinesales meetings. Producers with $300,000 to $500,000 in revenueprobably need only a moderate amount of structure, provided theirnew-business activity and revenue growth justify a release ofcontrols. Producers with less than $300,000 needs significantstructure, monitoring and accountability, because they have not yetreached a production level that assures success. Give themcontinuing sales training to help them stay on track.

Any producer who cannot produce at least $35,000 in new-businesscommissions probably should not be employed. If you create a teamof mediocre (or worse) sales professionals, you'll never hit yourgrowth objectives!

7. Identify producers' top 20% and solicit referrals fromthem. These accounts generate 80% of producers' revenue, andtheir respective producers should visit them at least once perquarter. During each visit, the producer should develop a list ofat least 10 prospects who meet our criteria for revenue andemployee size, and who have something in common with the currentclient. It costs less to acquire clients via qualified referralsthan from cold calling, and the gestation period (the time spentturning a suspect into a client) is historically much shorter. Bytaking this approach, a producer can count on scheduling a minimumof 12 face-to-face appointments each week–six from his or her topclients and another six from qualified referrals!

8) Use good questionnaires to qualify new-businessprospects. Starting Sept. 1, we required the used of thoroughquestionnaires on all renewals too. A producer should complete thequestionnaire 120 days before renewal to allow time to resolve anyservice issues the client may have.

Adopting these eight fundamental changes has made a significantdifference in our culture, profitability, new-business growth andrevenue per employee. Please try them in your agency, too. It'slikely that you are busier now than you were last year, that morecompetitors are after the Top 20% of your accounts, and that yournew business activity is more sluggish than it should be. So whatdo you have to lose?

Good selling!

Tom Barrett, CIC, AAI, is president of the Midwest and Southeastregions of SIAA Inc., a partnership of more than 1675 agencieswriting $3.5 billion annually in property-casualty premium. Tomalso serves on the national faculty for Dynamics of Selling,Marketing & Sales Ruble Seminar, and Mega Ruble Seminars forthe National Alliance for Insurance Education & Research. Todiscuss your sales planning, e-mail Tom at [email protected]. For moreinformation on Dynamics of Selling and Dynamics of SalesManagement, call (800) 633-2165 or visitwww.TheNationalAlliance.com.