Sales-Driven Agencies Benefit Clients
After years of debate, a client of ours recently decided to begin distributing to their producers a monthly report showing everybodys new business numbers. This represented a compromise between those who felt the numbers should not be shared beyond the agencys inner circle of leadership, and those who felt the numbers should be posted on the office wall for everybody to see.
Why did they decide against posting the numbers for everybody to see? Because they were worried that their clients–some of whom occasionally visit the office–might see the list and become upset, perceiving themselves to be second-class citizens to the agencys new business prospects.
Summing up the compromise, the CEO said: "We want to be viewed as a Client-Driven Organization, rather than as a Sales Organization."
This compromise was unnecessary, because it was based on a false and destructive choice that numerous agency principals think they must make–between serving their own "selfish" interests by aggressively pursuing new clients, versus serving the interests of their existing clients. Like the guy who asks a girl out on a date and then spends his time ignoring his date while hes winking at other women, it just doesnt feel right.
The falsehood in this thinking is that the interests of existing clients are somehow compromised when an agency aggressively pursues new clients. In reality, an agencys existing clients are best served when that agency is aggressively pursuing new clients.
An agencys pursuit of new business is a classic win-win scenario, benefiting both the agency and its existing clients. Clients are best served by sales organizations because:
Sales organizations are innovators.
The extraordinary effort and creativity required for true innovation is motivated by an attempt to win a new client far more often then it is motivated by an attempt to retain an existing customer.
Sales organizations reinvest in value-added services.
A stream of new customers not only keeps the innovation happening, but also serves to justify investments in value-added services, such as risk management consulting, that deliver real value to customers. These services usually provide a poor economic return in and of themselves, and can only be justified with a steady flow of new business.
Sales organizations are talent magnets.
This might be the crucial point. The most talented individuals in our industry (be they sales, service or management) are relentlessly pursuing the best opportunities, and sales organizations deliver the goods, providing opportunities for personal growth both financially and professionally. The mere presence of these "impact players" serves to raise an organizations performance bar, bringing out the best in those around them.
Customers benefit from "relational economies of scale."
We all know that a broker who specializes in working with certain customer segments can do a better job and make more money than a pure generalist. The reason is that he provides more value to the customer through better knowledge of their account, better clout with insurance carriers, and a greater knowledge of (and hopefully participation in) innovation in their field.
Clients benefit when their agents insurance carriers are happy.
Since insurance carriers must meet their own growth objectives to satisfy their investors, they rely heavily on their best agents to not simply protect their existing accounts, but to go out and find new ones. Carriers are increasingly focusing their attention on those agents capable of doing so, and reward those agents by providing the best deals for their clients.
Like everybody else, customers like dealing with winners.
For the reasons noted above, sales organizations are winners–they are fun to work with and make those around them better.
In conclusion, the "Best Practices" agencies are certainly not buying into the false choice between client interests and their own interests. Commercial property-casualty producers in the largest three revenue groups (the smallest of which begin at $2.5 million in total agency revenue) generated average new commissions of over $100,000 per sales person for the first time in 2002.
At the same time, their retention rates–a pretty good indicator of customer satisfaction–were among the highest in the industry.
So if you really want to do your clients a favor, begin winking at some prospects. In the end, your clients will thank you.
Kevin Stipe is a senior vice president and principal of Reagan Consulting Inc., an Atlanta-based management consulting firm that developed and produces the "Independent Insurance Agents & Brokers of America Best Practices Study." He may be reached at (404) 233-5545 or by e-mail at Kevin@reaganconsulting.com.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 10, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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