Characteristics of Top Producers and Their Agencies

oTop producers plan. When I ask producers how they plan, I get a range of responses. Some aren't sure how to go about planning; others really have it nailed. They have figured out who their best prospects are, who their best referral sources are, etc. They've determined the top 25 accounts that they want to target. They don't waste time on accounts that don't meet their criteria. They also are focused on account size. If they get a referral to a small account, they pass it on to somebody else in the organization. As part of their planning, top producers determine the activities they must carry out to hit their goals. They know how much time per week they need to spend on prospecting and other sales activities.

oTop salespeople interact professionally with their support staffs. They don't lose their tempers with people who they think should be working faster; they don't have a meltdown because a proposal doesn't read the way they think it should. (Nor do they wait until five minutes before departing for appointments to see if proposals suit them.) On the other hand, they have regular meetings with their support people. They keep them apprised of what's going on and how they're doing. They respect their associates' time and understand their time constraints.

oTop producers make time for new business. According to the Independent Insurance Agents & Brokers of America's 2005 Best Practices study, the most successful commercial-lines producers spend a majority of their time (53%) servicing existing accounts, but they still devote about 30% of their time to soliciting new business. That's quite a lot, when you think about it–and it pays off.

oTop producers qualify prospects. They don't waste their time and the agency's resources on accounts they have no chance of closing–or that the agency might not even have a market for. At top agencies, producers are trained to perform due diligence on prospects to determine if they meet certain criteria in regard to size, type of business, etc., and to evaluate the odds that prospects really are willing to move the account.

oFinally, top producers study selling. Selling is partly an art, but it's also a science. And top producers study it–by reading books, going to seminars, etc. They are constantly honing their skills.

Sales-driven agencies
oSales-driven agencies have sales managers. Larger agencies typically hire full-time sales managers. They've come to realize that the benefit of having them far outweighs the cost of their compensation. The best small and midsize agencies, on the other hand, at least have someone filling the sales-manager role part-time.

Sales managers should be held accountable for results–and should enforce accountability on producers. They should go over prospect lists with producers, perhaps using programs like ACT or Goldmine that track acti-vity. If producers are unable to demonstrate that they've been working on given prospects, sales managers should have the discretion to assign the prospects to other producers.

Sales managers should be compensated in a way that gives them a financial incentive to see that all producers (and the agency) succeed. That's a key. They can't be producer-managers who can earn more by using their time to sell than to manage and assist the other producers.

oSales-driven agencies invest in new producers. The need for growth is driving agencies to hire more producers. In our own surveys, we found that some agencies are hiring two or three new producers a year. Often, they come right out of college or were salespeople in other industries. Sales-driven agencies understand that if you hire somebody who can sell, you can teach them insurance. They're not hiring lackluster producers who simply move from agency to agency with their books and really are not interested in producing new business.

oSales-driven agencies look at value-added sales approaches. They don't sell just insurance but offer other resources as well. I know of a midsize agency that has a young, talented loss-control person with great sales skills. He goes on a lot of calls with producers and helps close a lot of sales. Prospects know the loss-control person is going to be working with them. They see the additional value that the agency will bring to their business.

oSales-driven agencies set goals. They ask their producers not only for their revenue goals but also how they plan to attain them. The producers are required to prepare detailed sales plans in which, among other things, they spell out the strategies they will use and any resources they'll require.
oSales-driven agencies provide marketing support. Good sales managers can get more out of producers, just because of the support, recognition and motivation they provide. But sales-driven agencies go beyond that and provide marketing materials and campaigns. Marketing campaigns often lack structure and discipline and so can be hit or miss. Sales-driven agencies identify their target accounts. They pinpoint the decision-makers and determine how best to approach them. Some use seminars effectively; others use testimonials. They may take a "tag-team" approach, involving multiple producers or other people who can help the agency make a good impression and get a foot in the door.
oSales-driven agencies require producers to shed small accounts. They run the numbers on their producers' books annually, if not more often. They require producers to shed accounts smaller than a given size. They may pass those on to CSRs, a small-business department or new producers to handle. In a survey we conducted last year, 24% of respondents said they plan to reduce or eliminate producer commissions on small accounts. Agencies vary in how they define such accounts. The smallest figure we saw was $1,000 or less in annual revenue. Others defined them as $5,000 or less; $3,000 or less appeared to be typical.
oSales-driven agencies focus on bigger accounts. If you look at the IIABA's 2005 Best Practices study, you will see a big gap between the average size of producers' books in the typical agency and the top 25%. For instance, producer books averaged $267,000 in revenue in small agencies–those with $500,000 to $1.25 million in total revenue. But they avergaged nearly $500,000 for the top 25% of agencies of that size. That's because the average commission in those agencies was $4,086, versus $1,880 in the typical agency.

For midsize agencies ($2.5 million to $5 million in total revenue), producer books averaged $658,000–but they were more than $1 million for the top-performing agencies in that class size. The average commission per account was $14,366 for the high achievers versus $6,506 for the average shop. For the top performers among the biggest agencies ($25 million-plus in total revenue), producer books averaged more than $2 million in revenue, and the average commission per account was more than $58,000.

A decade ago, few agencies even thought in terms of $1 million producer books of business. They do now. Sales-driven agencies target large accounts and enforce minimum account sizes as one key tactic, along with account qualification and sales support, for getting producers to that level.

oSales-driven agencies cross-sell. Many agencies cross-sell commercial-lines and employee-benefits policies effectively, but not necessarily life products. Sales-driven agencies, on the other hand, take an organized approach to cross-selling and round out the client's total account.

oSales-driven agencies deal with producers who aren't performing. It used to be that many agency principals were not greatly concerned about underachieving producers, as long as the overall business was doing reasonably well. Not anymore. Sales-driven agencies are aware of what underachievers cost them in time and money. They may change such producers' compensation plans, make them service people or terminate them.

oSales-driving agencies build and maintain better pipelines. One way to prospect is to buy lead lists and perhaps have a telemarketer make initial contacts. Top producers and their agencies don't take that route, however. Rather, producers constantly develop referrals to keep their pipelines full. I know one producer who, after closing every sale, tells his new client, "I believe in a 'win-win.'" Of course, the client agrees. Then the producer says, "But I've lost something–my best prospect." Then he asks his client if he can think of similar businesses on which the producer can call. It's a simple technique, but the producer says it leads to $100,000 in new-business revenue a year.

oSales-driven agencies compensate CSRs for sales. Years ago, there was a big debate among agencies about whether CSRs even should sell. That debate is over. In our recent compensation survey, we found that 65% of agencies are paying CSRs for writing new business. New technology–imaging systems in particular–has resulted in huge increases in CSR productivity. CSRs now have time to sell–or should. Primarily they sell personal lines and small-business accounts. They typically are paid a 20% to 30% new-business commission.

In an industry in which most agencies and brokerages have to acquire business to increase revenue, those that can grow organically really stand out–and significantly increase their own market value. By following the steps outlined in this article, your agency and the producers in it can join the elite.

is president of BMG Consulting, a management consulting firm that advises insurance agencies in such areas as strategic planning, management, compensation, automation, and mergers and acquisitions. She is a featured speaker at a variety of national conferences and is a regular columnist for Best's Review. Readers can contact Ms. Cunningham at (800) 772-0202 or by e-mail at scunningham@bmgconsulting.com.