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From the Editor
"Ask an Expert" Briefs
Acquiring and Keeping Good Producers
To solve the problem of a declining agency client base, the answer for insurance agency owners is to recruit producers who will both grow the agency in support of their compensation needs AND become the agency owners’ successors.
Growing Your Agency by Adding New Clients
How do you get new clients? If you are like most independent agents, most of your clients come to you by word-of-mouth from other clients. These clients are invaluable because they already know OF you and the contact is for them to get to know you personally. If you get along and they like and trust you and if you can solve their problems, a relationship can begin that will likely end with them purchasing insurance from you.
Partnership Marketing is the joining of two diverse organizations with a client base that can use the services and products of both. In its broadest terms the concept can apply to almost any two businesses that serve the same type of client base. But in reality Partnership Marketing can be very beneficial and profitable, but only to synergistic product or service providers.
The Holy Grail
For as long as I have been in the insurance business agents have sought ways to promote themselves to their marketplace to get people to know them. The agents believe that if they were allowed access to prospects, the sales would follow. The obvious fact is that many agents are not salespeople. This is evidenced by the decades-long trend away from selling a trust relationship between producer and prospect and toward offering quotes, hoping to sell because of price.
The New “Retention Dimension”
High performance agencies inevitably maintain controllable customer retention rates of 95% or more regardless of the market conditions, regardless of the insurance economy and regardless of competition. And these high retention levels at these successful, profitable agencies are not accidental.
What Do You Do When a Producer Doesn’t Have Time to Produce?
When producers reach a critical point, you notice that their New Business production diminishes each year. They are still active, but they spend their time managing their client relationships to keep the clients happy and renewing. Something is happening that needs to be addressed if you agree that a producer’s job in your agency is to build an ever-growing book of clients for the agency. But there are two types of Producer personalities and each must be treated differently if you want to continue to grow your business.
Why Customers Buy from Independent Agents
Have you ever wondered why customers buy from independent agents? According to research, the two main reasons are claims management and remarketing.
A 15-Step Commercial Lines Marketing Program
Most desirable prospects are deluged with offers for insurance. Another letter or call will not differentiate the agency from all others. A sales letter sent in bulk is NOT a marketing program. Prospects are more likely to do business with agents with whom they're familiar and comfortable. Knowing this, how do you implement an effective marketing program?
A Producer's Role
Even in trying economic times, smart agents understand the critical need for feet on the street, bringing new clients to the agency on a regular basis. Only one of every seven people on earth has the characteristics of a producer, and unfortunately, many of them do not end up in sales jobs. What are those characteristics?
Advertising and Marketing Insurance in the "TiVo" Age
The “TiVo” phenomenon is just the tip of the iceberg when it comes to consumer-centric product and service marketing. This change, most noticeable in television advertising, is in itself a remarkable change in the way we spend and manage our recreational and spare time. But, more importantly, the “TiVo phenomenon” in all of its forms will doom media advertising and marketing as we have known it and learned it for our own industry.
Arrows in the Quiver
Many agents don't do a good job of explaining to clients just how much value-added service they provide. Sometimes you must lift the water to their lips because they have tasted bitter water before – they don’t know that you offer them sweet water. In this article, I'll provide six “Arrows in your Quiver” that you can use to point out that you are not “just another insurance agent.”
Back to the Basics Selling
Time and again we encounter successful producers, urban, suburban and rural, who continue to grow regardless of the economic or insurance conditions. These producers invariably follow the same guidelines, although every one of them feels that the guidelines are his/her personal secret. This short article presents three timeless guidelines for producers that will make them more successful in their sales efforts.
I respond to marketing calls, letters and telemarketers for insurance purposes. Yes, I am that guy who actually does this. But I respond to these campaigns because I desperately want to find agents and other insurance professionals who actually follow up on their marketing programs. So far, the results are dismal....
Breaking Through the Glass Ceiling
During our 20 years in consulting, Agency Consulting Group, Inc. has identified several ceilings above which an organization can not grow without severe hardship – or extensive changes. We call these points the Glass Ceilings because we can see the benefits of growth beyond them but we can’t seem to break these invisible barriers. In this article, we'll present the first three 'glass ceilings' an agency may face.
Buggy Whip Marketing
Buggy whip manufacturers thought they were in the business of selling buggy whips. They failed to realize that technology was passing them by and they were really in the business of providing for the transportation equipment needs of the American public. Agents are at that same crossroads today.
Building a Sales Organization
This comprehensive article addresses the issues of building a successful sales organization, for outstanding customer service to the critical need for formal sales training. Al presents some startling statistics dealing with the 'producer trap,' then goes on to present some solutions to the dilemma. Finally, he provides some practical tips that will enable small agencies to develop a productive sales culture.
Can Your Agency Sell Insurance?
In this article, I'd like to present six points that are the core of sales oriented insurance agencies that we encounter and assist as a consulting firm. If you are not yet a sales-oriented agency, follow these guidelines to become one. If you feel that these efforts are too strenuous for you to accomplish, acknowledge that you are not an insurance SALES organization and that your forte is in excellent service.
Clients for Life: Customer Retention
Customer retention has been trending negatively for the last ten years. Customer retention in recent years has averaged 87% and, while a few percent retention loss doesn’t seem like much, consider the following: If you have 1000 clients, the difference between the 94% retention of the best agencies and the 85% retention of the typical agency is 90 CLIENTS (about 7.5 customers every month)!
Our insurance companies give us lists of their desired markets every year. They claim that they have competitive products and pricing to permit you to sell to those markets. But those markets are suspiciously similar for most carriers. Why?
Creating a "Legendary" Agency
A “Legendary” agency is one who rarely loses customers unless the customer dies, moves or sells his/her business. It also has a regular, measurable, flow of referrals generated both by customers and by the agency requesting them. A “Legendary” agency is easily identified by the positive and proud attitude of both employees and owners.
What is GOOD customer retention? If you consider the fact that some customers move, sell their business or die every year, a 95% retention rate or better is considered strong. But having strong retention without knowing and controlling the reasons for the retention makes you “lucky” more than good.
Do Advertising and Marketing Work?
Do advertising and marketing work? The short answer is a resounding, 'Yes!' The real questions are how do you know which advertising campaign or marketing program works best and how do you measure their success? As John Wanamaker said, 'Half the money I spend on advertising is wasted, and the trouble is I don't know which half.' This article will give you some ideas on how to determine which half isn't wasted.
Doug the Pharmacist
Over the past decade, bigger, national sized competition has come to Doug's small town. These big boys have come in with national advertising budgets, recognizable names and low prices that Doug simply can't match. But that doesn't mean that he can't compete.
From "Mom & Pop" to Professional Shop
It used to be the $1 Million ceiling. That was the level of revenue at which an individual agent with a few helpers had to become a business with different people handling different clients and responsibilities. Everyone still worked for the agent, but the agent no longer made every decision in the agency. However, a running an agency as a business does not result in automatic growth and professional service at high levels...
How to Become a Shark Hunter
The title of a popular book is “Swimming with the Sharks.” It teaches you how to get along in the world of “sharks” – the voracious salespeople of industry. Well there’s a group of people who welcome circling sharks – The Shark Hunters – and you can learn how to compete and beat the price-shoppers and quoters of the marketplace, our version of Sales Sharks.
How to Conduct and Measure Advertising and Marketing Campaigns
A few years ago we visited an agent who boasted about continuous strong advertising and marketing efforts but bemoaned the lack of growth in his agency. Our consultants asked the agency for the marketing layout and the results. His “continuous strong marketing and advertising efforts” consisted of a full one page ad in the Yellow Pages.
Integrating Relationship Selling Into Agency Sales Strategies
Like many sales consultants with many years of experience under their belts, we have found that there is no “free lunch,” the IRS is NOT here to “help” us, no, he WON’T still love you in the morning --- and “Get Rich Quick” schemes in sales are a sure-fire way to spend your time and money and get little results from the efforts.
Moving from Service to Sales
What do you do AFTER... ...you have automated to increase efficiency... ...you have eliminated functions and personnel... ...you have cut your expenses to the bone......and you are still losing ground or earning less money yourself to keep the business afloat?
Negotiating the Sale
For many years we have criticized the common practice of price quoting as the insurance agent's primary sales method. Price is certainly important. But it’s rarely the only issue facing insurance customers and, while it is the easiest issue to address, there are often more important triggers to buying decisions than price. This article discusses means to negotiate the sale other than price.
One Size Does Not Fit All
In order to compete against the direct writers, we must direct our advertising and marketing toward the most important aspects of the clients’ insurance protection. That is, of course, integrated coverage at a fair price with CHOICES that can only be afforded by a professional that offers a variety of products and coverage options. This can be illustrated by comparing why consumers choose full service groceries over convenience stores.
Opening New Territories
We often encounter agents whose growth goals require them to penetrate new geographic territories. They open offices, hire or move employees and expect a flow of business. Unfortunately, that doesn't always happen. Here's why and what you can do about it....
Points of Differentiation
Many insurance entities, both agencies and companies, simply “exaggerate” or pose vague statements about their capabilities such as “lowest rates” in an effort to attract the consumer's attention. But the few “gems” in the insurance industry actually have points of differentiation that makes their products and/or services genuinely different and better than that of their competitors.
The smartest agents train their producers to quickly identify those classifications of prospects who have no intention buying insurance from you. These prospects fall into various categories but are fairly easy to recognize if your cognizant of their personality.
Producer Validation and Management
Most insurance agencies would like to be driven by a regular flow of new business from their producer force. However, most agencies find that their producers spend most of their time caring for existing customers with production relegated to a secondary position. In this article, you'll learn how to establish a producer validation program to get your producers back on the production track.
Relationship Selling is the differentiation of you and your agency from your competitors - without considering price. Sales can be made on the basis of price. But relationships cannot be created or maintained on price. The agencies that rely on price to sell accounts will lose those accounts on the same basis at renewal or within a few years.
Selling Personal Lines Insurance
Once upon a time, insurance buyers who wanted auto and homeowners policies found it necessary to visit their insurance agents (or be visited by them in their homes) in order to properly insure their property and liability. Once upon a time, you had to visit a travel agency to arrange for a vacation. Once upon a time, the airlines had local offices to permit travelers to purchase, pay for and pick up ticket.
Soft Market Selling
Most agents who call us asking how to motivate their producers to sell more and retain more clients in this soft market are concentrated on only two things: getting into more prospects and getting them quotes that beat the incumbent. No matter how often we explain how relationships develop stronger, longer lasting clients, these agents are attuned only to the ‘hunt and kill’ method of sales.
Stop Selling Insurance
Most agents have been conditioned to be exactly what the client suspects...salespeople trying to get them to change from their current insurance program to another similar program in order for the agent to earn commission. Most agents will spend their entire careers exchanging clients with other agents as pricing changes in the companies they represent. Yet, the best agents in the country don’t work that way at all.
The Asset Protection Model
The Asset Protection Model (APM) is a radical change in agency operations and relationships with both current and prospective clients. It converts agencies from price-driven quote machines always trying to ‘get it cheaper’ as a method of gaining clients to relationship-driven businesses becoming true consultants to their clients, whether the APM agency writes the insurance account or not.
The Contact Grid
The Contact Grid is the management system by which the agency employees manage their relationships with the clients and prospects, and the agency management controls and knows that the expected contacts are being made as scheduled. The Contact Grid is a concept that can be done manually, automated through MS Office (in Excel) or managed through one of several contact management software versions (i.e. ACT, Goldmine, etc.).
The Myth and Mystique of Customer Loyalty
Studies indicate that in 1950, customer loyalty was at 66%. A half century later, customer loyalty had decreased to 12%. We believe that the insurance industry has tracked this trend. But what does customer loyalty actually mean? How was it originally achieved? How was it lost?
The Process of the Sale
In another article, I described how an advertisement directly influenced me to seek out a product due to the timing of the advertisement coinciding directly with my need for it. Now I’d like to tell you about the process of the sales call and how it worked out – it was fascinating.
The Sales Funnel (or How to Avoid Feast and Famine in an Insurance Agency)
Most experienced agents have found themselves saving some money when they have good sales months in expectation of lean months ahead. Why is that? Why is it that some producers NEVER seem to have lean months. Their major complaint is that they are busy all of the time. The busy producers are those who have learned the inherent value of the Sales Funnel.
The Ultimate Marketing Tool and the Golden Rules of Sales
Why do the unsuccessful marketers constantly seek the 'Holy Grail' of sales and marketing when the answer has always been well within reach? I assume that the fads in the sales and marketing profession are the 'divining rods' and tarot cards of our industry. Everyone seeks a shortcut to success. Well, I have bad news and good news....
Using Pull Technology for Marketing
By virtue of your getting this newsletter via e-mail, you are participating in the greatest information overload in human history. In 2008, 5 EXABYTES of data was created and transmitted. This is more data than was produced in the last 5,000 years combined. So what do we do to gather the information that is important to us personally or from a business standpoint without having to read exabytes of information to determine where the valuable information lays?
What Do Consumers Buy?
What causes the uncomfortable feeling that many of us get when shopping for a car? How different is the gut-wrenching feeling related to buying a car from the similar feelings expressed by many respondents in our focus groups on shopping for insurance? The answer is that these two exercises appear uncomfortably similar. Both tend to feel that the consumer is not in control. The seller appears to be in control of the situation. Is this what the seller desires?
What To Do If a Producer Leaves...With YOUR Accounts!
The primary value of an insurance agency is its book of business. The solicitation of an agency's accounts represents THEFT, pure and simple. This theft is worse than the burglary of jewelry from your home. In the case of jewelry, you have lost the value of the pieces once (and any emotional attachment you may have had to them). In the theft of accounts, you lose the revenue value of the accounts EVERY YEAR.
What's a Producer Worth? Intervention-Based Compensation
Compensation depends upon what the producer does for the agency and client, NOT how long he’s been with the agency or even how much he has produced in the past. Producers are paid for selling insurance. Producers are paid for maintaining the customer relationship in order to retain those customers, and premium and commissions. Producers are not paid to service clients since most agencies have service staff to fulfill that function.
When Does Incentive Compensation Make Sense?
Incentive Compensation defines a change in compensation method in which employees achieve increased compensation (raises) for increased productivity. It teaches employees the shocking truth about growth and profitability — we can only afford to keep paying more to employees if we grow and are profitable (without taking money from agency owners’ pockets).
Why Can't I Find a Producer to Hire?
A very high percentage of agencies have a common complaint: the lack of production staff capable of growing the agency's book of business. Many agencies ask us for assistance finding producers. But producers are HARD TO FIND. And we think we know why.
Independent Insurance Agents & Brokers of America, Inc.
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Alexandria VA 22314
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