Several years ago a golf pro attended one of my seminars. The topic was "MINOR DETAILS MAKE A MAJOR DIFFERENCE". During the break he approached me, explained what he did for his livelihood, and said "I’ve got an interesting statistic for you. If you consider ALL of the players that participate in the P.G.A. (those that have earned their P.G.A. card), and then tabulate their annual scores, there is only 3% difference between the rich and famous and those that we’ve never heard of".
Think about that · · · three percent difference between Tiger Woods and the guy who didn’t make the cut. The difference in earnings, however, could be MONUMENTAL! In horse racing the outcome is often determined by a photograph · · · A "Photo-Finish". Yet sometimes the horse that wins first, wins ten times the amount of the horse that placed second. Is the winning horse ten times faster · · · Ten times better bred · · · Ten times better trained? NO! It’s just better by a nose · · · a little bitty bit.
Our organization deals with hundred of agents daily. We see this very same exact phenomenon manifested on a regular basis. My intention in this article is to expose you to a number of proven, tested models and strategies that could possibly contribute to building your agency. If they appeal to you, use them. If you find them lacking, contrary to your style, too complicated, too difficult, or too labor intensive, disregard them entirely. How you run your business is · · · YOUR BUSINESS!
Now, if you’re still reading this, there is a possibility that you’re at least curious about the three "P’s" in the title. They are · · · PRODUCT · · · PEOPLE · · · PROCESS. Each of these is foundational to the function of an agency, or any business for that matter.
We could begin by arguing about priority, sequence or importance but instead let’s attempt to agree that all three of these components are necessary ingredients for our agency building formula.
First we need to determine the "Fifth Point" on our map. The compass gives us the four primary points · · · North, East, South and West, but before we can embark upon our journey we need to determine the "Fifth Point" · · · Where we are NOW! It is as difficult to get to someplace you haven’t planned to go as it is to come back from someplace you "Ain’t Never Been". (Pardon the dangling preposition and other grammatical flaws but it just don’t read right without’em)
The point however, is painfully true. Unless we have an accurate assessment of our current position and status how can we begin to move towards improvement? Someone once said, "If you can’t measure it, you can’t manage it."
Once again we find ourselves constrained by the lack of space afforded us by a written format, but I think I can provide enough of a shove in the right direction so that you can establish your own momentum. I feel compelled to warn you that there is a modicum amount of tedium attached to this task. You’ll actually have to sit down, get pen and paper and make a few lists. Occasionally you’ll need to consult your files. In short this procedure requires some judicial self-analysis. Therefore it will involve some time and a small amount of simple mathematical calculation.
Let’s take it from the top:
PRODUCT – From a basic marketing standpoint the companies with which you contract represent your inventory. Let’s consider a clothing store for a metaphorical comparison. The store owner has categories that are based upon the requirements of the consumer; dress apparel, business, casual, sportswear, ad infinitum. He then must consider size ranges, such as how many smalls, mediums, larges, extra larges, etc. so he can maximize his potential sales opportunities.
An agent faces a similar challenge. While many of our agents are "Auto Only" in terms of category, others offer homeowners, motor cycles, life and health and other types of coverages. Since our focus is Auto Insurance I’ll limit my comments to that portion of an agents "Inventory". Our company, American Southwest Insurance Managers, has specifically tailored our product mix to correspond with what we see as four distinct echelons in the Texas marketplace.
A recent calculation of our in-force policy count determined that less than four percent (.0385) of our business emanates from our "Monthly" product. At the opposite end of the spectrum over fifty percent of our book was found in the renewals that evolved from our entry-level programs into the safe haven of our "Preferred" program.
The reason I mentioned this is to emphasize the significance of MEASUREMENT in order to establish balance. An obvious question would be, "Why bother with a program that only equates to 4% of your book?" Good question. The answer is that our most recent survey indicated that 57% of our agents (that’s you) wanted us to maintain the monthly program. When we asked "Why?" we were told that if a customer mentioned "tags" or "inspection sticker" in their conversation they could possibly have short term intentions.
We then learned that these agents monitored this portion of their book and if the policyholder made their 2nd or 3rd payment, the agent moved them to a six-month policy. Although this program is not a big premium factor for us, to 57% of our agents it is an important service consideration. It’s win, win, win.
If you, as an agent, sign up with any company that walks through your front door and then always write the lowest rate, you accomplish three things simultaneously. First you spread yourself so thin you automatically become UNIMPORTANT to everyone.
Secondly you lose the opportunity to establish a bond that relates to the service level you need to function efficiently.
Poor service at the company level is a hidden cost factor. Bad service loses business at the policyholder level and takes valuable time from your sales effort.
Finally, an over abundance of contracts inadvertently results in a higher percentage of underwriting errors, uprates and cancellations. Your staff faces the unrealistic challenge of being well versed with an inordinate number of underwriting guidelines. Consequently, your error rate increases.
OK! So what is the optimum number of contracts? That takes us back to "Measurement" and "Balance". Here’s where the work comes in. Pull a sampling of files, (you pick the number, but AT LEAST one month’s average production is needed to accurately define your policy profiles) look at your variables; age, sex, marital status, liability only, etc. and then determine who writes what. Make note of the companies that appear most often. Consider their service level. Evaluate the relationship factor. Some of our agents operate quite well with four companies, others require fifteen. Only you can determine the current number for your agency. I’m simply suggesting that you invest the time to investigate instead of operating on guesswork.
The second "P" is for "PEOPLE." Here we encounter a paradox · · · How to OBJECTIVELY evaluate SUBJECTIVE skills and talents. We’re going to dispense with the most obvious basics such as personal hygiene, dress code, work ethic, attendance, punctuality, etc. For the purpose of this article I’m going to assume your people know how to bathe and can find their way to your office. Since we’re focusing on "Agency Building" let’s spend our time with two issues, training and compensation.
Recruiting and selection, of course, precede the training sequence. Although we’re limited as to space and therefore can’t elaborate on the hiring process I do want to emphasize the importance of this initial step as it relates to the "People" factor in our "Three P’s" formula.
Many of the individuals I encounter in agent’s offices appear to have been hired by utilizing the "Mirror Method" of recruiting.
If you’re unfamiliar with this discipline it involves placing a small mirror under the applicant’s nostrils. If the mirror then fogs up . . . the person is hired. A bare bones standard might be "If you wouldn’t buy something from this person, don’t hire them."
The "AXIOM" that headlines this article is almost impossible to argue with. Is there an exception? Yes. The exception is if you recently inherited a staff or the people have less than 90 days of "real life" insurance experience you are then in a temporary "Safe Zone." After that they "represent what you have taught them or allowed them to become."
My personal experience has been that office personnel in the majority of agencies I visit are expected to perform multi-functional job duties. They often answer incoming calls, process policies, file, underwrite at the point-of-sale, sell, do internal administrative work plus deliver customer service. Yet the only training they receive is of the "On the job" variety. "On the job" training is better defined as "When you encounter something you haven’t done before I’ll stop what I’m doing and show you how to do it" training. Professionals in the training industry can verify that this is one of the least effective and ultimately most expensive training approaches.
If you really want to build a professional staff that has the potential for longevity and loyalty, take the time to structure, implement and monitor their training. You can accomplish this by determining training priorities, preparing procedural information, explaining why each element is important, showing them HOW to do these things, observe them doing them, and finally supervising their progress.
Before we leave the "PEOPLE" portion of this article allow me to address one remaining provocative issue · · · compensation. As I said earlier "How you run your business, is YOUR BUSINESS." I also said I would "· · · expose you to a number of proven, tested models and strategies" I recently visited with an agent that was concerned about cancellations and renewals. A portion of our conversation logically explored how his people were paid. They were paid on an hourly basis with incentives attached to new business and fees.
Not surprisingly, if a policyholder came in to make a payment a little late, instead of taking advantage of the E-Z start or Re-instatement options many companies offer, the C.S.R. would re-write them, often with a different company.
Of course the new down payment and an additional fee resulted in more cash outlay than their upcoming monthly payment. Consequently customers were often lost due to this additional expense.
Why would the C.S.R. take this approach? To quote Willie Sutton, the famous bank robber, when he was asked "Why do you rob banks?" his reply was "Cause that’s where the money is." That’s why the C.S.R. re-wrote them.
If you want your staff to show up at 9:01 A.M. and leave at 5:59 P.M. pay them hourly.
Now don’t read too much into this example. I’m not recommending any particular pay basis. I’m simply attempting to illustrate a point.
Professor LeBouff of Tulane University authored a book entitled "The Greatest Management Principal." Training professionals who are proponents of this theory refer to it as "G-M-P". To summarize the entire book into one sentence it translates into "Reward the behavior you want repeated." If you want your staff to show up at 9:01 A.M. and leave at 5:59 P.M. pay them hourly.
If you want active, focused behavior that will assist in building your agency’s business, develop a compensation plan that encourages their contribution.
Pay them for their productivity. I’ve done numerous "Sales Sessions" for agents that have such pay plans in place and also for agents that compensate solely on an hourly or salary basis.
Guess which group has the highest attention level. The incentive oriented group views the training as "an opportunity for growth." The other group thinks of it as "a meeting."
The remaining "P" represents "PROCESS." Admittedly this is a very broad category. As it relates to "Agency Building" it encompasses not only the "PRODUCT" and "PEOPLE" components, it also involves procedural aspects, structure, scheduling, training, discipline, work assignments, human resourcing, advertising, promotion, customer service, public relations, management and a number of other considerations.
On one end of this spectrum you have the overly structured "Standard Operating Procedure" mentality where everything is required to be "by the book." General George C. Patton is quoted as saying, "It’s OK to fight a war by the book, as long as the S. O. B. that wrote the book has been in the war!"
On the opposite end of this same spectrum you encounter the totally unorganized, "fly by the seat of your pants", or, "management by crisis" approach. Somewhere between these two extremes lies a realistic compromise that provides enough structure for efficiency and offers an appropriate amount of flexibility for effectiveness. The obvious challenge is determining where you are on this scale and then isolating areas for improvement so you can then begin developing systems and processes that will result in our aforementioned purpose · · · "Agency Building." This take us back to "The Fifth Point on the Map", where we are now! · · · judicial self-analysis.
"OK" you’re probably asking, "Where do I start? You start with pen and paper. Let’s revisit the "P’s".
· · · PRODUCT · · ·
- List your contracts
- Calculate your premium percentages
- Company A - 40%
-
Company B - 25%
-
Company C - 20%
-
Company D - 7%
-
Company E - 4%
-
Company F - 3%
-
Company G - 1%
-
Companies H – L 0%
- Rate the service levels – 1 through 10 (10 being the best)
- Rate the relationships – 1 through 10
In addition, remember that what are often thought of as "intangibles" can actually be hidden cost factors. Claims handling, policyholder satisfaction and poor customer service can erode your profitability. Additional time involvement on your part subtracts from time better spent on sales and service. NOW you have a starting point!
· · · PEOPLE · · ·
This element is, without a doubt, the most exasperating. Ready for more "P’s"? You need to determine, individually, if you have a PROVEN PERFORMER, POTENTIAL PERFORMER OR A PROBLEM PERFORMER. Again back to "HOW?"
RATE THEIR SKILLS 1 THROUGH 10
-
PRODUCT KNOWLEDGE – Underwriting, Coverages, Etc.
-
PEOPLE SKILLS – Sales Skills, Phone Skills, Service Skills, Personality, Etc.
-
PROCESS SKILLS – Accurate Applications, Filing, Organization, Etc.
If they score 25 to 30 you have a "Proven Performer." Congratulate them. Thank them. Love them. Hug them. Buy them dinner. RECOGNIZE THEM! Recognition is the most effective, least expensive and most often neglected motivator. Since these people require very little supervision they sometimes receive very little attention. Express your appreciation. Better yet, involve them in training your other staff members. It creates a feeling of importance.
A score of 15 to 24 indicates a "Potential Performer." Often these people are primarily functional bodies that are "too good to fire but not good enough to keep." Ironically these same folks are often the best investments in management and training time. If they can be directed and motivated towards the "Proven" category, you’ll experience a geometric increase in their productivity.
1 to 15 qualifies as a "PROBLEM PERFORMER." Usually not only are their skill levels suspect but they often exhibit punctuality and attendance problems, a lack of dedication and work ethic, plus attitudinal issues. They do, however, deserve an opportunity to pursue improvement. This is best accomplished with a serious interview that clearly defines what you expect, where they are lacking and offers a reasonable time frame for correction. One of two things usually occurs at this point. One, they secure other employment, (which is a blessing) or two; they develop the inspiration of desperation and mend their ways. Both are OK. Remember "your people represent what you have TAUGHT them or ALLOWED them to become."
· · · PROCESS · · ·
For an eye opening experiment try this. Make a list of job responsibilities, procedures and then connect them to the appropriate staff members. This can include opening the store, emptying the trash, filing policies, answering the phone, all the way to depositing your money in the bank. Then ask your people to list their responsibilities. Compare them. Sit down before you do this. It’s not uncommon to discover that what you thought was common knowledge of your required procedures didn’t make it to their list. My first suggestion is to re-read "Creating an Employee Manual", written by our recently elected President, AnMarie Bozick (Flagwaver Volume 8, Issue 1, June 2003 Page 6). It’s accurate. It’s concise. It’s industry specific and I’m not dumb enough to attempt to improve on it. It’s exceptional advice from an exceptional agent.
At American Southwest Insurance Managers our internal computer system can generate over thirty marketing reports, charts and graphs. Some of these I use often, some occasionally, some hardly at all. One I often look at depicts agent productivity by individual location in descending order.
In preparing for this article I noticed that on our TOP 20 agent list, eight of those entries were single office operations. Why do I mention this? Because, if you’re still reading this article and you’re not a big multi-office agent you are quite possibly thinking "This doesn’t apply to me", "I don’t need to do all of this stuff", "I don’t have time to attempt this type of analysis" or "I already know all of this." You could be right. Most of our small agents think this way also. Except for the eight that appear in our TOP 20.
If there is a common thread that runs through all of this it’s evaluation and training. Like bacon and eggs they are common partners. INVEST the time to analyze the balance (or imbalance) you have in this agency building triangle comprised of PRODUCT, PEOPLE and PROCESS. Then dedicate yourself to an effort to train and direct your people. If you want a list of training resources, I have one. If you would like a one-page form that offers a quick assessment of sales ability, I have one. If you’re satisfied with what you’re doing and your current status you’ve probably just wasted ten minutes of your time reading this article. But you’re probably use to that. Aren’t you?
I shoot on a weekly Skeet league. One of my team members is an agent that recently left the independent agent category and joined the standard agent population. This particular company requires three weeks (120 hours) of initial training before they can begin writing business.
As part of their training regimen they bring in agents that produce in excess of ten million of premium to share with this audience of new agents the strategies and tactics that have contributed to their agency’s growth.
My friend told me that after these successful agents selflessly shared their ideas with this group two things became very apparent to him. Numero uno, these proactive agents carefully monitored and managed every aspect of their agency operation with a thorough concentration on what we’ve described as the "Three P’s". Numero Dos, many of the most seasoned agents in his group cavalierly dismissed this advice with an "I already know this" shrug of the shoulders. My compadre said "Knowing these things only remotely relates to the challenge of doing these things."
"Doing" is what ultimately separates the agent that merely survives from the agent that truly succeeds.
About the Author
Ralph Moten, Marketing Director of American Southwest Insurance Managers has been involved in sales, marketing and management training since 1972. He has conducted over 2,500 seminars.