Roadblock 2: Lack of sales activity
Many producers simply don’t spend enough time with prospects to generate sufficient sales to satisfy agency needs. If their problem is not lack of time due to the press of service needs of current clients (see AE section above), either they do not understand the need for sales calls, or they are not motivated enough to remain producers.
You can show any producer the need for sales calls through a formula that translates producer compensation needs into sales, proposals and sales calls needed to accomplish the desired compensation level. Call or e-mail me (800-779-2430 or al@agencyconsulting.com ) and I’ll send you the template for the calculation.
Once that calculation is complete, you and the producer will know empirically how many sales calls need to be made every month in order for the producer to logically earn the amount he desires every year.
But knowing how many sales calls need to be made doesn’t make the calls.
We have evolved a ‘Pay to Play’ concept for producer compensation that provides producers stable compensation based on both their needs and their historical performance but will penalize producers by reducing compensation if they fail to meet the activity (sales call) requirements that they need to accomplish their sales goals.
If a producer is a proven salesperson, he will make sales if given enough sales opportunities. However, the producer cannot make their revenue goals if they don’t see enough prospects to convert a fair number into sales. The ‘Pay for Play’ concept defines the sales call requirements by a producer’s own personal history. If a producer has successfully sold one account for every four sales calls made historically, the tendency is for the producer to repeat his history. Based on the number of sales needed in a year and the historical number of sales calls required to make a sale, we define the number of sales calls needed by the producer in a year, and down to the number needed in each week, in order for him to make his sales goals.
If the producer fulfills his sales call requirements, we guarantee the stability of his compensation. We assume that he will sell sufficient accounts to justify his compensation. If not, it is up to his manager (the Sales Manager or Agency Principal) to help the producer by visiting prospects with him and observing any faults that may be stopping sales. The manager is to coach and counsel the producer to get him back ‘in the groove’ making sales.
However, if you can’t get the producer to make enough sales calls to yield the right number of sales to fulfill his sales goal based on his own history, there is little a manager can do to motivate the producer. Since we are so loath to release producers who have “retired” from production into a service position, we let the ‘Pay for Play’ program control the producer’s compensation level. If, in the role of producer, the employee fails to meet his sales call requirements for two months in a row, his base compensation is reduced by 10%. And that reduction continues for every two months that the producer does not meet his sales call responsibility.
In order to regain lost income, all the producer needs to do is to make up the sales calls missed. The assumption is, of course, that at appropriate sales call levels, the producer will sell sufficient accounts to justify his compensation and make his goals.
If a producer realizes that his is no longer in the sales profession, he can adjust to Account Management at a lower, but more stable compensation level that acknowledges that his role is to retain a book of business and cross-sell for enhanced revenues. We make a serious mistake assuming that because a group of people have sold insurance in the past, that they remain producers for life. When we feel that we have a staff of producers who aren’t selling, we generally stress ourselves over ways to rehabilitate them. Instead, if we realize that he producers are satisfied and are good at customer retention but have left the sales arena, we will certainly recruit new producers and suffer less stress over “producers” who have left that arena. They can still be valuable employees, supporting their efforts by managing a book of business. However, once a long-distance runner puts on fifty pounds, it is unlikely that we can motivate him to be an Olympian again. We’re better off using him as a coach or recruiter since he certainly knows how to run – but is no longer capable or desirous of running competitively. Treat producers who no longer sell like this. They are not bad people. They have just changed their priorities.
Reprinted from the PIPELINE, the national newsletter for agency principals. The PIPELINE is published by Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for over 20 years. Call 800-779-2430 for information about the content of this article or PIPELINE subscription information. E-mail info@agencyconsulting.com – Website www.agencyconsulting.com.
