THE NEGLECTED ART OF SALES MANAGEMENT –HOW MUCH IS IT COSTING YOU?
by Bill Hoos
Why your agency can’t afford not to have an effective sales manager.
I’m constantly amazed by the seemingly useless statistics that are tossed at us — minutiae such as “So and so has a .521 batting average when hitting right-handed in the top of the third,” or “The last time the stock market showed a 250 point gain on the third Tuesday of October was 1922.” With all of this useless numerical clutter, it’s no wonder that we sometimes ignore what’s significant. We simply have a tough time discerning the difference between what matters and what doesn’t.
Here’s something that does matter. Consider these statistics:
- More than 90% of independent insurance agencies don’t have a full-time sales manager.
- More than half of newly hired producers don’t survive their first two years in the job.
- The average independent agency’s organic revenue growth rate in 2005, including contingencies, was 8%.
I look at these statistics and wonder if there’s a correlation. My gut instinct is: “You betcha!” In all my years of working with independent agencies, I’ve observed that those with well trained, disciplined sales forces tend to be the most prosperous. This isn’t rocket science. Yet nine out of ten agencies just don’t seem to get it! With the possible exception of the real estate sector, no other industry distribution segment allows its salespeople to function as independently and unaccountably as does the Independent Insurance Agency System.
When I signed on as a producer fresh out of college 30+ years ago, I was bequeathed a desk, a rotary dial phone, and a “prospect” list and was forced to endure a two week training boot camp. That was it! I was then ordered to make 50 phone calls per day, get x-dates, and make sales appointments. Want to guess how that turned out? Sadly, this sweatshop scenario or some version of it still plays out in many insurance shops as a daily routine.
So what’s the answer? It’s alarmingly simple: Put someone in charge of sales!
When I suggest this to agency principals, I invariably get such retorts as “Sorry, I don’t have the resources or the time or the expertise available.”
To which I reply “Would you let your CSRs go unsupervised, working independently as they see fit? How about your claims people or your receptionist?” Somehow these principals have found the time, money, and expertise to direct what I’ll dub these “corollary functions.” Yet when it comes to managing the drive train that powers their businesses, they just don’t make it happen.
Of course time, money, and expertise are legitimate resource constraints — but the cost of a producer who hangs their hat in your shop for a couple of non-productive years can be staggering. Using a very modest cost estimate of $50,000 per year, you could be out of pocket a hard earned $100,000, without even counting the opportunity cost! Worse yet, how about the producer who is comfortably ensconced in your office forever, but just barely breaks even? Imagine all those dollars floating away silently and invisibly!
I’m not suggesting that you have to hire a full-time sales manager to get the job done. However, the agency sales function must be managed. You can contain the costs by making sales management the part-time responsibility of an agency principal or you can delegate it to a seasoned producer. A word of caution: If you use either of these approaches, be sure that the designated person can dedicate quality time, is held accountable for results, and is compensated properly for the extra work load. Otherwise, the chances are that sales management will become just another chore. Another alternative would be to outsource the function. Good choices might a retired sales manager looking to stay active part-time, a qualified outside consultant, or possibly a retired producer.
However you solve the riddle, you should expect a good sales manager to:
- Establish a strong “Nothing Starts Until You Make a Sale” culture within your agency.
- Instill an effective sales regimen that communicates the manager’s vision and the agency’s value proposition for customers clearly.
- Work with your producers to set personal sales agendas with attainable goals and objectives.
- Mentor producers consistently, instilling such success-oriented disciplines as time management, the creation of a “makes sense” prospecting game book, management of their sales pipeline, and the creation of agency value with customers.
- Work with your salespeople to ensure effective and consistent application of these techniques.
- Interface with producers and agency principals to create a positive sales stimulus within the agency.
- Hold producers accountable for results with impartiality.
Beyond the clear benefits of increased production, improved retention, reduced turnover (and, over the longer term, increased profit margins generated from a higher quality customer portfolio) the major benefit of a well-managed sales team comes from the peace of mind of knowing that you can count on consistent annual top line revenue gains.
When analyzing all the statistics that come your way, do your homework on the one that could impact you the most: If you don’t have a sales manager, how much is it costing you?
Bill Hoos is president of Agency Sales Pro, LLC, a consulting firm that provides sales management services for independent insurance agencies. He can be reached at (866) 624-3800, e-mail [email protected], or visit www.agencysalespro.com.