DIRECT SALES EFFORTS TO POSITIVE GOALS
While there’s no magic formula for success, your agency can improve its chance of profitability by implementing a more disciplined approach to the sales process.
Agencies, in general, have been realizing progressively lower profit margins each year. Some agency principals, however, are doing quite well, and others are returning profits in excess of 25% of revenues.
Average or below-average agencies are still relying upon less-focused methods of producing business; and this passive attitude toward sales is beginning to evidence itself in diminishing profit margins. Good sales management is no longer a luxury.
Sales management doesn’t have to be complicated. In fact, unless it's simple, a plan will probably be ignored, especially if a plan has never been implemented before.
When developing your sales plan, first divide the sales-management process into four basic steps:
1) evaluate the agency;
2) develop a plan based on the evaluation
3) form strategies to attain goals and objectives based on steps 1 and 2, and finally,
4) establish a system to monitor the program.
Use this chart to analyze growth and new business:
Producer
1. total commissions last year
2. subtract expected attrition
3. renewal commissions
4. calculate decrease/increase due to rate change
5. net renewal commissions
6. total level of commissions desired at the end of the year
7. total new-business production needed (step 6 minus step 5)
8. new accounts needed (divide step 7 by average account size)
9. number of quotes needed (divide step 8 by expected hit ratio)
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number of accounts
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commission dollars