Reach Out And Sell Someone

REACH OUT AND SELL SOMEONE

Think of your telephone book as a roster of almost every potential prospect in town. Flip to the white pages and pick a name. You may have singled out someone who would rave at your homeowners rates. Do the same thing in the yellow pages and you may have identified a contractor who would find your fleet coverage to be a perfect fit. In either case, you could just be a few touch-tones away from a new client.

Of course, you could also be targeting someone else's satisfied customers who would praise their agents, laud their coverage, defend their rates, and bid you a good day-or just as likely, hang up in a huff. The trick is, obviously, to abandon random selection and somehow separate the likely prospect from the loyal policyholder-before you dial.

As more and more insurance professionals are discovering a well-planned telemarketing effort can greatly increase and agent's chances of getting an interested party on the other end of the line and ultimately produce a significant number of new accounts. As a result, the telephone has moved to the center of sales strategies in insurance agencies throughout the country.

Exact growth statistics for insurance telemarketing are currently unavailable, according to Lee Van Vechten, the Freehold, N.J., publisher of The Van Vechten Report, a telemarketing management resource. However, says Van Vechten, recent studies of the attitudes and expansion plans of managers in a broad range of industries show that telemarketing in general is growing 'by leaps and bounds.'

A number of factors account for telemarketing's recent surge in popularity within the insurance industry. Economic trends, for example, have made many independent agents more marketing-oriented. 'The recent hard market in this area forced agents to look for new ways to stay competitive,' says Jim Smith, a commercial producer at Leick, Marshall, Neal and Associates in Dallas. 'Moreover,' adds Smith, 'many oil-related companies were eager to reduce their premiums and become much more receptive to what insurance telemarketers had to say.'

By using the telephone to spawn new leads, an agency often can lower the costs associated with face-to-face sales efforts. 'In today's market, it's simply too expensive for us to go out knocking on doors,' says D. Scott Liebert, sales manager at the Liebert Group in Nanuet, N.Y. 'Our agency's producers are too valuable to send out to a prospect's premises only to be turned away because the prospect was unavailable.'

Moreover, a good telemarketer can call up to 200 people in a typical five hour period-or about 195 more than even the most seasoned producer could reasonably hope to contact during the course of an eight-hour day. 'We've generated about 650 viable leads during the eight months that our telemarketing program has been going,' says Joe Martin of the Arthur Noll Agency in Bloomfield, Conn. 'It's taken a lot of the prospecting load off our producers and allowed them to concentrate more on selling and servicing.'

Contacting more people usually leads to writing more policies-and that's the contest closer for most agents who have turned to telemarketing. 'We've generated about $1.8 million in new business at a Long Island satellite office that we purchased about three years ago-almost all of it through telemarketing,' says Bob Ziegler, vice president of the MRW Group in Huntington, N.Y.

Similar results have been achieved at the A.H. Meyer and Co. agency in Marlton, N.J. 'With our telemarketing program, we're adding new personal lines customers at the rate of about 120 to 125 a month,' says agency president Al Meyers, 'and we've been doing that pretty consistently for the last two years.'

Indeed, says Bob Ziegler, if there's a disadvantage to telemarketing, it's that an agency often generates more leads than it can handle. 'After about three months into the telemarketing program, we had to send out letters to some of the prospects we had contacted telling them that we would be unable to supply the quote we had discussed-the producer in that office simply couldn't follow up all the leads,' says Ziegler, whose agency has since taken on additional staff at its satellite office to handle the extra business.

Not the least of telemarketing's appeal is its logistical simplicity. The process typically entails three basic steps: soliciting and organizing policy expiration dates (x-dates); following up by telephone or direct mail (or both); and scheduling a face-to-face appointment to discuss and write the policy. Of course, most agencies put their own spin on each step, and the thrust of the overall effect varies somewhat according to the line being marketed. And it should be emphasized that while the process is simple, it is by no means easy-agents who are experienced in telemarketing point out that each step requires careful planning, diligent follow-up and a strong, agency-wide commitment.

The first step: soliciting and organizing x-dates, is based on the assumption that the best time to convince someone to switch their coverage is when their current policy is about to expire. Agencies typically rely on prospect lists -- developed in-house or purchased from one of a growing number of list vendors-to target the audience for this initial effort.

The x-date calls are normally made either by employees of the agency itself or by an outside firm working for the agency on a contractual basis. In addition, some insurance companies have begun to offer this type of service to independent agents. In any case, the goal is to call every individual or business on the prospect lists, normally after sending a pre-approach letter. The telemarketers ask each person they are able to reach (about 83 out of every 100 on the list) for expiration dates on the coverage the agency wants to bid on. On average, an effective telemarketer can generate approximately five x-dates per 25 calls.

The x-dates are then manually or electronically filed, and letters are promptly sent to each prospect, thanking them for talking with the agency marketing representative and informing them that an agent will call prior to the expiration their current policy. In the interim, many agencies periodically send newsletters and other materials to promote name recognition among those who have been added to the x-date pool. Some agencies instruct their telemarketers to place a second call to gather necessary information for a coverage comparison and quote.

Finally, approximately 60 days before the expiration date on the prospect's present policy, the agent sends a letter announcing that he or she will be contacting the individual within a few days. If all goes according to plan, the subsequent phone call sets an appointment that results in a signed policy, a solid handshake, and a satisfied client.

What percentage of x-dates normally culminate in this happy scenario? This will vary according to the line being telemarketed, the quality of the prospect list and, of course, the skill of the agency producers. David Carlson of Carlson Insurance in Cedar Rapids, Iowa, offers these statistics from his recent telemarketing campaign as a sample outcome: from 1,000 initial x-date calls, 200 commercial agency producers, who arranged 53 appointments and ultimately sold 13 policies for a total of $421,000 in new business volume. Carlson's telemarketing costs? Approximately $3,000.

Starting a telemarketing program requires, first of all, a careful analysis of an agency's long-range goals, according to David Carlson. 'An agency first has to sit down and decide where it wants to grow and how fast,' he says.

The agency managers must decide, for example, whether to focus their telemarketing efforts on commercial lines, personal lines, or both. The decision is often highly individual, hinging on factors such as geographic location as well as the focus, philosophy and resources of the agency.

'We've had more success in telemarketing commercial lines,' says Michael Herzak, executive vice president of North Coast Insurance in Cleveland. 'With personal lines, you not only have to find a telemarketer willing to work nights but you also go against the resistance people have to being disturbed in their homes. Our hit ratio has been consistently higher with commercial lines, primarily, I think, because businesses in this area are more receptive to telemarketing than private individuals.'

Conversely, the A. H. Meyers and Co. agency in Marlton, N.J. was very successful telemarketing personal lines for several years before turning to commercial accounts more recently. 'We quickly found that commercial insurance is more complicated,' says Meyers. 'It's much more difficult to define a good commercial risk than it is a good personal risk; you often need more information from the prospect than you normally can obtain over the telephone.'

However, says Meyers, while telemarketing personal lines is more direct, access to the customer is more restricted. 'At the most, you can figure on 12 hours per week when people are going to be receptive to phone solicitation at home.' Meyers explains. 'We call between 7 p.m. and 9 p.m. Monday through Thursday; the rest of the time people either don't want to be bothered or aren't at home.'

Along with selecting a line to telemarket, agencies also must decide who's going to man the phones. One option is to enlist the services of a growing number of professional telemarketing organizations whose primary function is to solicit and deliver x-dates. Most of these firms work with a prospect list and script supplied by the agency: some will obtain a list and write a script based on agency-specified criteria. Charges are typically based either on an hourly rate or on the number of x-dates the firm's telemarketers generate.

Leick, Marshall, Neal and Associates in Dallas chose to use a professional telemarketing service for two reasons, according to Jim Smith. First the agency felt that its producers would be overwhelmed with leads by having a full-time telemarketer on staff. In addition, says Smith, the agency wanted to avoid the added management responsibility of training and motivating the telemarketer. 'Frankly, I can't cold call x-dates: nor do I want to be in the position of constantly pumping someone else up to do it,' says Smith.

Other agencies find that the advantages of hiring local telemarketers to work at home or out of the agency outweigh the disadvantages. 'We feel that having our own telemarketing staff gives us more control, allowing us to qualify our leads and improve out hit ratio,' says Joe Martin of the Arthur Noll Agency. 'A lot of people will give their x-dates to an outside telemarketer but won't be that interested in talking to you later about changing their coverage.'

However, most experienced agents caution that finding a good in-house telemarketer isn't easy. 'We looked for nearly a year before we found someone we thought could do the job for us,' explains Martin. What are the qualities to look for? Michael Herzak's ideal telemarketer is 'someone with a good phone voice and phone manners, but who is also aggressive and can handle the rejection that goes with the job.' David Carlson adds that it's not necessary for telemarketers to be knowledgeable about the insurance business, but, he adds, 'they have to sound like they know what they're talking about.'

Regardless of who ultimately makes the calls, a crucial factor is to whom the calls are made. 'You've got to target market before you telemarket,' says Jim Smith, who stresses that the program being marketed will determine who you approach and how. 'For example,' says Smith, 'if you've got a real strong trade association in your area and you represent a company that has an endorsed program for its members, send each of them a preapproach letter and then have your telemarketers give them a call.'

Another targeting strategy Smith recommends is to identify all the businesses in the same ZIP code area and then stress the agency's proximity. 'Agencies can also use SIC codes or Chamber of Commerce membership lists to target specific industries in their area,' says Smith.

Another option is to purchase a prospect list from one of a variety of list vendors. However, cautions Al Meyers, make sure the vendors you're considering update their lists frequently. In addition, Paul Engelhard of Engel Agency in Glenview, Ill., advises agents to sure they select a list that will yield enough revenue to cover their telemarketing costs. 'Determine if you can break even by writing a very small percentage of those prospects before you invest in that list and incur the costs of going after that business,' Engelhard suggests.

After deciding on a target population, the agency must then delineate what it wants its telemarketers to say during the x-date solicitation calls. Most agencies give their telemarketers a script in either narrative or outline form that details the information they want to convey to the audience they've targeted.

However, telemarketing experts caution that a scripted presentation can often sound stilted. 'The script has to be so well-rehearsed that it becomes intertwined with the telemarketer's own personality-it can't sound like it's being read,' advises Raymond Spies, president of Development Associates, and Eau Claire, Wis., firm that specializes in telemarketing, sales training and sales management.

According to Spies, the script's opening lines are crucial. 'Studies have shown that you have about 8 to 15 seconds to grab the attention of the person at the other end of the line. So, for example, if you've sent a letter, have the telemarketer mention that right away.' Spies also recommends that the script avoid references to 'I,' 'me' and 'my,' and focus instead on 'you.'

Agents experienced in telemarketing unanimously agree that x-date management is another crucial element. 'You have to stay on top of your prospect data; otherwise, names are going to get lost or fall through the cracks,' says Jim Smith. While some agents have designed effective manual systems for this purpose, a growing number are using personal computers to maintain their x-date information.

Many people who supply x-dates will soon forget the agency's name. For this reason, successful telemarketing strategies promote agency name recognition through frequent direct mail contact beginning soon after the initial x-date call. Some agencies augment this with a gift that allows the producer who calls for the appointment to associate the agency name with an item the prospect will likely remember.

Finally, regardless of how effectively an agency plans and implements the above components, a telemarketing strategy must include patience. 'We see telemarketing as a long-term investment. You're not going to get your money back in the first six months, or maybe even the first year,' says Joe Martin.

Moreover, says Jim Smith, getting a good return on an investment in telemarketing requires work. 'No matter how you market yourself,' he explains, 'you still have to sell insurance; that part doesn't change.' However, says Smith, the results are worth the wait and the work, adding that 'telemarketing is the great door-opener in our business.'