Follow this systematic approach to market planning and watch your sales and profitability grow.
Today, it’s critical for agents and brokers to plan their own destiny. You can’t control the market cycles, legislative activities, or strategies of your competitors — but you can control your own firm’s activities.
Agents who have taken the time to develop and implement their marketing plan for new business growth are outperforming their peers in internal growth, productivity, and overall profitability. All three of these factors impact heavily on agency value.
Your growth needs to be planned in order to:
New sales are the lifeblood of any agency or brokerage. Each producer should complete a growth model for the sales manager indicating the number of monthly quotes needed to reach the number they need to write, based on their average size of account and the amount of growth expected by management. Attrition also needs to be built into the equation.
Management needs to assess the classes of business the firm writes that are:
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Easiest to sell
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Hardest to sell
There are two sales to every account. The first sale is to the underwriter. Then, with the competitive proposal in hand, the second sale is to the client. By pinpointing those classes of business that are easiest and hardest to sell, sales efforts can be better targeted. The easier it is to complete the two-sale process, the more business you’ll write in less time.
SOURCES OF NEW BUSINESS
Management needs to determine which sources of business have had the most success, using these categories:
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Existing accounts - Have existing accounts been developed adequately? If not, what can be done on an ongoing basis to expand the coverage written for existing clients, to meet their needs, and to improve retention? To avoid another agent or broker getting a foot in the door, offer all clients both Personal and Commercial insurance coverages. You should also sell Life and Group products to Property/Casualty clients. This will further cement the relationship with those clients and helps retention, too.
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Dead files or quotes - Have accounts that left the firm because of price been x-dated? Has the firm also x-dated those prospects who did not accept the quote due to price, so the account can be quoted again at the next expiration? These are excellent sources of new business because these customers already know the firm and the producer had already gathered a wealth of information in the past that can be used to quote the account again with updated information. Suspense all of these x-dates for timely follow-up.
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Referrals - The best time to ask for referrals is at the time of sale. Although most producers tell us that they get the majority of their new business from referrals, few of them have defined procedure for obtaining those referrals. In Commercial Lines, you’re an “expert” when you have written at least three of the same type of account at the close of sale. Identify the account’s major competitors and go after them. You’ve already learned what type of information needs to be gathered, what coverages are needed, and how to market this type of risk to obtain a competitive quote. Some agents also send a letter at the close of every sale to get in the habit of asking for referrals. In Personal Lines, ask for the names of the account’s neighbors, best friends, or business associates at the close. If your client approves, approach these referrals using the client’s name as the referral source. Thank-you letters to referral sources, enclosing a few more business cards, are also quite effective.
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Centers of influence - Which organizations, clubs or community events should your producers be involved in to generate new business? Make an effort to have producers participate in a few selected centers of influence so they can tap a number of these sources, depending on their areas of interest. Producers should have different centers of influence, to span the possibilities available and reduce duplication of efforts.
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Specialties - Do your producers have any special areas of expertise in certain classes of business or types of coverages? If there are carriers available to write those accounts, then these specialties should become the firm’s target markets. There are also a variety of specialty MGAs, so watch trade journals for advertisements. The key is to identify the areas of interest of the producer. They’re more likely to go after accounts in areas where they have this interest.
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Telemarketing - Some agencies have established new business centers to prospect certain target markets. If implemented, sales assistants should call a list of identified prospects within a selected target market. Using a telephone script, they should qualify the prospects, obtain expiration dates of existing policies, and then set appointments for producers to visit these prospects. If the firm has the right individual employed as a telemarketer, the new business center can be an excellent source of new business for producers. The telemarketer or sales assistant can also be used to obtain expiration dates of other policies of existing clients, to assist with account development, and also to follow up on lost accounts or lost quotes.
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Prospecting - If the agency does not have a new business center, producers may prospect on their own, or cold call. Producers should drop in on identified prospects to trigger interest and qualify the prospect. Producers will succeed more often when they call prospects in an area where they have developed an expertise. Other prospecting sources include: yellow pages, trade journal advertising, direct mail campaigns, joint venturing with other industries, etc.
All producers need time to sell new accounts. Agencies we’ve worked with that provide support for good producers enjoy better productivity and more growth from new production. Producer support can come from three main areas: developing of leads, assistance in marketing/placement, and servicing accounts.
HELPING THE PRODUCER
Producers need to write larger, targeted accounts. A sales assistant can help develop the leads for larger accounts and can target particular industries in which the producer has some expertise, or the carrier has an interest.
Producers can greatly improve their hit ratio on writing new accounts when they have good marketing/placement support. More and more agencies are using central marketing to help write new medium and large Commercial accounts.
Help producers to:
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Screen the prospects that should be quoted
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Gather the appropriate information on the screened prospect
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Write a professional submission for the underwriters
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Determine which markets are appropriate to send the risk to
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Manage the administrative aspects of the marketing process; and, lastly
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Create a professional proposal for the client with a number of alternatives
With this type of assistance, good producers should improve their hit (closing) ratios. An average Commercial Lines hit ratio is 20%-25%. Most agencies don’t track hit ratios by producer. Doing so and then discussing the hit ratio at sales meetings on a regular basis and using it as a performance tool will pressure producers to do a far better job of screening before quoting to greatly lower agency costs.
SEGREGATE SALES FROM SERVICE
As a firm grows, it’s important to segregate sales from the service of accounts whenever possible. If producers can delegate most of the service work on their accounts to good technically qualified CSRs, they’ll have more time to produce new business. This will help the firm grow at a faster rate, increasing its profitability and value.
New sales are the lifeblood of any organization, especially in this continued soft market. An effective marketing plan that manages production through sales meetings, tracking performance, supporting producers and planning efforts will guarantee continuing agency growth and higher profits.