Jack Fries looks into the differences between agencies that sell and retain a lot of business and those that don't. This applies to not only the sales people, but to the CSRs, who have the responsibility of account development.
The hard market offers significant advantages to an agency that has positioned itself to be a sales organization. Proper sales management equates to great sales. Sales management in the average agency still relies on more traditional and less focused methods of producing business: Waiting for the phone to ring. This attitude toward sales will prevent the agency from enjoying the benefits of increased pricing and lead to decreasing profit margins. As competition from larger agencies grows for not only large accounts, but also for small to mid-sized accounts, sales management is no longer a luxury — it's a matter of survival.
Although there are a number of aspects to sales management, this article will focus on two areas of Commercial Lines sales:
- Establishing and managing a marketing program
- Creating a sales system
THE MARKETING PROGRAM
Most agencies do very little marketing to the public. Their marketing effort might include Yellow Page ads, some advertising in local newspapers or athletic programs, a barebones Web site, and word of mouth. To succeed, you must create a process to ensure the flow of new business leads into the agency by using these methods:
- Referrals;
- Telemarketing; or
- A combination of the two.
Most agencies rely on passive referrals. In other words, the client refers someone to the agency and the prospect calls the agency looking for a “quote.” This is a sure way for an agency's sales effort to stagnate. A seasoned producer can usually maintain the same number of accounts and, if they don't lose a large account, will maintain their income level. This is especially true in a hard market when increased pricing covers commission reductions and the loss of some accounts.
Active solicitation of referrals is the most cost-effective way of acquiring a list of prospects. However, just asking the customer for five prospects puts a lot of pressure on them to come up with the names of prospective accounts. They might also give you the names of accounts that you can't — or don't want to — write.
For years, I've taught the “Reverse Referral Method.” Most professional sales trainers use this system. Here's an example of how it works: Let's say you have an appointment to visit the owner of a machine shop that you insure. Before the visit, the sales person should secure a list of all the machine shops in their marketing area that they wish to write.
During the conversation with the machine shop owner the salesperson would say, “For me to maintain a market for your business and try to keep the pricing as low as possible, I need to add good, qualified machine shops to the program. It's important that we obtain only good accounts, because a bad one could screw up the program for everyone. Would you take a moment to look at this list of shops and tell me if there are any that you could recommend?”
After the client has selected the prospects that they'd recommend, the salesperson should ask them for permission to tell the prospect that the client referred the salesperson. In most cases, they'll agree.
This marketing method offers several advantages. Not only is it inexpensive, but the referrals are a class of business that the agency can write. Also, you enjoy the benefit of using your client's name as a referring party. Third-party recommendations always have a greater impact than a cold call.
Telemarketing , the other method of marketing, can be combined with the reverse referral method or used separately. You can do telemarketing in house, or outsource it to a professional firm such as National Marketing Services. Although some excellent agencies are able to train and manage in-house telemarketers, most agencies use outside pros for this function.
Telemarketing requires creating a list of names of prospects, either referrals gathered by the reverse referral method or purchased from a list vendor. Using the latter requires some advanced work; the list must be cleaned and the telemarketer needs to determine whom to call. Once the final list is compiled, the telemarketer must secure X-dates and set appointments for the producer.
Before these appointments are made, each producer must agree to call on a certain number of prospects per week and give the telemarketer the number of leads that they need and the days and times that they'll be able to make the calls. The telemarketer should also be provided with a script to generate interest, as well as a list of pre-qualifying questions.
Make sure that you give each salesperson the correct number of qualified leads and establish a system of accountability.
THE SALES SYSTEM
Before the salesperson makes a single call, you need to establish a sales system; otherwise, the salesperson is “shooting from the hip” on every call. The system should have several components. First comes the initial call. This is best done face-to-face as soon as possible after the initial marketing contact. During the meeting, the salesperson should ask structured questions to determine if this is a good prospect. After the visit, the salesperson should be able to tell if there's a chance to write the account or if they're just being used.
Next comes soliciting information needed to generate the proposal. Give the salesperson a form to use to gather the data and coach them to discuss the benefits of doing business with the agency.
Finally comes the presentation. Train salespeople to eliminate the word “quote” from their vocabulary: It indicates to the buyer that price is the main or only differentiation between your agency and the others. The presentation should address not only loss exposures and insurance remedies, but also offer the prospect information on the unique services the agency provides.
These are the basic requirement for training and managing salespeople.
The combination of a systematic marketing program with an effective sales system can play a key role in keeping you ahead of the hard market curve — and building your bottom line.