Reaching Out To Sell Someone

REACHING OUT TO SELL SOMEONE

by Monica Langley

If you think telemarketing is only a bunch of people yakking on the telephone, think again. It lets agents prospect for business from Rapid City to New York City, and all points in between.

Though he hustled for new business as a matter of course, Dallas agent James Smith wasn't really pressed to do it-until he suddenly lost $400,000 in premiums. One client went bankrupt and others switched carriers because of ownership changes. Recalls Smith: 'I had to make a comeback fast.' So what did he do? He turned to telemarketing, the insurance industry's-and everyone else's-version of reaching out to find someone to sell, and then doing it.

Smith put a telemarketing operation in place at Leick, Marshall, Neal & Associates, and he's been ringing up business opportunities ever since. Says he: 'Telemarketing was the answer, and it's really paid off.'

One recent effort: one of the agency's telemarketers telephoned Bob Price, president of a Dallas-based manufacturer of car-wash equipment, at the very moment he was considering a change in his insurance carrier. 'Normally I wouldn't listen,' Price says. 'But the caller was professional and I was receptive at the time.' Smith followed up after the telemarketer's call, and is currently working on a quote for the policy, which would call for an annual premium in excess of $100,000.

The precisely timed call to Price was about as coincidental as the sunrise, which is what telemarketing is all about. More than a bunch of people hawking goods or services over the telephone, telemarketing involves finding where potential markets are, then selling to prospects known to be ready to buy, or at least thinking about it. In effect, telemarketing uses the telephone and a lot of accompanying electronic wizardry to replicate the success of the Ford Mustang, a car made for its youthful market in the 1960s that set a still-unbroken record for acceptance by buyers of a U.S.-made vehicle in its first year.

More and more insurance agents are finding that a deftly orchestrated telemarketing effort can bring in significant amounts of new business. Northside Insurance services in Roswell, Georgia, for instance, will generate $1 million in new sales in personal lines this year, all because of telemarketing. Jones, Hill & Mercer in Savannah sold $500,000 in premiums on commercial lines in just this year's first quarter.

Telemarketing can be a powerful and versatile form of direct marketing. With lead generation a top priority for most agents, telemarketing can be the cost-effective means of finding qualified prospects. With the high cost of face-to-face meetings, agents who telemarket meet only with prospects who are most likely to buy insurance.

Telemarketing helps increase sales not only by adding new policyholders, but also through cross-selling and upgrading existing customers. Says Smith:

'Telemarketing is an easy source of new business leads. And it frees up producers from spending their time prospecting and lets them do what they are supposed to do-sell.'

Explains Donald Jackson, a direct-marketing consultant: 'It's not waiting for the phone to ring or for a referral to come walking in the door. It's using the lists and telephone to go after the prospects you want most.'

Why telemarket? It's strictly the law of big numbers. By using the phone to track leads, an agent or telemarketing representative can make perhaps 20 sales presentations in an hour, compared to only one if making a personal visit. On a winter evening this year, for example, three telemarketers secured 86 leads in less than two hours at A.H. Meyers Insurance. The New Jersey firm gets 13,000 leads in a year by telemarketing.

Indeed, the only disadvantage to telemarketing seems to be that an agency can generate more leads than its producers can follow up on. 'We had to send out letters saying we couldn't deliver the quote we had promised them over the phone,' says Robert Ziegler, vice president of administration at MRW Group in Huntington, New York. Nevertheless, a new satellite office has written $1.8 million in business through this telemarketing effort.

While independent agents for the most part haven't incorporated telemarketing into their sales program, they are showing interest in it to generate leads. The American Telemarketing Association is seeing a boost in membership from insurance agents. And at the Texas PIA convention in May, telemarketer Jessica Bradshaw of Dallas says she was deluged with serious inquires about retaining her firm.

PIA is committed to telemarketing and has a telemarketing staff that makes some 50,000 calls a year. PIA uses the telemarketing to sell errors and omissions and health insurance to its members, as well as advertising for this magazine. 'We believe in telemarketing,' says Mitchell Glass, PIA's vice president of telemarketing and member services. PIA uses telemarketing to support its direct marketing efforts, which generates annual sales of more than $100 million.

Glass says a major reason independent agents have shied away from telemarketing is 'because they think of themselves as service providers, not salesmen.' But Raymond Spies, president of Development Associates in Eau Claire, Wisconsin, which specializes in telemarketing training, warns: 'If independent agents want to survive in this marketplace, they have to telemarket.'

Telemarketing is a combination of systematic activities, which typically involves four basic steps: approaching leads with a letter or brochure about the agency, phoning to solicit policy expiration dates, following up by telephone or direct mail and scheduling a face-to-face appointment.

The 'pre-approach' letter tells the potential customer about the agency and says the agency will be calling shortly to ask about their current insurance policy. The purpose is to introduce the name of the agency into the household or business and to present the idea of comparing rates' and coverages before renewing. Smith of Dallas says his firm's response rate is 50 percent if a call is preceded by a letter, but is as low as 15 percent without some introductory correspondence.

The telemarketer, who frequently isn't a licensed agent, then calls the prospect to briefly describe the benefits of the agency's coverage and to generate their interest. A primary purpose of this call is to solicit the x-date, which is based on the assumption that the best time to persuade someone to change coverage is when the current policy is about to expire. Additionally, telemarketers can obtain the name of the present carrier and such rating information as the number of rooms in a home.

At this stage, management of the newly acquired prospect data is critical to how successful the telemarketing program will be. It is preferable to compile the prospects by their x-dates so that at the start of each month, producers can call up the names of prospects whose policies will expire shortly.

One popular way to organize the prospect data is a software package called the Automated Sales Center, sold for $1,295 by Automated Insurance Marketing in Marlton, New Jersey. In addition to managing the data, the program can generate pre-approach letters and track monthly x-date volume.

After the phone calls, letters are sent out thanking prospects for the answers and promising to reach them 60 to 90 days before their current policies expire. In the meantime, some agencies send newsletters and other materials to establish name recognition. Ziegler sends a calorie counter to prospects, so when an agent calls on the prospects, who often forget they've responded to earlier calls, an agent can remind them that he sent the gift.

Then, shortly before the x-date, the agent contacts the prospect to set up an appointment. A minority of agents, however, make their sales strictly on the phone.

While these steps to carry out a telemarketing program seem straightforward, agents must fine tune them to fit their own goals and limitations. Jerry Hargrove, vice president of Northside Insurance who has implemented a strong telemarketing operation, says it took him three years of trials and tribulations to make the program work predictably. He decided to set up a telemarketing operation once his agency moved to Roswell, an upscale Atlanta suburb. Telemarketing became the key to Northside's plan to become the 'insurance source' for that market.

First, he outlined the territory on a map, targeting 35,000 homes. Three agents began working four hours a night, five days a week on the phone. In just five years, Northside Insurance has grown from eight people to 33, and Mr. Hargrove says 90 percent of the business is sold over the phone.

As Northside's experience indicates, telemarketing can work whether the agency is big or small. Size only dictates how the telemarketing operation will be structured, such as whether it's full-time or computerized.

The first decision is who will actually implement the telemarketing program. Jackson, the marketing consultant, suggests that the most cost-efficient way to break into telemarketing is by hiring an outside firm rather than trying to hire, train and operate a new operation internally. His advice to agents is to calculate how many leads you need each week so producers can follow up. 'Then put a program in place to ensure follow-up so leads aren't wasted,' Jackson says.

Agents can hire local telemarketing firms that work for any kind of business or firms that specialize in lead generation for insurance agents. Tel-America Telemarketing of Franklin Square, New York, will do telephone prospecting for agents, typically for a six-week period, for an hourly charge of $30 to $34. Sidney Communications of Pittsburgh can be retained for a lead-generation program at a hourly charge of $26 to $38.

Additional sources for telemarketing assistance are certain insurance carriers. For example, State Auto Cos. offers telemarketing training to independent agents who sells its products. Crum & Forster sells a direct mail program designed for telemarketing by insurance agents called 'Xdate Xpress.' Once an agent selects a target market, Crum & Forster will send out letter to prospects telling about the firm and to expect a telephone call from the agent shortly. The company charges up to $875 for 1,000 names and letters, and doesn't require that the agent offer its products. It also provides a how-to-telemarket kit, with information ranging from the design of a telemarketer's desk to the best time to reach certain professionals.

The New York metro branch of Aetna Life & Casualty is offering a new telemarketing program that is designed to provide free, no-pressure insurance information to consumers that still nets prospects for area independent agents. Prospects receive a brochure in the mail that invites them to call an 800 number for recorded information on 20 types of insurance or a particular independent agent. After providing information on a certain insurance product selected by the caller, the recording then offers to connect the caller with a live agent (who mailed the brochure) by punching 1.

Wishphone, the Huntingdon Valley, Pennsylvania, company that operates the service for Aetna, says 25 percent of the callers ask to be connected to an agent. The charge for the service, including personalized brochures, 800 service and life-call transfers to the agency, is $199 a month.

If an agent decides to telemarket inhouse, he typically will need to purchase a prospect list. There are several list vendors, who offer names and numbers based on various criteria starting with geography and including household income or type of business. IMR of Morristown, N.J., sells commercial lists to agents who specify geographical area, risk profile and account size. For example, an agent can ask for only commercial prospects whose annual premiums would exceed $25,000. The price of the list is about 60 percent for each name, says IMR's Ralph Gray.

If an agency decides to set up its own telemarketing operation, it's important to find a phone representative who is persuasive, has good phone manners and can handle lots of rejection.

PIA's Glass recommends personality tests to applicants to look for certain traits including empathy and persuasiveness fueled by ego gratification. PIA, which offers a personality-testing service through Personnel Survey & Research Group in Princeton, conducts the tests before hiring its own telemarketers.

The testing is worthwhile, says Glass, because the tests enable the agent to better predict who will stay on the job. There is a high turnover rate generally in telemarketing, because workers can't handle the excessive number of rejections.

'The way to avoid burnout is by using a soft-sell approach and being polite,' says telemarketer Chris D'Agostino with Arthur Noll Agency of Bloomfield, Connecticut. 'You don't try to push insurance down their throats, because the goal is to get long-term clients.' D'Agostino makes 400 to 500 calls a week, and secures about 45 x-dates on commercial policies in that time. 'My job is to get the agent in the door,' he explains.

Jackie Wilkes, the telemarketer for Scott Insurance of Lynchburg, Virginia, says she sets up about 15 appointments a week for eight agents. She is a licensed agent herself 'so I can answer substantive questions like what exclusions apply on a policy.'

Studies have shown that a telemarketer has 8 to 15 seconds to grab someone's attention, says Spies, the consultant. He cautions that a telemarketer shouldn't 'read' a script, although some kind of outline is useful to insure hitting important points and asking pertinent questions.

Despite getting callers that hang up or brag about their current carrier, agents find that the odds are good that telemarketing will pay off. Take David Carlson in Cedar Rapids, Iowa. In a recent telemarketing campaign with 1,000 x-dates calls, 200 prospects for commercial lines were interested enough to have the agents contact them. Agents arranged 53 appointments and eventually sold 13 policies for a total of $421,000 in new business. The cost? About $3,000.

Telemarketing will be an even greater sales success once there is widespread availability of picture phones, predicts Glass, who envisions two-way dialogs that include body language as well as words. He concludes, 'Telemarketing really is the future of sales in the insurance business.'