'Nothing happens until somebody sells something.'
Traditionally, in the independent insurance agency that 'somebody' has been the producer. But these days, more and more agents are using their Customer Service Representatives (CSRs) as a valuable resource to generate new and renewal business. Your CSRs can, and should, deal with every aspect of the selling process: Prospecting and X-dating; upgrading coverages (by increasing limits or adding endorsements); and account rounding (using the 'by the way' approach)— not to mention writing walk-in or call-in business.
It's the CSRs who handle the 'demand contacts' (customers' questions about billings, endorsement, claims, and so forth that arise after the sale) whenever your producers are out selling-which should be at least 80% of their working day. In other words, your CSRs form the backbone of the customer relations program which you need to survive-and thrive-in today's consumerist society.
CSRs who are producing sales and earnings for your agency deserve a compensation system that is: a) based on financial and extra-financial incentives; b) consistent or equitable (applies equally to every CSR); c) results-oriented; and d) comprehensive (i.e., provides incentives for every aspect of the sales process).
To develop an effective compensation plan, you'll need to set-and stick to-specific standards, then review your CSRs' performance at regular intervals and make 'mid-course corrections' if needed. You can choose from a variety of incentives: CSRs may earn financial rewards either on an individual bases (such as cash payments for prospects or X-dates, or sales commissions-if the employee is licensed) or as members of the agency (through a profit-sharing plan, bonuses, or a share of contingency commissions). Non-financial rewards might include anything from free trips, home appliances, or even a car to such 'warm fuzzies' as a 'CSR of the month' award.
To give you some idea of how creative agents can combine these incentives to develop effective CSR compensation plans, here are several examples chosen from interviews with hundreds of agencies, large and small, throughout the nation over the last five years:
- Afton Insurance Agency, Houston, Texas. CSRs receive a fixed commission for each sale they make, with the money deposited each month into savings accounts the agency has opened for them. The CSRs love the program: one has earned a piano, another has a new VCR, and all of them have hefty balances in their accounts.
- Anderson Insurance, Valdosta, Georgia, Principal Bob Anderson has novelty coins stamped with the agency's name. Whenever a CSR sends a policy or corresponds with a customer, she puts a coin in the envelope, with a card asking the insured to return the coin to the agency if they believe their CSR has been giving them good service. Most clients return the coins, which are worth $2.50 apiece. CSRs also earn coins for such in-house functions such as X-dating, prospecting, or writing an account. They can exchange coins for everything from an umbrella to a gift certificate, savings bond, or half a day off.
- Hawkins Group, Edina, Missouri. The agency sets annual and monthly production goals for each CSR based on average production over the current and previous year. At month's end, each person gets a spreadsheet comparing results with the monthly projection and with the same period in the previous year. The CSR with the highest percentage of increase in her book of business gets a $50 savings bond. The CSRs who hold P/C and Life insurance licenses receive 50% of first-year commissions (no renewals), plus $1 for every X-date they generate.
- Elliott Insurance Service, Inc. Yakima, Washington. Says principal Dick Elliott, 'Our CSRs want to make this thing fly because they know doggone well that we're going to share with them.' The agency has a profit-sharing plan-and each CSR receives 10% of the agency's contingency commissions, plus a pro-rata share of interest or dividends on investment funds. In one year, each CSR took home an extra $8,000 in incentives.
- Ted Marty and Associates, Cincinnati, Ohio. Principal Ted Marty sees the agency's CSRs as a valuable source of business. So he pays them 100% of first-year commission for every new client they bring in, plus 50% of commissions for every account upgrade-such as adding an Umbrella or increasing limits.
- Roybal Insurance Agency, Billings, Montana. 'We have a lot of incentives because we enjoy them,' says principal Jess Roybal. Once a month, Roybal fills a cookie jar with $500 (one $100 bill, two $50s, five $20s, twenty $5s, and one hundred $1 bills). For every account she upgrades, a CSR gets one chance to draw form the jar. The agency also pays the CSRs a $200 bonus for passing their licensing exam, offers a profit-sharing check every three months, and buys a new car (plus gas, insurance, and upkeep) every year for each CSR's personal use.
Remember that 'cookie cutter compensation' won't work. You'll need to base your CSR compensation plan on the structure and needs of your agency. So give it your best shot-and bear in mind that a CSR is a terrible selling asset to waste.