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... Blog Photos Group Connections Reviews IMMS Library Immerse yourself in our stacks. Take some time and browse through our library. We have thousands of articles, checklists, tip sheets, sales letters, and more! Communications Marketing Customer Service Planning Finance/Accounting Risk Management Human Resources Selling Legal and E&O Technology Life/Financial Services Glossaries Management Resources & Links Categories Popular Recent All Back Are Your Producers Subsidized?4/30/2013 12:00:00 AM by CompleteMarkets Editor , Chris Burand This content has not been rated yet. If you don't think you're subsidizing your producers, you might need to think again. The average agency spends between $1.02 and $1.04 for every commission dollar earned (" Growth and Performance Standards," APIS, 2000) . The cost of producer-generated ... . If a producer had an 85% hit ratio on new business, new sales would be almost as profitable as renewals in most agencies. Even with higher profits, a producer's repeat sales (renewals) usually aren't profitable enough to turn an agency's loss into a profit. In fact, our studies have found that some agencies spend as much as $1.70 for every renewal commission dollar earned! HOUSE BUSINESS Because renewal profits alone can't support producer's new sales, another key source of subsidies is house business. House business is usually the most profitable because no one gets a commission on it. It helps to subsidize the entire agency, especially producers with small books. OWNER SUBSIDIES In many agencies, renewals and house business combined still aren't profitable enough to cover losses on producer-generated business. Many owners ...

Are Your Producers Subsidized?
If you don’t think you’re subsi...

... to be fair the Life producers might resent the inefficiencies that they see (or think they see) in any part of the P/C operation. If I'm paying part of the overhead, I don't want to see anybody goofing off, ' is the feeling that may result. A good relationship can turn sour for no good reason. Another possible negative effect is that Life producers may be subsidizing the P/C operation indirectly. For example, if a large P/C agency has a relatively small Life producer staff and the allocated expense system described above, the Life people are paying for Life leads they will never use because the agency can produce more Life leads than they can handle. In extreme cases, P/C agencies with $40 million to $50 million in ... fact that the P/C agency already exists rather than the idea of building a P/C agency. The Life producers usually have no share in the P/C profits, no equity in the P/C agency, and perhaps only secondary interest in the inner workings of the agency. More important, Life producers pay' for Life leads by splitting commissions with the P/C house. If it's a fair split, the payment satisfies their obligation to the P/C house for leads. If, in addition, Life producers were also expected to help pay for the cost of producing those leads (i.e., the cost of running the P/C agency), then they would be paying twice for the same leads: once by sharing commissions and again by ...

...t. Opportunity Four — Subsidized Producer. If you wish to develop a ...ealth department. As with any such subsidized arrangement, the entire agency-c...

... expect growth beyond standard rate increases (although if they sell something new, great) . Since they're not responsible for new sales, make their books larger. Pay them in proportion to their responsibility — probably 20% of the commissions they service. Expect your Selling Producers to produce, and pay them well for doing so. You'll have more money to spend on good producers because you're no longer subsidizing poor ones. Eliminating these subsidies will allow you to attract better producers and to pay for more sales training. A two-tiered producer compensation system offers other rewards. Profits increase because you'll require fewer people. Producers not qualified to sell won't waste their time trying and you'll pay lower commissions on renewals. Morale will improve because your staff won't waste time on new business they're unlikely to write, and ... emphasized cross-selling, identifying needs and fears, and selling efficiently — just what most sales articles stress today. The difference I noticed is that most agencies were much smaller 30 years ago. Many were one-man (and they were almost all men) shops. These producers could sell because they had to sell. They relied on no one else because there was no one on whom to rely. The house books were a product of the blood and sweat of the sole producers: the agency owners. Agencies today are larger and usually have multiple producers. However, most of their producers aren't very good at generating new business. Yet they hold the same title — producer — as their predecessors. They also earn the same compensation as those producers who can sell. It's time for a change. ...

... build your image — and for that matter, what image are you trying to build? How much name recognition do you really have in the marketplace? Have you branded yourself and your agency? To that end, here are some questions you might ask yourself: How active are you in your community's volunteer associations, with your peers in business (your potential customers)? Do you promote or subsidize membership in such organizations for your producers and service staff? Is there cohesiveness and continuity in your advertising? How involved have you become in the industry associations that support your clients? What sort of value-added resources do you bring to the table for your clients and prospects? Have you shown your clients and prospects that you're more interested in their success than in your own immediate gratification? What sort ... ?4/30/2013 by Jack Burke This content has not been rated yet. What's your name again? ' They can't buy from you if they don't know who you are. Jack Burke offers advice for putting your name in front of those who matter in this document. Recently my good friend David Brady, a television/movie producer from , called to tell me that a publishing house absolutely loved a manuscript of a book that he'd recently finished. Unfortunately they weren't willing to sign a deal because he has no public name recognition, which creates problems in promoting the book. I could go down the list of movies and television shows he's produced, the many awards he has won, but the fact is that he's unknown outside of his industry. As a result, David ...

... an in-house producer initially subsidized by an insurance carrier. Use ...se than if you were to use company-subsidized producers or field representativ...

...lly successful. Option Four: Subsidized Producer Agency owners wishing t...ealth department. As with any such subsidized arrangement, the entire agency-c...