On April 21, 1980, Rosie Ruiz crossed the 84th Boston Marathon finish line in first place with a record time of 2:31:56. In the post-race interview immediately following her finish, Ruiz—appearing to having barely broken a sweat and with no apparent shortness of breath—could not recall prominent landmarks along the course, including Wellesley College, where the students cheered on female marathoners.

FAST FOCUS

  • Like marathon coaches, insurance executives must establish incremental goals for those they supervise.
  • Retention rates hardly set agents and brokers apart when considering growth.
  • A successful organization must provide the sales staff with the coaching and other resources necessary to win.

Her unfamiliarity with common marathoning terms like “splits” and “intervals,” and her surprising admission that she did not have a coach, cast immediate doubt on the validity of her victory. She was disqualified a few days later when race officials found she hadn’t run the entire race.

Like a marathon, the insurance sales process must be viewed in intervals and splits, and, like marathoners, insurance producers and coaches must become intimately familiar with such intervals. Interval training is simply breaking long, high-intensity workouts into small work repetitions. They are the most formal of speed workouts in that the distances and target paces are precisely fixed before running. 

As with marathon runners, the days of measuring insurance sales producers simply at the finish line—that is, December 31—have faded into oblivion. Today, leading insurance executives and sales managers consistently coach the sales staff—quarterly, monthly, weekly, even daily—by establishing incremental goals throughout the year.

Coaches provide the focus needed to break down the annual marathon into such measurable sales splits. They believe that the actual organizational commissions received are the lag indicator of sales performance. The lead indicators, on the other hand, reside in the activity, behaviors and results measured on a regimented and consistent basis.

Toward that end, today’s leading organic-growth executives focus on two main initiatives. First, they provide a clear understanding of the roles, responsibilities and expectations of their sales teams. Rising new business written and overall book growth, supported by positive reinforcement for exceptional achievement and negative consequences for non-performance, are now the norm. Second, the executives provide the sales team with an understanding of how the expectations will be accomplished. Instead of a stopwatch, pipeline management technology and consistent sales meetings have quickly solidified their place as the tracking mechanisms of choice.

Focus

Executives must redefine the role of a producer. Producers must proactively go to the market and find opportunities that otherwise would not have existed for the organization. They must sell. Insurance is the last industry where salespeople can wake up in the morning and decide whether they feel like running, training or selling. The intervals are far apart, thus hurting the potential for long-term success.

Often, the only thing some producers still successfully sell is a web of excuses for non-performance. Historically, coaches have enabled this by not establishing and governing goals, intervals and action plans. But no more.

Go back to Economics 101. There are only three vehicles enabling organic growth:

1. Add a new product to the mix

2. Increase price

3. Sell more existing products and services.

High-growth agents and brokers are able to outsell the external economic obstacles.

High-growth agents and brokers understand that the only vehicle in their direct control is number three. Sales cultures are created and marathon runners are identified, coached, groomed and trained based on that understanding. Those with little chance of ever completing a marathon are shown the door.

Premium rates, investment income, supplemental income, and miscellaneous income also fall outside the realm of the organization’s direct control, so high-growth agents and brokers focus the organization on new business written and its commissions. Graphic A illustrates this primary difference in concentration between average and high-growth agents and brokers.

While critically important, retention rates hardly set agents and brokers apart when considering growth. The current recession and the well embedded soft-rate environment have created a black retention hole for everyone. Unlike the agency masses, however, high-growth agents and brokers are able to outsell the external economic obstacles.

Selling is far from easy, but sales managers recognize the compensation, renewal stream, perks, service staff, support structure and life balance associated with the producer title.

The average agency and brokerage sets the minimum new-business performance standard at $53,750 compared to $83,750 for high-growth agents and brokers. The difference in new-business minimum standards takes root in enterprise-wide focus and in tough love coaching expectations, not in geographical differences.

Only 48% of producers in the average agency or brokerage achieve the minimum performance expectation, compared to 62% in high-growth organizations, so less than half of the sales staff within the average insurance agency or brokerage shoulders the burden of driving enough new business and commissions to make payroll, provide benefits, pay for selling and operating expenses, and generate a fair owner return.

While it is easy to blame individual producers for lackluster performance, the sales process needs to start with the organizational infrastructure. A successful organization must provide the sales staff with the coaching and other resources necessary to win. Those tools include:

  • Pipeline
  • Differentiation platforms
  • Value-added services
  • Sophisticated service personnel
  • A sales plan
  • Competitive markets.

The best of the best all have coaches. Just ask Jacqueline Gareau, the real winner among the women running the Boston Marathon in 1980.

Like athletic coaches, sales managers provide additional benefits. They establish strict consequences for non-compliance (often in the form of additional sales training or reduced producer renewal commissions, perks or access to value-added service resources). They also force many non-performing producers to confront the brutal reality that they are not, in fact, salespeople at all.

Clarity

Once each action plan is set in motion, the sales manager leverages pipeline management to measure, monitor and improve performance for the next interval.

High-growth organizations currently write in excess of 20% of the prior year’s commissions as new business. Before they seek external solutions (new producer hires or acquisitions) to solve internal growth deficiencies, they provide the existing sales staff with the clarity to achieve new goals.

The difference between high-growth agency producers and their average agent/broker counterparts should be no surprise. The average producer in the average agency resides in the 40% to 60% new-business quintile. Simply put, they are average. And the average agency saw a 4.6% drop in organic growth during the year ending June 30, 2009.

The average producer’s book of business amounts to 60% to 80% of that of high-growth agents and brokers. Critical factors in goal-setting within these firms include:

  • Establishing higher sales expectations
  • Illustrating how the individual producer goal supports corporate objectives
  • Modeling the projected producer book and W-2 ramifications of new business written vs. book leakage
  • Creating an action plan to break the annual sales marathon into a series of incremental activity and result intervals.  

Once each action plan is set in motion, the sales manager leverages pipeline management to measure, monitor and improve performance for the next interval. These current prospects provide the sales manager with a wealth of information to help producers hit desired sales intervals.

Sales managers should establish commission dollar goals as well as desired account size and number of accounts needed to keep pace.

The center line correlates all three axes and helps producers define how their desired pipeline should look based on book expectations. The average producer with a $450,000 book of business has about 150 accounts with an average account size of $3,000. The typical $1 million producer book has about 64 accounts with an average account size of $15,625.

Producers (based on average account and book size) falling to the left of the center line already maintain an above average account size relative to peers with a comparable book, so they must focus on writing more accounts to grow their book. Producers falling to the right of the center line maintain a host of small accounts relative to peers. They must focus on writing larger accounts.

Sales managers can use this information to dissect the annual producer goal of $90,000 of new-business commissions into numerous incremental goals:

  • Weekly or monthly quality appointment goals
  • Number of referrals or leveraged introductions
  • Appointment-to-close ratios
  • Proposal-to-close ratios
  • Nine accounts with a minimum $10,000 account size.

Produce or perish is the new mantra for organizations and individuals alike. Coaches remain an integral ingredient of personal and collective achievement. They provide consistent and repetitious focus and clarity on the series of short races that build up to the marathon.

Coaches must confront the brutal reality that not all individuals are built to run a marathon. While some athletes can be coached and trained, others will never possess the motivation to win. Take Rosie Ruiz. Exactly two years after the Boston Marathon, Ms. Ruiz was sentenced to five years probation for scamming $60,000 from her New York City employer. One year later, she was busted for selling cocaine in Miami. Referring to her flight risk while seeking her release on bond, Ms. Ruiz’s attorney told the judge, “Your honor, she’s not a runner.”

Average New Commissions

Where does your firm stand?

New Producer...........................................< 3 years

Senior Producer.......................................>3 years, <$500,000 book

Executive Producer..................................> 3 years, $500,000–$1 million book

Million Dollar Producer.......................... > 3 years, >$1 million book