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Authored by Nick Kormos, Sr. Sales Management Consultant | 440.392.6563 • email: [email protected]
theMarshBerryLetterA MarshBerry Publication | Volume XXX, Issue 8 A u g u S t 2 0 1 4
1 AUGUST 2014 theMarshBerryLetter
Making the Perfect ProducerWell, no producer is “perfect.” But here are five qualities of profitable, hard-driving produc-ers paired with strategies to guide them toward a path of growth and profitability.
Producers are the lifeblood of an agency, pumping in qualified, new business that makes continued growth a reality for the agency. They’re the feet on the street, communicating the firm’s core values to clients and prospects. Their ability to attract new business, maintain existing accounts and “hunt” for qualified prospects drives the sales life cycle.
Producers power an agency to reach its goals — at least, that’s the idea.So, what happens when producers hit a wall? When they’ve grown a book of business that is significant, yet strikingly unfamiliar to them as they fail to really analyze the who’s who in that book? Most agencies at some point experience a bottleneck in the sales process; they need a road map, a strategy to deploy a sustainable, repeatable sales process. Let’s face it: Producers are human. They get stale, fall into the same-old rhythms, they burn out.
Most sales managers or agency principals feel constrained or helpless as you examine both the sales culture, and the individual producers that just don’t produce. While there isn’t a “magic match” to light a fire under your producers, you can help reignite a producer’s energy and steer them, and your agency, onto a profitable growth path. In order to accomplish this, we start by understanding the key attributes of a “perfect producer.” What habits do focused, hard-driving, smart producers share? How do they perform, and what characteristics are inherent (and learned) that give these valuable players an edge?
Producers, In a Perfect WorldThe perfect producer is an economist, a specialist and perhaps even a therapist who drills down to tease out a prospect’s pain, then (ideally) supplies a plan, and a solution. The perfect producer understands the reality of capacity and the value of serving a niche. The perfect producer loves “the kill” and lives to sell rather than selling to live. They don’t wake up worried about making a mortgage payment, but rather excited about their prospects that can drive them into a better lifestyle. The perfect producer is competitive, confident, humble and involved in the community. The perfect producer is a mentor (not a preacher). The perfect producer has the conviction to carry out a strategic plan to grow his or her book of business — and the courage to walk way when a lead does not meet qualifying criteria. The perfect producer is relentless at refining the strategy to meet new targets.
Now, here’s the reality: Producers are not perfect. But these ideals should guide sales training and strategy. Ask producers to identify areas they feel need the most attention for improvement. How would the agency like to excel? Align these goals and focus on a few top characteristics that will drive profitability — and think long-term.
Classification of Producers: New Business Agency Revenue Comparables
Figure 1
New Business Dollars – 2013
Percentile Group All Producers Million $
ProducersExecutive Producers
Senior Producers
New Producers
Top 20% $115,696 $457,716 $201,094 $109,338 $117,696
60% to 80% $95,608 $197,931 $125,242 $54,949 $46,714
40% to 60% $66,491 $84,290 $90,504 $36,950 $28,564
20% to 40% $43,036 $54,962 $57,833 $27,455 $17,992 Bottom 20% $23,093 $35,736 $39,579 $20,094 $12,385
Source: MarshBerry Producer Benchmark Report
• New Producer: Less than three years experience
• Senior Producer: Over three years and < $500k
• Executive Producer: Over three years and > $500k but < $1M
• Million Dollar Producer: Over three years and >$1M
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Here, we outline some common producer hang-ups, how the “perfect producer” handles these scenarios, and offer some realistic strategies you can implement now to drive more profit and energize your team.
1. Setting Goals: Think ‘Big’The hANG-uP: Producers set goals based on past production — they made the numbers before, so they can stage a repeat performance without breaking a sweat. They prefer to set goals low so they can beat their targets easily, and impress their managers when they “make numbers.” There’s really no momentum with this approach—it’s like trodding along on a treadmill. They’re burning energy and clocking some miles, but they’re really not going anywhere. Neither is the agency if this is the producer’s approach. Worse yet, sales managers and agency executives will try to apply uniform goals for all producers in an organization, which fails to play to each individual’s actual abilities. Trying to drive a slightly less successful producer to meet or beat the same goal as your all-star isn’t going to change their behavior it will just remove their mental belief that they can ever achieve that. Conversely, setting a goal for your all-star that is lower than what you know they can accomplish enables them to go into cruise-control.
The PeRFeCT PRoduCeR… Understands the economics of growth and how the numbers relate to retention and production.
The STRATeGy: Producers should consistently write 20 percent new business as a percentage of the prior year’s book. For an agency OR a producer to grow by 10 percent, it must plan on losing 10 percent of business and gaining an additional 20 percent to reach that target growth. Eventually in a producer’s career, meeting last year’s sales goal just isn’t enough to account for client attrition. When producers understand this concept, they’ll
realize why that goal of 20 percent of the prior year’s book is critical for perpetuating growth — and not just churning away on a sales treadmill. Each producer should have a minimum goal (to avoid negative consequences), organizational goal (their slice of the agency’s new business goal), and stretch goal (additional incentives/bonuses). Each should be determined on past production levels, book size, and talent level. There must be buy-in from both sides, otherwise it’s just a number on paper.
2. understanding Capacity: Trade down to Move up The hANG-uP: Producers protest new business goals — when is there time to write new business when they’ve got such a large book of existing clients to tend to, as well? You can’t do it all, right? And renewals are important. (True: But without growth that surpasses the prior year’s book by 20 percent, the producer AND the agency are just existing, not moving forward.)
The PeRFeCT PRoduCeR…Recognizes that “trading down” their smallest accounts frees up time to hunt and, with focused prospecting, reel in higher-value accounts that drive profitability (and generate larger paychecks).
The STRATeGy: A giant bottleneck builds up when producers get tied up in renewal business and fail to clean out their book of business so they can prospect. Here’s what happens: A producer writes $100,000 in new business his first year, and the second year, the agency wants that producer to write an additional $100,000 and renew the previous year’s accounts. The third year, the agency asks the producer to bring in another $100,000 while renewing the existing $200,000 accounts. The producer, without seriously evaluating his book, hits a wall. Big time.
You can only produce, and renew, so much volume — but account size is a different story. Growth is possible when the smallest accounts are traded out of the book, freeing up time
The elusive $500k Book (Growth offset by Attrition)
Figure 2
Source: MarshBerry Experience
3 AUGUST 2014 theMarshBerryLetter
to hunt and, eventually, increase the average account size. For example, if a producer hunts on accounts that are in the $1,500 to $2,000 commission range, and by year four he has a $400,000 book to renew, he will drive himself into the ground if he continues hunting those smaller accounts. Over time, producers must trade out their smallest accounts to internal, highly trained account executives who can actually spend some time with those clients; and the producer can then focus on boosting their average revenue per account. It all goes back to the concept of working smarter rather than harder. Typically a producer can be relieved of 20% of their accounts and only be giving up 1- 3% of their revenue/commission.
3. Qualification Prowess: Know your Sweet SpotThe hANG-uP: Producers are focused on prospect’s size and market access. But they don’t always consider the real deal-breakers: access to the decision-maker, an understanding of prospect’s pain points, and knowledge of the criteria that will allow producers to win the business. They’re pounding on a lot of pavement rather than isolating the best doors to knock on, or which doors they should actually walk-through.
The PeRFeCT PRoduCeR…Has the conviction to dig deeper to understand prospect’s decision-making processes. They can ask the tough questions resulting in an actual roadmap of deliverables that are required to win the business.
The STRATeGy: It’s not enough to hunt accounts that match your market and revenue targets. Go beyond basic qualifying factors — size and whether a carrier will be willing to provide a quote. Do a deep dive and get to know the accounts intimately — understand their processes and the players involved in order to close a sale. Then be willing to walk away if the account is a set-up to fail — if
the criteria do not exist to win. Walking away from a prospect that meets the basic qualifications might be the toughest thing a producer has to do. But it’s necessary to free up time to hunt business that will actually close — and close within a period of time that yields greater profitability. Create some “Rules of engagement” and have the conviction to stick to them.
4. Sticking to the Core: Alignment with Agency Values The hANG-uP: What differentiates your agency from others? Does the answer sound something like this? We’ve been in business for 80 years, and we focus on delivering top-notch customer service. We provide risk management consulting and respond to your requests in a timely fashion. It’s time to rewrite the script — or better, drop the script that runs through a litany of “value-added services” (yawn) and begin prompting producers to address “the why”, as in “why” should the client care? (More on that in The Strategy.)
The healthy Growth Line (Average Book of Business Relative to Number of Accounts and Account Size)
Figure 3
Source: MarshBerry Sales Management Best Practices and Benchmarking Report 2012
Rules of engagement
Figure 4
Source: MarshBerry Experience
Criteria Percentage
Geographic Territory 5%
Niche Industry 10%
Account Size 10%
Access to Decision Maker 30%
Referral Opportunity 5%
Learning Opportunity 2%
Growth Potential 3%
Differentiate against the competition 25%
Number of Brokers Involved: Less than (X) 10%
totAl 100%
Percent needed to pursue: 70%
For an archive of reports and newsletters please visit www.MarshBerry.com/Articles
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The PeRFeCT PRoduCeR…Explains exactly why that litany of services matters to clients and prospects. The perfect producer gets “the why” and expertly articulates that to help the audience understand why the offering is relevant, valuable, and DIFFERENT!
The STRATeGy: Communication breakdown is a common culprit for producers. They know what the agency does. They understand at a high level the core values, and what they bring to clients and prospects. However, it’s important to tailor the message so it truly speaks to the audience — to address “the why.” Rather than pitching a general sales spiel, clearly identify why risk management consulting addresses a prospect’s pain point. Explain how the agency’s claims management process makes doing business with the agency easier than with the competition. Producers can make a two-column list of the agency’s core values/services on one side, and “the why” on the other side. This will help organize those ideas so they can be clearly articulated during a sales discussion.
5. Find your Niche: Score as a SpecialistThe hANG-uP: Producers who claim to be generalists miss out on potential business — and lots of it — from clients who want to buy from an industry expert. Serving as the jack-of-all-trades has its advantages, but from a producer perspective, that is trumped by the relationship-building potential afforded by acting as a specialist.
The PeRFeCT PRoduCeR…Develops three to five niche markets that align with their personal expertise and the agency’s core competencies.
The STRATeGy: Producers who turn their personal interests into professional niches bring their knowledge and passion to the table — and this shines through during conversations with prospects and clients. They’re subject-matter experts. They know their stuff and can capitalize on that market. Niches are also born from agency core competencies such as service models and a cultural understanding of the industry they serve. A producer and the agency must be able to articulate those effectively to prospects.
SalesPro Producer TrainingMarshBerry’s SalesPro Producer Training is specific to the insurance industry and built from proven top producer methods of building a sustainable and predictable book of business.
This session is designed for both new and seasoned commercial or employee benefits producers who are looking to achieve a higher level of performance.
ToPICS INCLude: • Time Management • Developing a Consistent Sales Process • Sales Strategies of High-Growth Producers • Seven Levels of Prospecting• Rules of Engagement• Pre-Appointment Checklists • Relationship Profiles • Overcoming Objections• Business Planning• Selling to the Clients’ Perceived Value
Log on to www.MarshBerry.com/TrainingSessions to learn more, or contact: Jim Wochele, Sales Management Consultant, at (p) 440.392.6559 (e) [email protected] or Nick Kormos, Senior Consultant, at (p) 440.392.6563 (e) [email protected]
What Next? Where does a producer, and agency, go from here? How do you coach a good producer to great?
• Begin by prompting some soul searching: What areas are of highest importance — then get specific.
• Avoid blanket goals: I want to prospect more. I need to sell more. I plan to make more cold calls.
• Set up milestones — drill down to the numbers. What, exactly, is “more”?
Consider these qualities of a perfect producer as milestones are set. Then P.E.T.A. (Plan, Execute, Track, Adapt).
• Create a plan for improving performance — and be specific.
• Execute on that plan and track its effectiveness. If you don’t know why a plan worked or didn’t work… how will you know how to adapt the plan to meet future goals?
Each of these steps need the appropriate amount of focus or the process breaks down.
Achieving growth – either organic or through acquisitions – is no small task as brokerages face
challenges from an uneven economy, stubbornly soft premium rates, evolving carrier demands and competitors eager to lure away top-performing employees.
The 8th Annual SNL Insurance Brokerage Summit brings together top industry executives, advisors and analysts for an open and informed discussion of strategic planning, growth, and the outlook for M&A in the insurance distribution marketplace.
Panel discussions include:• The economic factors currently impacting the industry’s
performance, as well as those most likely to affect future performance
• Key executives cover how to determine the best growth strategies for your business
• Top industry deal makers share the key elements of a successful negotiation
• An overview of the healthcare environment and the impact of regulations
Past Attending Organizations include:AmWINS Group Benefits
ARS Americas
Arthur J. Gallagher & Co.
AssuredPartners, Inc.
BMO Capital Markets
Brown & Brown, Inc.
CBIZ Benefits and Insurance Services Inc.
Chubb & Son, Inc.
Corporate Synergies Group
Digital Insurance, Inc
Grand River
Hub International
Hylant Group
Integro Insurance Brokers
Kaplansky Insurance
Keefe, Bruyette & Woods
Lighthouse Insurance Agency
Macquarie Capital
Marsh & McLennan Agency LLC
National Financial Partners
Sandler O’Neil + Partners
The Hilb Group
Upshaw Insurance Agency
USI Holdings Corporation
William Gallagher Associates
Williams Mullen
Insurance Brokerage Summitin collaboration with
8th Annual
When and WhereNovember 5-6, 2014 The Union League Club, New York
RegistrationFor more details or forregistration details go to www.snlcenter.com/brokerage
Save $200 with code MB200
Register Today!
Sponsorship opportunities: Please contact Steve Kruskamp at [email protected] or call (434) 951-7579.
Platinum sponsors:
Gold sponsors:
Media Partner:
Keynote Speaker:
J. Patrick Gallagher, Jr. Chairman, President and CEO, Arthur J. Gallagher & Co.
