21st Century Sales Success.

Retaining good agents requires changes in how insurers develop and deploy them.

As we begin the 21st century, it behooves us to take a look at not only the things that have changed, but also at the things that have remained the same. According to Limra, four-year retention of life insurance agents has hovered around 17% for the better part of the past five years. Is there any hope in the new century that new solutions will be found to remedy this historic embarrassment to the insurance industry?

Let's take a new look at an old problem through the lenses of six "P's": people, productivity, process, product, possibilities and a summary of the problem.

People

It is painfully obvious that to increase retention we need to recruit the right people--but who are they? The recruiting challenges are greater than ever in this robust economy, which offers many alternatives for qualified candidates. To shed some light on what kind of person is succeeding these days, we interviewed William O. Goodwin, Northwestern Mutual general agent and GAMA International Hall of Fame member. Goodwin's answer: "Successful recruits are willing to give up what they have to get what they want." He said they need a desire for at least two of three benefits of a financial-planning career: independence, economic opportunity and the chance to have an impact on the lives of others. They also must have the right competencies and emotional fortitude to survive the ups and downs of getting established in the business." It's a lousy job, but a great career," he said.

Productivity

In companies with poor retention, we inevitably find low agent productivity. Goodwin's observation about this situation is poignant--"People who are doing well don't leave." A large part of doing well is high levels of productivity. It is important to get people up and running quickly with a track to run on. Many organizations are using a financial-planning approach, special training, joint work and mentoring to build clients and sell more products per sale.

Processes

Historically, there were 1,000 different sales processes in a sales force of 1,000 agents. The best practices of top people could rarely be transferred to the less productive agents. In today's environment, cutting-edge companies "unbundle" the sales process to match people and their strengths with the parts of the sale that they do best. Baltimore Life's "Team Advantage" approach, for example, combines a prospecting role with a sales/closing role, and a client-service manager completes the team. Early results show an encouraging increase in productivity. Similarly, Axa Advisors' new strategy of fee-based financial planning has led to a center in Atlanta, where plans are completed in conjunction with the adviser, the client and financial-planning experts. This has led to increased productivity and retention.

Products

In order to work on behalf of a better-educated client, today's agent must have access to a full range of products, both proprietary and nonproprietary. In addition, these products must be appropriately priced to reflect the value-added services rendered. Compensation grids should not be weighted to favor the products of one manufacturer over another.

The Possibilities

The "great career" of which Goodwin spoke will remain intact. Financial rewards and great satisfaction can be gained by building a clientele of affluent clients. But there is an ever-widening gap left by the multitude of companies that are abandoning the middle markets because agents are too expensive a channel to deliver their products. Some possible solutions are work-site marketing, direct marketing to affiliated groups (such as USAA), Internet marketing (the jury is still out) and attempts by banks to serve the middle market.

The Problem

The problem is simple, even though it is a long-term one. With retention rates continuing at a dismal 17% and with fewer than 20 companies still in the business of hiring and developing new agents, where will all the producers of the 21st century come from? How will the middle market be served? The companies that are living off the development efforts of others must join together to solve this problem. They desperately need an industry-sponsored effort to bring good people into a great career. That will be the key to assure high retention, productivity and long-term success.

William N. Goff Jr., a Best's Review columnist, is a consultant with Tillinghast-Towers Perrin in Atlanta, specializing in distribution effectiveness.