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A hard sell: the solution to adding new producers may be to look outside the industry.

Growing your business is not an option anymore: It's a requirement. Carriers are raising their thresholds and looking to increase their volume with their most productive agencies. However, carrier demands and agency capabilities are sometimes at odds. Agencies with a limited sales force are finding it difficult to produce enough new business to meet carrier requirements, while agencies with a larger producer force are finding it easier to generate new business for their carriers and also to grow their businesses faster. Many of the latter agencies hire at least two new producers each year--and some larger agencies hire more than five producers a year.

Adding new producers not only fuels growth, but is a critical component in agency perpetuation. Thirty-eight percent of agency principals are 45 to 54 years old and 24% are 55 to 64. Younger producers are not only critical to perpetuation of the business, but to retention of accounts when customers transfer ownership to the next generation.

The challenge for agents and brokers is where to find producers. With non-compete agreements common today, agencies find it difficult to recruit experienced producers or pay the high salaries they need during validation. Other insurance professionals, such as carrier underwriters or marketing representatives, are well suited to their current positions, but may lack the sales skills necessary to develop new business. Additionally, agency service staff may want the higher compensation levels that a producer can achieve, but are reluctant to work on commission.

The solution for many agents has been to hire salespeople from other industries. Although they may not be insurance experts, they can prospect, make sales presentations and close sales. They are used to cold calling, networking and having to make a sales quota. Many of these people have had good sales training and mentoring and have confidence in themselves as salespeople. They may have former clients who can be prospected as insurance buyers, or expertise in a particular industry that can become an agency niche. I have seen salespeople make a good transition from high tech, health care, communications and banking.

Salespeople from other industries often are pleased by the compensation potential in an agency. With good results, they can earn a high income with no cap on earnings. The opportunity for ownership, deterred compensation arrangements, or book equity are also very attractive to these sales professionals.

To be successful in hiring these people, agency managers need to spend a lot of time interviewing candidates to make sure they have the right skills and will work well within the agency's sales culture. For example, it's not enough that a producer wants to open doors; the producer also must be interested in learning the insurance product. A producer who is demanding and difficult or who cannot work independently may not fit with many agency cultures. It's important to effectively screen producers by putting them through several interviews with key personnel. Look for capabilities such as relationship building, problem solving and creativity, perseverance and the drive to accomplish something. The last step should be personality testing to determine the candidate's fit with the position and to assess strengths and weaknesses.

Once the producer is hired, you must be able to provide support, insurance training and mentoring. You will need to plan for educational costs, such as sending the new producer to insurance courses. Account executives and customer service representatives also must be capable of assisting the producer with gathering information, developing submissions, negotiating with carriers and developing proposals. Service staff should understand that their support is critical to the success of the salesperson and the agency's growth, not just additional work for them.

An experienced producer also should be assigned as a mentor to go on sales calls with the new producer and assist with presentations. The mentor should be able to devote a significant amount of time each week to producer coaching. The agency also should be prepared to support the sales efforts of these people with marketing materials, entertainment expenses or targeted advertising.

These salespeople need enough time to develop confidence with insurance, but once they do, many of them are highly productive. Their strong sales skills will keep them prospecting and identifying the leads that will turn into new accounts for the agency. They also can contribute their knowledge of good sales practices, learned from other industries to help make the agency business stronger.

Sharon Cunningham, a Best's Review columnist, is president of Business Management Group, a management consulting firm based in Hartford, Conn. She can be reached at insight@bestreview.com.
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Title Annotation:Agent/Broker
Author:Cunningham, Sharon
Publication:Best's Review
Geographic Code:1USA
Date:Jul 1, 2004
Words:756
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