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How Long Does It Take for a Producer to Become Profitable?
 "Is there any guideline as to how much time an agency should expect from a newly hired commercial sales producer to have enough commissions to the agency to cover the new producer's salary and benefits?"
 There’s not a lot of information to go on here, but we ran this basic question by the VU agency management experts and the consensus was 3 years, as outlined in the following responses:
There are so many variables to this situation that a generic answer that is also a correct answer is not really possible. If management does their job correctly, more important than if the producer is doing his or job, then it is usually three years to breakeven. But there are a lot of “if’s” in that statement.
Yes. Our “new” new producer program has an 18 month up-flow to get the producer up to nominal speed and 18 month more for him to catch to the draw he received as he was ramping up. 18 mo. into where he can support his expense; 18 mo. out to make up for the excess cost to the agency in the first 18 months. At the end of 36 months, he is fully self-sufficient. We have producer training going on for the entire time and a validation schedule that assures us that his activity level is sufficient to meet his financial obligation. Feel free to contact us for more information.
E. Al Diamond
President
Agency Consulting Group, Inc.
800-779-2430
Lots of "what ifs" in this question. Depends on experience; book of business to transfer; knowledge; newbie; what kind of resources does your agency offer to a commercial producer? Would need to know more to provide a reliable answer.
Judi Newman
Phaze II Consulting, Inc.
Phone: 239-481-6001
Fax: 239-481-6268
Mobile: 239-281-4140
I can be available if the agency would like to chat (781-665-0623) but the quick answer is that at least by year 3 a Producer's commission split (I recommend 50% new and 25% on renewals over $750 commission) supports him or her. If, by that point, he or she still needs to be subsidized by the agency, there is a problem. That 3 years should be a lot shorter for an experienced producer who comes to you and certainly for any producer bringing a book. Hope that helps!
Virginia Bates
Last Updated: August 26, 2014 |
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