The average producer is literally wasting tens of thousands of dollars a year quoting on accounts they have either little chance of writing or shouldn’t even be trying to write. Why? Simple. They have no real clue how much their time is worth, how much of it they waste, how many accounts they solicit with little or no chance of closing, and how many quality accounts they never approach because they have used up all their time and effort chasing accounts that will earn the agency little or nothing.
Simon and Garfunkle once sang: “I feel I’ve been fakin it; not really makin it!”
How many producers could claim that as their theme song?
I remember watching my friend Chris Burand stand in front of a group of agents at a seminar, showing a PowerPoint slide of “What it Costs to Quote.” His numbers were solid, yet the prevailing reaction of the audience was disbelief. “Oh, come on, that can’t be right” muttered more than one attendee. Basically, they didn’t want to believe the average producer is literally wasting tens of thousands of dollars a year quoting on accounts they have either little chance of writing or shouldn’t even be trying to write.
How could anyone waste such amounts and not know it? Simple. They have no real clue how much their time is worth, how much of it they waste, how many accounts they solicit with little or no chance of closing, and how many quality accounts they never approach because they have used up all their time and effort chasing accounts that will earn the agency little or nothing. Maybe they’d rather not know.
Try this simple test. Call a meeting of your producers, and ask each, without referring to any other resources, to write down their individual numbers for closing ratio, average commission per account, persistency or other key determinants of whether they are kicking butt or just “slip sliding away”. (If you are a producer, pull out a piece of paper right now and write down your own numbers.)
Too often the answers will be qualified with terms such as “around”, or “about”, or “roughly”. Translation – they have no clue. And when someone has no clue about the key determinants of whether they are “makin it” or “fakin it”, which one do you think they are doing?
Am I being unfair? Consider. Do you think Kobe Bryant can’t tell you his shooting percentages, number of assists, and minutes played? (If he can’t, the newspapers will tell him following every game. Maybe principals and sales managers should take a tip from the newspapers.) When Jack Nicklaus was a regular on the PGA tour, he could not only tell you his scores, he could also describe the shots he played on every key hole in every tournament he’d ever played. And what professional baseball player can’t quote his current batting average? These athletes know their livelihood depends upon knowing exactly how they are doing in the key benchmarks that are used to determine success or failure in their chosen profession.
Why should producers be any different?
Let’s take the baseball example a step further. Batting averages are calculated based upon total at bats (minus walks and intentional sacrifices). Basically, if you walk up to the plate, it counts. When a producer determines closing ratio, have they counted every single attempt (every appointment, every meeting, every lunch) that might have resulted in a sale? Or are the figures skewed by only counting (usually in hindsight) “serious” attempts? Isn’t that akin to a baseball player arguing many at bats shouldn’t be counted against his average since, after all, “the manager knows I can’t hit left-handed fastball pitchers”?
If you really want to get serious about baseball hitting productivity, you ignore batting average in favor of slugging percentage, which measures not just the hits, but what kind of hit it was – single, double, triple or homer. A player who has 200 hits, half of which are for extra bases, is clearly more productive than a player who had 200 singles. The parallel for producers would be to measure not just pure closing ratio, but how productive each sale could have been.
For example, if a producer has a closing ratio of 30 percent, resulting in an average commission per account of $8,000, is that good or bad? The answer isn’t determinable from those facts. You need to know what the potential production could have been if the producer had called on the best accounts instead of the most convenient. Also, does the $8,000 in commission represent the total value of the account, or did the producer settle for only a small piece of the potential (by failing to offer additional coverages such as umbrellas, floaters, financial products and risk management services)? A baseball player knows when he approaches the plate his productivity can range from zero (an out) to maximum (a home run). Every producer approaches an account knowing the minimum possibility (no sale), but how many know the maximum? In other words, will they be celebrating a single when they could have hit a homer run? $300, 000 in commissions may sound good, but not if it should have been $750,000 with the same number of at bats.
No more delays. No producer should ever have to wonder if they are good. They should know!
Makin it or fakin it – nostalgic tune or agency theme song? Your call, coach.
Chris Amrhein, AAI
Co-Chief Fun Officer
www.InsuranceIsFun.com
Copyright 2009 by Chris Amrhein.
Used with permission.