Author: VU Faculty
Your agency has a commercial marketing department, but you have the option of either marketing an account yourself or using the marketing department. Most producers do it themselves since they have a perception of not getting a thorough and complete job from the department. Assuming that you have a completed submission, what do you do?
Recently, our "Ask an Expert" service received the following question:
"As a broker at a large independent agency, what should my standard expectations be of our commercial marketing department? We have the option of either marketing an account ourselves or using the marketing department. Most brokers do it themselves since they have a perception of not getting a thorough and complete job from the department. I have not been able to find a 'best practices' type guide on the marketing of commercial accounts. Assume that a complete submission has been delivered to the department and go from there."
Well, it's very difficult to give a definitive answer since the philosophies and practices of agencies vary so greatly from one to another. In addition, without knowing the unique situations, skills and personalities above, the best we can do is speak in generalities. At least as food for thought, below are some observations and comments from our agency management faculty.
There are several dynamics at work here. Some producers view every account as personal income, but sometimes the producers allow the "perfume of the commission to exceed the stench of the account." Good producers are often not good team players...they are sometimes very individualistic and, in many instances, will view their account (no matter how large or small) as the one that needs the "favor" from the underwriter. Also, if the producer does the marketing he/she has much less time to sell and can that be an excuse for lack of sales.
A marketer, on the other hand, has three objectives: (1) place as much business as they can for multiple producers, (2) protect the agency's contingencies and reputation, and (3) use "favors" as prudently as possible and always in the best interest of the agency.
The producer will ALWAYS work harder to place an account than a marketer, unless the marketer is compensated on placements and contingencies.
The first assumption is that you have the wrong marketing department if they can't do marketing better than the producers themselves. If that is the case, why would any producer trust or use them?
However, if the results speak for themselves, then two things get done:
1. The marketing department salaries (based on an Incentive Compensation Program) is based in one year on the percentage and commission volume of their successful placements in the prior year.
2. Measure Hit Rate on both the new business and the renewal side and compare the hit rate of the marketing department vs. that of the producers. To do this properly, you need to measure producers results without any submissions to marketing for a period, then marketing results without any direct marketing by producers for another period. If they are mixed, then the producers will market those accounts that can be easily placed and give to marketing those that would be difficult for either to place.
Most marketing departments with which I've been involved have failed or, at best, they did not do any damage for all the reasons, and more, that the agent mentions is occurring in his agency. The ones that have succeeded have had one thing in common: detailed procedures that dovetail with good job descriptions. Then, everyone knows what to expect and that is the key.
It does not matter, in my opinion, who does what as much as it matters that everyone is in agreement as to who is to do what. If in developing these procedures, the producers, staff, and management cannot agree as to what a marketing department should do, or cannot agree on whether adequately competent people can be found for the job (because marketing department incompetence is a very common perception of producers), then decide whether a marketing department is even in the agency's best interest (often not).
Much of the problem may indeed be a sales issue and have nothing to do with marketing at all. Marketing, administrative and clerical chores for producers are much less threatening than going on a prospecting or sales call and facing...rejection. Thus, many producers thrust themselves into marketing activities and work hard at justifying those efforts. Part of that justification, by necessity, is to denigrate the marketing department. It's all a "smoke screen." It exists because, especially now in the hard market, many producers, even the experienced producers, DON'T KNOW HOW TO SELL. I work with these issues all the time and it's NOT rocket science. When producers know how to sell and prospect and they like it and they're good at it, it's interesting to note that marketing problems often disappear.
Do you have an opinion? Have you successfully implemented a marketing department in your agency, or have you tried this concept and then abandoned it? Share your experiences and thoughts with others by emailing them to us at Bill.Wilson@iiaba.net and we'll post your comments here.
I am a Marketing Representative in a dedicated Marketing department for our Commercial Lines division. The producers are always "allowed" to market an account on their own. However, we encourage them to submit accounts to us, or at least, seek our advice on the direction an account should take. Our department is not only charged with placement of new and renewal accounts, but we also manage our agency volume relationships and are reportable for contingency commission reporting at the end of the year. We also try to discourage movement of accounts from one carrier to another (particularly among what we have determined are "emphasis" carriers) simply to appease a customer. If there is a genuine problem, of course we will place the customer's account with the best carrier, regardless of our agency's relationship with that carrier. However, we have found that many producers will "market" an account just to make the client believe that the producer has "worked hard" on finding the best deal, when all he has done is move the account from one carrier to another, with no discernable benefit to anyone.
Also, rarely do our producers actually get their hands dirty with the actual marketing when they handle it themselves-- they generally hand it off to a CSR to do all the heavy lifting (application completing, loss runs collection and additional information gathering). Additionally, every producer thinks that every account of theirs, regardless of size or loss history, deserves priority consideration and pricing from all underwriters, so having the Marketing Department handle the process allows us to keep our underwriters from ducking our phone calls when we need an actual favor or have a real opportunity.
It is also the Marketing Department's responsibility to know what carriers write what classes and lines of business, what their territorial operations are, what account sizes they can handle, etc.. We know that a submission on a contractor requires apps and loss runs, as well as a supplemental application. We also happen to know where to get the supplemental, and which underwriters at which carriers get particularly upset if you do not include the proper information or send them a submission for a class they do not write. The producer not only doesn't know this information, they find it irrelevant to their needs for the account they are working on right this second. It has been my experience that at least half the time, a producer's response to a request for additional information is "Can't they quote subject to?". While this sometimes can be a reasonable response depending on the circumstances, it is a reflection of the low regard the sales staff tends to hold about the marketing process and personnel in general -- Why are they bothering me, big-important-sales-guy, with this petty information request- aren't they tripping over themselves with excitement just to be asked to quote MY client in the first place?
Lastly, I am too familiar with the producer attitude towards Marketing personnel. It's usually the Marketing Department's fault when the producer doesn't get the order -- we weren't savvy enough in our negotiations concerning terms and conditions, or we weren't competent enough to get the price lower. Unfortunately, when all you do is sell on price, then you will always lose on price. Our sales staff is generally unable to close the deal when we are not the cheapest proposal on the table, but they rarely take responsibility for it. Even our renewal accounts are willing to walk out the door for a few hundred dollars because our sales staff does not tend to establish relationships with our clients. These same clients wouldn't bid out their Accountant or their Lawyer every year, but for some reason, we are embarrassed to stand up for the professional services we provide to our clients. The only way I can think to overcome this attitude is to have Senior Management make it clear to the sales staff that the Marketing Department is an essential and meaningful part of the agency and to place responsibility for getting the sale (or more importantly, NOT getting the sale) firmly at the feet of the producer.
Oh yes, and pigs just flew out of my ear. : )