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Hi everybody! I am looking for some information. I am looking to open up a State Farm agency sometime in the near future and am looking for some information from any State Farm agents or anyone that knows of the State Farm process. I have been given approval by State Farm for the agency program. I am at the point now, where I can post for available opportunties within my market. I am still in talks with them about all of the numbers, but it looks like I will be taking over about a $2mil book of business and office from a retiring agent.

I am looking for some feedback here. I am looking to grow my business as quickly as possible in the first year. State Farm has tremendous market share in my area, especially in personal lines. Is there a good number of leads that come in just from the advertising that State Farm does and their name recognition? I am also looking for some advise on what direct response marketing is working out there and is worth the $$$. Now don't respond and tell me to beat the streets and build relationships, get involved in the community, etc.... That is a given and is something that everyone in my agency will be doing. I have a sales background so I know that referrals and raltionship marketing is the cheapest and best marketing you can do. However, I also know that it takes time to see those results. On top of building relationships, I need to invest some money in advertising that works. My job is to make sure the phones will be ringing and I need the phones to ring from day 1. I have looked into hiring a telemarketing company, buying leads off of the internet, sales genie, 1-800 WE INSURE, direct mail and some others. Is there anything in particular that is giving any of you great results?

Also--If any of you have recently gone through the State Farm process and taken over an agency, I would love any advise and feedback. How challenging was that transition process?

You IA's out there. Please do not reply to tell me to go the independent route. I know long term that is the way to go, but I am not in a position to deal with all of the headaches that come with opening up a scratch IA. I need access and resources to be a business owner and grow a business, not run around like a chicken with it's head cut off trying to do everything myself, which is what happens the first couple of years on the IA side.

One thing you did not mention is cross selling. If I was taking over a 2mil book I would first contact all your existing customers for reviews and cross selling opportunities. You should be able to produce a large volume of business just from the existing book. This should keep you busy enough to begin with.

Under your circumstances, you've got brand name recognition, an existing agency apparently with staff and your own energy.

What I suspect you'll find is that your fellow State Farm Agents will be your strongest competition.

Despite what your State Farm Managers/Mentors will tell you, personal lines is largely a price point commodity, and if your stars are aligned and State Farm is competitive in your marketing area, then you're about as set as you can be.

There are no hidden marketing secrets that haven't already been publicized and talked about at length. Your own momentum and initiative and market conditions will make the phones ring. Your rate will attract new clients and your service skills will retain those clients. You're at the mercy of State Farm to keep you competitive, but that's how things are in the captive end of things.

Generally, unless you screw things up, or State Farm wakes up one day and decides they don't want to be in your market, you'll have a successful career.

My strongest bit of advice is to think for yourself and don't fall into the trap that State Farm is looking out for your best interests. As a large corporation that focuses on the bottom line, they're only looking out for themselves. Just make a few calls to State Farm in other states & areas where the tide turned and State Farm's only answer to P&C accounts melting away was to offer more financial service products.

Good luck.

Hey, Coach. The advice about cross-selling id the biggest bit of advice you should heed. I have several friends that are SF agency owners, and they have done very well by learning how to market Long-Term Care Insurance. This product is very necessary, gets you into the homes where you want to be, and, properly marketed, sets you out as a cut above all the other agents out there just doing P/C.

SF has a very good product. This helps.

Then continue your education with designations that mean something like CPCU, CLU, LUTCF etc... and advertise the fact that you are the insurance counselor to call. Sell yourself! It will pay off as long as you can deliver the goods!

Go for it!

Swymmer

Thanks for the advise guys. Cross selling is definitely a crucial marketing strategy. I am still wondering how much I can rely on the brand recognition, and if I need to invest heavily into purchasing leads and advertising, until I start seeing results from word of mouth and relationship building .

coach wrote:Thanks for the advise guys. Cross selling is definitely a crucial marketing strategy. I am still wondering how much I can rely on the brand recognition, and if I need to invest heavily into purchasing leads and advertising, until I start seeing results from word of mouth and relationship building .

The local SF agent sends out postcards all the time, and I think over time those would work. They're very well done, so someone has the name in their face even if it goes right in the trash. Discrete, they are not. I've never done post cards before, but if I was to, I'd model them after SF's cards.

Good Luck,
cross sales and balancing your book of business are going to be important. try Pro-to-call for commercial appointments (888-340-4139 x122)they have good QC and are exclusive by territory.

coach wrote:Hi everybody! I am looking for some information. I am looking to open up a State Farm agency sometime in the near future and am looking for some information from any State Farm agents or anyone that knows of the State Farm process.

but it looks like I will be taking over about a $2mil book of business and office from a retiring agent.

I am looking for some feedback here. I am looking to grow my business as quickly as possible in the first year. State Farm has tremendous market share in my area, especially in personal lines. Is there a good number of leads that come in just from the advertising that State Farm does and their name recognition?

My job is to make sure the phones will be ringing and I need the phones to ring from day 1. I have looked into hiring a telemarketing company, buying leads off of the internet, sales genie, 1-800 WE INSURE, direct mail and some others. Is there anything in particular that is giving any of you great results?

Also--If any of you have recently gone through the State Farm process and taken over an agency, I would love any advise and feedback. How challenging was that transition process?

Coach,

Although I haven't gone through the " State Farm process" I started out life with the Farmers Insurance Group company lies before going I/A. I do have a good friend that s with State Farm and if you are securing a large book that is PERMANENTLY assigned to you I don't think there is any question of that being the way to go. $2,000,000 looks like approximately $200,000 commissions.

I think that your best bet is to Cross Sell the existing book. If done properly that will cement your relationship with the customer. State Farm also operates a good call center for contacting your existing customers. I know this because my daughter has worked for them. Pay attention to the reports and comments you get from their call center.

In your advertising you need to emphasize whatever makes you stand out from the other State Farm agents to get them to call you and not your fellow State Farm agent. If State Farm already has a significant market share Cross Selling is critical. Customer Referral is even more critical.

The down-side is that you do NOT OWN your book of business and the commission scedule is lower than an I/A, although that gap has narrowed over the years. I don't believe that you are compensated if a customer changes agents, like Farmers does. The up-side is that you also do not have to find a buyer and that State Farm contibutes to a 401K on your behalf that you can also contribute to. This compares to Farmers giving you a contract value with bonuses for profitablity based only on last years RENEWAL commissions NOT including New Business.

Overall if you are agressive and comfortable having only ONE company to work with State Farm is one of the best markets to do that with. Farmers is definitely the worst (that is if you consider Allstate as an Insurance Co.) Most State Farm agents do not write W/C with NCCI (assigned risk) or Fair Plan on property. I personally think that anyone that writes Assigned Risk Auto needs to have their head examined. The end result is that you are extremely limited in what you are able to offer your customers.

What kind of operating budget should I expect? I am still trying to work through all of the numbers with State Farm. It looks like I will have a staff of 3-4 people. I'm not sure if all will be sales and service people or if I will have a dedicated service person and dedictated sales people. Either way I need to figure for compesation expenses. Rent is going to be around $20K for the year. The there is overhead + advertising. I will have about a $2Mil book, but how much revenue does it take to run a small office and be able to earn a decent living?

The best source for setting up a budget is to get a copy of the agency's present income and expenses (tax returns) and then modify them to suit your own situation.

Unless SF pays a much higher commission that what is normal, I can't see where a $2 million book will support an agency owner plus 3 or 4 employees.

rethomas is right... look closely at the current agency's books! Office rent, utilities, phone books (usually more than one), and all the other overhead will run an agency this size between 50 and 100 G's a year. A $30,000 salary for an employee will cost you 50 grand a year after adding in perks and payroll taxes.

So, at best, three employees add up to $150,000, if other expenses add up to $75,000... and at a 15% average commission you'll get $300,000 on a 2 million book... only leaves you MAYBE $75,000!

Now, if SF covers most all the expenses the numbers may be different.

Swymmer

Hi Coach,
I was looking at the State Farm Program last year. From what I was told the base commission structure on the "new contract" from 2005 is 7% on home and auto. So your 2 million book is only going to bring you $140000 or less depending on your retention. I know SF says they will pay up to 3% bonus on all business if you meet your goals, which are selling the banking products which make you almost nothing.

I would seriously ask some brand new agents who have less than 2 years in this process how it is working for them. I met with two agents who were struggling. Each of them went into the program where they were assigned an agency, I think this is called the internship program. That way they got the next available opening without bidding on an ageny. Anyway the costs of operation were eating them alive. One of these guys set regional records for life insurance sales, but because his banking products sales were too low, so he did not get his perminant contract. Oh ya, you start out with a provisional contract. You have to work for a year and hit all your goals and then they may make you perminant. Or they can yank it out from under you and send you packing.

I desided to go the independent route. Talk to some other carriers and get appointed with them. Some captive agents I know say they just rent their book of business from the company. Independent may be a harder way to start, but in the long run you are the boss. State Farm is going to be your boss the other way.

Good luck