Managing the Marketing and Sales Effort in the Hard Market

In a new series in Insurance Journal, we’ll have industry experts talk about the best ways to manage today’s agencies. In this article, Jack Fries speaks on managing the marketing and sales effort in the hard market.

The hard market is of great advantage to the agency that has positioned itself to be a sales organization. Proper sales management equates to great sales. Sales management in the average agency still relies upon more traditional and less focused methods of producing business. By this I mean waiting for the phone to ring. This attitude towards sales will not only prevent the agency to benefit from the increased pricing, but will also be reflected in diminishing profit margins.

While there are numerous aspects to the sales management effort, I will focus on commercial sales and specifically on the following areas:

• Creating a system of sales.
• Establishing and managing a marketing effort.

Before any calls are made by the salesperson, the successful sales manager will have established a system of sales. Without an established system, each salesperson is “shooting from the hip” on each sales call. The sales system should have several components. First is the initial call. This is best done face-to-face as soon as possible after the initial marketing contact. During this meeting, the salesperson should ask structured questions to determine if this is a good prospect. After this visit, the salesperson should be able to tell if there is a chance to write the account or if they are just being used.

Next comes the solicitation of information necessary to generate the proposal. The salesperson should be given a form to use to gather the data and should be coached to discuss the benefits of doing business with his/her agency.

Finally comes the presentation of the proposal. Salespeople should be coached to eliminate the word “quote” from their vocabulary. Quote indicates to the buyer that price is the main or only differentiation between your agency and the others. The presentation should address not only the exposures to loss and the insurance remedies, but should also provide the prospect with information about the unique services provided by the agency. Obviously, there is much more detail necessary to establish a sales system. However, the aforementioned steps are a minimum requirement for training the salespeople and allowing the manager to critique each and every sales effort.

Once the sales system is established, the sales manager must establish a marketing plan. Most agencies do very little in marketing itself to the buying public. The marketing effort usually includes yellow page ads, some advertising in local newspapers or athletic programs, very basic Web sites, and word of mouth. To be successful today, the sales manager should establish a process to ensure the flow of new business leads to the agency. Successful agencies have used the following methods:

• Referrals.
• Telemarketing.
• Combination of referrals and telemarketing

Most agencies rely upon passive referrals. In other words, the client refers someone to the agency and the prospect calls the agency looking for a “quote.” In my experience, this is a sure way for an agency’s sales effort to plateau. A seasoned producer can usually maintain the same number of accounts and if there is no loss of a large account, will maintain their income level. This is especially true in the case of a hard market when increased pricing covers the commission reductions and the loss of some accounts.

Let me expand upon the marketing process. The active solicitation of referrals is the most cost effective way of acquiring a list of prospects. However, just asking the customer for five prospects puts a lot of pressure upon your customer to come up with the names of prospective accounts. Also, they may give you the names of accounts that you can’t write or don’t wish to insure.

For years, I have taught the “Reverse Referral Method.” Most professional sales trainers teach this system of prospecting/marketing today. Here is an example of how it works. Let’s say that you have an appointment to visit with the owner of a machine shop that you insure. Prior to the visit, the sales person should secure a list of all the machine shops in his marketing area that he/she wishes to write.

During the conversation with the owner of the machine shop, the salesperson would say, “In order for me to maintain a market for your business and to attempt to keep the pricing as low as possible, I need to add good, qualified machine shops to the program. It’s important that we obtain only GOOD accounts, because a bad one could screw up the program for everyone. Would you take a moment to look at the list of machine shops that I have and tell me if there are any that you could recommend?”

After the client has selected the prospects that he/she recommends, the salesperson should ask the client if they could tell the prospect, that the client referred the salesperson. In most instances, there will be an affirmative reply.

This method of marketing has many advantages. Not only is it inexpensive, but also the referrals that are secured are a class of business that the agency can write. Also, you have the benefit of using your client’s name as a referring party. Third party recommendations always have a greater impact than a cold call.

The other method of marketing can be used separately or in conjunction with the reverse referral method. That is telemarketing. Telemarketing requires that a list of names of prospects to be gathered. The list can come from the referrals gathered by the reverse referral method or they can come from a list purchased from a list vendor. The list has to be cleaned and the telemarketer has to determine whom to call. Once the final list is compiled, the telemarketer must secure an X-date and set an appointment for the producer.

Prior to setting up the appointments for the salesperson, each producer must agree to call on a certain number of prospects per week and give the telemarketer the number of leads that they want to be given and the weekdays and times that they will be available to make the calls on the prospect. The telemarketer should also be provided a script to generate interest, as well as a list of pre-qualifying questions.

The sales manager’s responsibility is to make sure that each salesperson is given the correct number of qualified leads and then to establish a system of accountability.

Jack Fries is recognized as one of the nation’s top agency operations experts. If you wish to contact him, you may e-mail him at jfries@jackfries.com, call him (859)694-1580 or visit: http://www.jackfries.com.

Topics Talent Pricing Trends Market Human Resources