Today’s younger producers seek more power. Since they can’t control the market changes swirling around them, many demand more influence within the agencies where they work. There is concern that their production efforts go primarily towards retiring the agency’s current principals, putting their own future security in jeopardy. This column helps you to recognize impending problems and suggests possible actions to avert them.
When agency profits languish, previously hidden problems rise to the surface. One of the initial places that they appear is on the front lines. Ideally, a producer concentrates on making sales and keeping accounts, with minimal distraction. But with the continuing mergers and buyouts, younger agents fear a lot more than losing a client. So if a few of the following fears hit home, be on the look out for concerned agents.
Working for agency principals who no longer like to sell.
Aggressive producers resent playing second fiddle to veteran agents who have long since reached their comfort level. They want to work with people who share their drive to continually prospect and generate new sales. Therefore all producers, regardless of seniority, should spend at least some of their week seeking fresh clients. Allow for reduced selling time as non-transferable renewals and managerial duties grow.
Working with older salespeople who waste scarce resources. Selling is like golf. Over time, you forget the basics. Yet, some agents aren’t willing to reeducate themselves. Instead, they tie up valuable agency and company time with quote requests that are unqualified, incomplete, or can’t be readily placed. Younger, more assertive producers must compete for these resources and have little patience for more senior agents who waste them.
Technological obsolescence. An outdated agency management system is more than an annoyance; it’s a sign that the principals are unwilling to invest in their own business. Producers who don’t see an adequate commitment to automation reasonably fear that the agency may not be a long-term survivor.
Principals may be building up the agency only to sell it.
This fear could be well founded, as mergers and acquisitions continue to be active. To calm this concern, consider allowing a younger agent who has proven his worth to sit in at future executive meetings. This way the producer will know what is happening behind the scenes at the agency and have a voice, although not a vote. If your office has several younger agents, allow them to select their own board rep.
Managerial mistakes. Failed hires, overpriced agency purchases, and mismanaged branch offices put unnecessary pressure on an agency’s bottom line. Youthful producers resent having to sell more just to offset these errors in judgment. Furthermore, they fear that additional bad investments may continue. A non-voting producer seat at management meetings [as suggested] allows these salespeople to participate in and sign onto future actions.
Dependency on contingency income. As front-end commissions continue to shrink, it’s understandable that company profit-sharing proceeds help with the agency’s operational needs. But some producers fear that managers may count too heavily on these unpredictable dollars, considering their volatile nature and recent bad publicity. Accordingly, management must be conservative when projecting contingencies and purchase stop-losses when available and financially feasible.
Working in an agency that’s unwilling to specialize.
Target marketing has been a buzzword for decades, yet too many agencies are still committed generalists. Alleviate this producer fear by budgeting for the education, research, and sales promotions needed to prospect in one or more selected niches. Allow your young sales staff to participate in the identification and selection of the agency’s future targets.
Too many future partners.
Certain principals love to share the ownership pie as an incentive to attract additional agents, who in turn personally guarantee their eventual buyout. Younger producers fear that chunks of the agency that they are helping to grow may be offered to others mainly to benefit the majority owners’ retirement and not to build the business. The perceived end result is an excess of partners and a dilution of their ownership percentage.
Unwillingness to market or sales train.
Principals who are reluctant to take the risks needed to grow their agency make poor breeding grounds for younger producers. Consistent promotional investments, wisely spent, are essential to satisfy any hungry sales staff. Marketing resources used in tandem with hands-on sales skills help to offset this often valid concern.
Alan Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the 1001 Agency Ideas book series and other popular P/C sales resources. He may be reached at (800) 724-1435 or by e-mail at: shulman@agencyideas.com. His Web site is www.agencyideas.com.
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