Sales & Marketing Planning

Part 1: Setting Your Course

It is that time of year again; time to develop the firm’s annual sales and marketing plan. This is an essential element of strategic planning. Many carriers want to meet with the agency owners to set the game plans for the coming year and it is best for agencies to be proactive in this process. To be a “preferred agency” it is often required that an agency have a sales and marketing plan.

So, what are the basic ingredients to a well-written sales and marketing plan? Like most other plans, there are three steps: A) Know where you are, B) Know where you want to go and C) Map out how to go from A to B.

Define Personality

The best starting point is to first define the agency’s “personality” or the book of business. This will define what to look for from existing carriers and the selection of new carriers to represent.

Start by finding out what the commissions are for each line of business: personal, commercial, life, group benefits and program business, etc. Then calculate the average size of account for each line. Also, how much of the agency business comes from the top 10 and top 50 accounts? Finally, analyze the distribution of business and identify the top five industries.

Calculate the current percentage of the overall book by line of business and for the top industries or niches. Is the mix of business healthy for the agency? This is a judgment call for the owners. Niche selling is usually more profitable, however, it is also riskier.

Write down future targets next to the current composition. This thought process is what separates the entrepreneur from the average person.

It is important to also perform all these same steps for each producer in the firm. The big picture is good for identifying the trends. However, the detail on each producer will define the journey to get to the goals. It is the individual producer goals that define what the agency can expect for overall agency goals.

In addition to repeating all those steps, each producer needs to define what they like to sell, what are their centers of influence and how they will get their leads and referrals. This will make clear what the producer will focus on and what leverage they might have in sales. Producers who can lean on relationships or follow their passion will succeed.

The analysis of the producer’s top 10 and top 50 accounts plus reviewing the most common industries in that producer’s book will define what they like to sell and their expertise. These should be the initial areas of focus for future growth. However, the producer’s focus needs to be inline with the products and carriers available, as well as the overall marketplace conditions.

Commission Goals

It is easier to create a sales plan from the bottom up. Overall new sales goals for the agency should be determined by the sum of new sales goals for each producer.

An experienced producer in a typical agency should generate at least $30,000 to $50,000 in new commission each year. For large firms with large accounts, the amount would be much higher, maybe even $75,000 to $100,000, or more in new commissions.

The process begins with each producer stating a target new sales goal. Is that goal reasonable? If not, what adjustments need to take place? Several quick iterations will culminate in a solid goal for the producer that he or she should be held accountable.

The initial target goals for each producer are analyzed and then verified or adjusted by assessing the following: the producer’s hit ratios and attrition rates, the potential for new business leads, the producer’s average size of account, and how much time is available for new business calls and for visits.

Producer hit ratios (new business sales to new business quoted) of less than 25 percent to 33 percent costs the agency a lot of time and money.

Often, the producer fails to pre-qualify the prospect. Sometimes producers just are not approaching businesses that match up with the products the agency has expertise in writing, or accessing markets that are competitive for those classes of business.

Calculate the attrition rate for the agency and each producer. The goal should be around 10 percent or less attrition for the typical property/casualty insurance agency. Higher attrition rates are usually an indication that the business the agency writes is transient and either the clients are price shopping or not good risks.

Delegate Service Work

The time a producer has for new business sales is directly related to how much time the producer spends on servicing accounts. Those who can delegate work will find more time for new sales. Management needs to encourage producers to sell and customer service representatives to service.

The producer’s level of interest in the products and clients, centers of influence and desire to make sales, also influences the time that is created or available for new sales. A producer that is “engaged” will make the time for new business sales. Those that lack motivation will focus on servicing accounts and not on new sales.

After adjusting the initial target goal for each producer based on time available, hit ratios, attrition rates, niches and centers of influence, a good, solid goal will result. The overall agency goal is then the sum of each individual goal.

Create the Action

If all the steps above were followed, then the roadmap is basically done. The roadmap merely lists the steps required to make the adjustments explored during the self-analysis and the goals setting phase. These steps are organized into action plans.

The Next Step

Part Two of this article will explore the creation of action plans, compiling the sales and marketing plan and then will discuss the plan implementation. Remember, firms that incorporate an annual planning process tend to be more efficient, more profitable and highly valued businesses.