1. The document discusses strategies that high-growth insurance agencies use to build a successful sales culture and high-performance sales engine, including producer recruiting, sophisticated service staff, defined agency value propositions, and clearly communicated producer expectations. 2. It recommends agencies focus on recruiting proven sales professionals from other industries, use personality testing and accountability tracking to identify the best candidates. Having a sophisticated service staff allows producers to focus on new sales. 3. Defining the agency's value proposition and communicating producer expectations are also discussed as important elements of success. The overall message is that agencies need to take control of growth rather than being passive in today's challenging economic environment.

1. THE MARSHBERRY LETTER
Volume XXVII, Number 1 January, 2011
Creating a High-Performance High-growth agencies have decided from within the industry. The current
New Sales Growth Engine to focus and take control of their line of thinking centers on the follow-
future by jumping into the driver’s ing question, “Why inherit problems
Many insurance agencies have seat. This type of take charge men- from other agencies?”.
struggled in this turbulent economic en- tality requires agencies to build out a
vironment for far too long. It is time for successful sales culture that includes Many agencies are finding success-
agencies to take control of their destiny having a well oiled high-performance ful, proven sales professionals from
and not allow external, non-controllable sales engine. industries like information technology,
factors to decide annual profitability. pharmaceuticals, commercial real
The soft market for property and casu- Following is a list of eight proven estate, mortgage brokerage, banking
alty insurance has become the norm methods high-growth agencies use to (lending officers) and prior business
and is expected to continue well into drive sales: owners. The key is to find individuals
the future. Unfortunately, this is the who have historically been in client
current world in which we live. 1. Producer Recruiting Model facing positions.
2. Sophisticated Service Staff
Recent health care legislation has Given the large pool of available
created tremendous concerns regard- 3. Defined Agency Value Proposition talent and high unemployment rate,
ing future group health commission 4. Clearly Defined and many agencies are finding that now
income. The big fear in all of this, of Communicated Producer is the time to make investments
course, is the unknown impact on the Expectations in quality individuals. Remember,
financials of insurance agencies. Will many high-quality individuals are
accounts with less than 50 lives go to 5. Pipeline Management System unemployed because of the global
insurance exchanges and dry up from 6. Continued Selling Skills Training economic crisis. It is by no fault of
the incumbent’s income statement? their own that they are unemployed.
7. Measuring and Displaying Sales Now is the time to find these high-
Overall, agencies have let uncontrol- Results quality people and make them part of
lable factors like premium rates, politics 8. Compensation Model Driving your organization. This opportunity
and market fluctuations define their Sales Results/ Accountability may never present itself again in your
institution’s financial outcome. While Metrics lifetime.
there are still many unknowns, some
agencies have succumbed, while oth- A solid recruiting model uses a
Producer Recruiting Model relevant job description of the traits
ers refuse to give up the fight. Those
of you who have the resolve to con- To build your recruiting model, you of a successful producer. Utilization
tinue to persevere, drive growth and need top-notch sales people. How- of personality testing tools are critical
improve shareholder value, we salute ever, one of the obstacles is finding to identify if the individual has the
you. This article is for you. the right talent. So where do you find proper characteristics for the position.
high-quality sales talent? Read on
for the answer. Other key steps for a thriving recruit-
ing model are identifying non-pro-
Over 80% of high-growth agen- ducers masquerading as producers.
cies (top quartile from Marsh, Berry Once identified, changes need to be
& Company, Inc.’s benchmarking made whether it is rehabilitation or
statistics) currently use outside firms termination. This requires hands-on
to find producer talent. A new trend accountability tracking. If hires are
has developed where agencies are made and successfully managed,
not very interested in hiring producers the overall cost can actually be lower
than that of an agency acquisition.
The MarshBerry Letter Page 1 January, 2011

2. Sophisticated Service Staff A strong service staff allows produc- cally their top revenue customers. In
ers to target larger accounts and sell the past, agency value propositions
Having a sophisticated service staff higher volumes of new business. In were demonstrated by listing mun-
lays the groundwork for keeping addition, the agency‘s close rate is dane agency characteristics such as
sales and service running smoothly. increased with a client-focused team “local presence“ or “being in business
Over 60% of high-growth agencies approach. Most importantly, this type for 50 years”. Now producers are
have a sophisticated service staff of selling creates a “testimonial client” using agency value propositions as
in place (see Figure 1 below). With for the agency, not just the producer. a selling point as well as a point of
this, producers feel they are able to The end result is improved reten- differentiation. Furthermore, agency
spend less time coddling their exist- tion ratios along with institutionalized value propositions enable produc-
ing accounts and are thus free to business. ers to refine their prospecting focus
concentrate on new business sales. and help identify as well as prequalify
This confidence is a product of the Defined Agency Value Proposition prospects.
sophisticated service staff.
A well defined agency value proposi- Your agency value proposition should
Many high-growth operations run tion plan is an element that has a capture the essence of your organiza-
a four tier production model with huge impact on winning new busi- tion and entice prospective clients to
producers as the principal drivers. ness, not to mention retaining current want to do business with you. Think
An example of a four tier produc- business. National brokers have long about what makes your organization
tion system would be as follows: (1) used defined agency value proposi- different and how that trait can be
producer; (2) account executive; (3) tions as a tool for producing key used to leverage interest in your firm
customer service representatives; (4) accounts. As noted in Figure 2 (page with prospects.
assistant. 3), 70% of high-growth agencies
provide a well defined agency value Clearly Defined and Communicated
The key is to have all levels of the proposition plan for producers to use. Producer Expectations
four tiers working in perfect har-
mony, complementing each other’s Notably, the agency value proposi- Clearly defined producer roles and re-
strengths and mitigating each other’s tion message is created from the sponsibilities are absolutely necessary
weaknesses. client’s perception of value, specifi- for ensuring high agency commission
growth. As mentioned before, this
ties in directly with the four tier model.
Figure 1 - Producer Tools and Resources Building a descriptive level of duties
100.0%
for different roles promotes holistic
work flow. With this, holding people
90.0%
accountable becomes much more
apparent and manageable. The result
80.0%
87.5% is that all tiers will know exactly what
their daily activities should be - every-
70.0% one will have a set job and expectation
with each role.
67.0%
60.0%
% of Agencies Providing
60.4% The next step is clearly communicat-
50.0% ing the position expectations to stop
any confusion or blame games. This
46.3%
40.0% 45.5% keeps everyone engaged and directs
attention to new business and client
36.2%
30.0% retention.
20.0%
Pipeline Management System
10.0% Pipeline management systems are
essential for driving new business
0.0% production. According to our statis-
Differentiation Platform Pipeline Management System Sophisticated Service Staff
tics, 67% of high-growth agencies are
Average Agency High-Growth Agency
using pipeline management systems
The MarshBerry Letter Page 2 January, 2011

3. (see Figure 1 on page 2). There techniques and sales processes in Measuring and Displaying Sales
are many different pipeline manage- the marketplace. Results
ment tools available. The type of
Most often, successful programs con- Measuring sales results and displaying
pipeline system is not necessarily
centrate on reminding producers of them in a public forum will engender a
the important factor, but rather hav-
the basic steps to prospect and close healthy level of competition. It rein-
ing a system is what’s important.
new business. Understanding and forces the importance of new business
executing successful sales methods production to everyone in the agency.
A pipeline management system’s
goal is to engage the producer develops a consistent new business
model that should be modified to Publically showing results helps
at each step of the sales process
meet new objections or obstacles. engage people to work as a team for
and allow for leadership to project
Currently, over 60% of high-growth a common goal. Additionally, this com-
expected new business genera-
agencies use an external, formal well municates to the staff the importance
tion. There is also an element of
designed training program. of new business to the growth and
accountability for producers to
longevity of the agency. Ninety-four
make sure they take the next step,
Successful producers need to be percent of high-growth agencies use
increasing the probability of closing
challenged constantly - it is in their some method to display goals and
an account.
blood to win. Remember though, sales results. Some examples of meth-
there has to be a sales culture or ods are postings near the water cooler,
Finally, many lessons can be
infrastructure for training to be worth- on screen savers or on flat screens
learned for what “to do” and “not to
while. Sending producers into a one throughout the office.
do” when it comes to pipeline man-
agement. These instances should day or even a week long program
only holds their attention for a month It is imperative to include new business
be tracked on critical paths and
or two if they return back into a world goals and sales results for cross-sell
identified for coachable moments.
without an existing sales driven focus. percentages, average account size
This is clearly one of the biggest based on minimums and anything else
Continued Selling Skills Training
drawbacks for funding allocated to essential you determine is important to
Sales training creates more con- sales training - you must build the be recognized in driving revenue. The
sistency within the team and is sales infrastructure to get value from goal is to create a sales culture from
what ultimately wins the race. No sales training. the aspect of every person in the firm,
question, there are many new sales no matter what their role.
Compensation Model Driving Sales
Results/ Accountability Metrics
Figure 2 - Currently have a Defined Agency Value Proposition
Compensation models are the main
80%
driving force for producers. Production
goals of the agency should be outlined
70%
and broken down for each producer.
70% Compensation should drive behav-
60% ior to reach individual goals within
the producer’s control. A producer’s
50% goal should be very specific and easy
54%
to measure. A basic compensation
40% plan should have both an upside and
downside related to compensation,
30% based on production. Measurements
should include minimum new business,
20% average account size and cross-sell
requirements.
10%
High-growth agencies are using about
0% a 15 point differential between the
% Answering “YES” new and renewal commission percent-
ages. A lower renewal commission
Average Agency High-Growth Agency
percentage relative to new commission
The MarshBerry Letter Page 3 January, 2011

4. percentage is accepted because of On the flip side, Figure 4 shows that if Insurance agencies must be run like
the investments made by the agency a producer does not meet or exceed any other business with the CEO mak-
in the sophisticated service staff and their new business target of 15% of ing decisions that build shareholder
sales training. their prior year’s book, their renewal equity. Producers, account executives
commission is decreased 5 percent- or anyone else in the agency must
Many high-growth agencies have age points for the coming year. If a be held accountable with enforceable
added thresholds to their model producer misses the minimum new metrics. All of the pieces to build a
that provide an increased first dol- business target consecutive years, successful sales engine rely on the
lar commission based on reaching their renewal commission percentage enforcement of holding individuals ac-
higher than expected goals. Addi- continues to decline. countable for their defined roles.
tionally, negative consequences are
used when minimum goals are not Producers need to be held account- As the sales culture is being estab-
met. Figures 3 and 4 (below) are able for their actions to produce and lished, do not forget to celebrate
examples of a high-growth compen- retain business. There needs to be successes. By this, take a victory lap.
sation model. enforcement upon every position Celebrations will forge strong bonds
based on clearly defined roles and re- with every member of the agency. To
This compensation model includes sponsibilities. Imagine if your car only achieve victory, there must be dis-
both an incentive when producers started half of the time. The first few cipline, training and ruthlessly high
exceed their new business goal as times you would invest to fix it and try standards.
well as a consequence if they do not to keep it running. If it kept breaking
meet their minimum new business down, any reasonable person would Justin Berry is a Vice President at
target. Figure 3 shows that each get a different car. This is simply MarshBerry and can be contacted at
producer’s new business goal is because the car was not serving its Justin.Berry@MarshBerry.com or
20% of their prior year’s book. When purpose. The same should hold true 440-220-5431.
a producer exceeds their new busi- for a producer. They are hired to pro-
ness goal by 20%, 30% or 40% they duce and produce is what they should Albert Lloyd is an Executive Vice
receive 45%, 50% or 55% respec- do – settle for nothing less. President at MarshBerry and can be
tively on all new business sold since reached at Albert@MarshBerry.com or
the beginning of the year. 440-392-6562.
Figure 3 - Producer Accountability
Compensation Model Based on Exceeding Specified Thresholds
New Business Goal = 20% Prior Year’s Book
Exceed Target By:
Current Split: 20% 30% 40%
New Business Percentage 40% 45% 50% 55%
Renewal Percentage 25% 25% 25% 25%
Figure 4 - Producer Accountability
Negative Compensation Consequences Based on Meeting Minimum New Business
Minimum Target = 15% Prior Year’s Book
Miss Minimum:
Current Split: Year 1 Year 2 Year 3
New Business Percentage 40% 40% 40% 0%
Following Year Renewal Percentage 25% 20% 15% 10%
The MarshBerry Letter © 2011
Marsh, Berry & Company, Inc.
(440) 354-3230 / (800) 426-2774
4420 Sherwin Road / Willoughby, OH 44094
MarshBerry@MarshBerry.com
www.MarshBerry.com