Every year the cost of living goes up. Your agency’s expenses go up and commissions have been cut by the carrier. How does an agency survive and thrive when it seems like everything but commissions are rising? You have to focus on the opportunity at hand and there are several in every agency.
How does an agency grow? It can be defined in a few key areas:
- Generate More Opportunities
- Close New Opportunities at a Higher Rate
- Upsell Customers
- Account Round/Cross Sell Customers
- Increase Retention
- Rate Increases
Now all but the last one are in your control. The challenge is converting your team from a service-centric mindset to a sales-centric belief. We all can agree that no one has enough insurance, right? So why on every phone call are we not shouting that from the roof top? Many times it’s because the team has adopted an order taker mentality-do what the customer asks for, not what they need. In order to convert this mentality we need to make a core cultural shift that makes a direct impact on everyone.
When we analyze changes in agencies, we pass it through the following test:
- Is it a win for the customer?
- Is it a win for the agency?
- Is it a win for the team member?
If the answer is yes, we move forward!
So how can you move from giving annual raises to a performance based pay model? The first thing you have to do is settle up that you will not be giving any raises to licensed people for the next 5 years. Yes, 5 years. It will take some time to transform culturally. We recommend giving people quarterly bonuses rather than pay increases. It can change the way the team thinks and acts. For instance, say you give someone a $3000 raise (this will obviously vary depending on where you are in the country). It’s a nice raise and good amount of money, right? Well, $3,0000/52 weeks in a year is $57.69. Take out 30% for tax and it’s $40 per week. Still not bad but as soon as you give it to the employee, they will generally figure out how to spend it and think they need a raise again soon. If you switch to a quarterly bonus of $1,000 and tie performance to it, it’s a win, win, win. Plus you are only paying on performance not for the same behavior you already get.
Typically we like to see team members have minimums they have to meet each quarter to get the bonus. For example:
- Retention of greater than 92%
- 5 Account Rounds per month
- Remarketing Closing Ratio of over 50% (# of remarketing attempts vs. actual moves)
Now if you can report on this each and every week to your staff, it only takes a few weeks for people to start really paying attention. That lump sum bonus is the difference between putting new tires on a credit card or paying cash.
This will start to create a culture of competition and accountability and the team will really start to understand the metrics. Take remarketing for example. This generally decreases the amount of remarketing since we are only going to remarket if you are going to move the account. The team becomes more tuned into the things you say because it personally affects them.
Now you can’t be soft. If someone comes close you have to hold the line. The team needs to know you’re serious about the program and seeing results. If you bend once, it will become expected. Now, over time, you can also adjust the program to meet the needs of the agency. For example, you can create goals on placing business with a certain carrier, getting on EFT, going paperless etc. The list goes on.
In order to drive performance from your team, you need to create a program that focuses on the three wins. The customers are better because we are educating them, the agency is better because we are doing growth related activities and the team is better because they are making more money. You should always, always, always provide them tracking to see where they stand weekly, not monthly. You want the team engaged in driving the number, not being surprised by it every 4 weeks. Also, investing in training will help them hit the critical numbers. When they know it will affect their paycheck, it’s amazing how much more open they are to listening.
