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Outsourcing for success
Professional sales management can provide a competitive advantage
By Michael J. Moody, MBA, ARM
Over the past few decades, one of the major trends that has been occurring in business is outsourcing. And while there has been some negative reaction to the increased use of outsourcing, many competitive firms have found ways to utilize it in productive ways.
Outsourcing is most widely associated with manufacturing operations that send operational functions offshore, but the insurance industry has also been investigating its value, too.
Within the independent insurance agency system, outsourcing has been successfully used to maintain quality services without the need to invest in additional equipment or personnel. For example, many of the backroom operational functions have frequently been delegated to service providers. These outside service providers can typically offer the advantages of state-of-the-art technologies without the agency having to incur the costs of acquiring and maintaining the necessary equipment.
Another area where agency managers have experimented with outsourcing is in the sales function. By far, the most popular outsourcing function to date has been call centers. These have worked in varying degrees depending on the expectations of the agency and the quality of the service center; however, overall they appear to be an idea whose time was right.
Another sales function that is receiving attention is the sales management function. And according to Thomas R. Dietz, chairman/CEO of Schiff, Kreidler-Shell Insurance and Risk Services (SKS) in Cincinnati, Ohio, “Outsourcing the sales management function can be very beneficial.”
Moving the agenda forward
Like many agencies at the start of this century, SKS was developing a strategic plan for moving the agency forward. The agency had been growing and, Dietz notes, “At that point, I was usually the person who was responsible for managing our sales staff.” However, management realized that some of the young producers needed more mentoring and training than Dietz could provide.
SKS management reviewed their options and, Dietz adds, “We decided we needed a sales manager.” He says that the agency initially did in fact hire a sales manager. But, Dietz adds: “Quite frankly, that didn’t work.”
However, several important lessons came out of this experience, Dietz says. “One was that our young people liked the ability to have someone they could talk to if they needed help or were having a problem.” The agency had been growing and adding several new producers each year. Currently, SKS has about 30 producers, so management realized that they needed to resolve the sales management issue.
SKS had been pondering this issue for a while when Dietz, who was attending an outside meeting, heard someone mention having hired an outsourced sales manager by the name of Tom Hunziker. As luck would have it, Dietz remembered Hunziker from prior association.
A unique approach
Tom Hunziker is the president of Force III Consulting Group, Inc. He specializes in providing independent sales management services primarily to independent insurance agencies. Hunziker had developed an approach that was modeled after a program he assisted in designing while he was at Continental Insurance Company. In bygone days, insurance companies had a different working relationship with their agency partners. “In many instances, insurers would provide goods and services (e.g., new electronic agency management systems, rating and quoting systems, etc.) to their key agencies.”
Frequently, notes Hunziker, insurance companies would help with the recruitment of new producers. Agencies were always on the lookout for good, young talent and the insurers were quick to help locate prospective producers.
However, there was a major shortcoming to this practice, says Hunziker. “The insurance companies would identify good candidates, but they would not get the proper training once they arrived at the agency.”
Twenty years ago, because most agencies were ill-equipped to do the necessary training, mentoring and monitoring, a new producer’s level of success was quite low. Hunziker noted the shortcomings in the system and assisted in starting a new unit within the company to address this issue. Essentially, Continental Insurance employees would “stay behind [in the agency] to train and manage as well,” he explains. Over time, Continental appointed 60 new agents to receive the service and were able to validate the usefulness of the system.
Although the system worked well, Continental was spending quite a bit of money to provide these services to the agents. Hunziker believed that the agents had seen the value of this service and would be willing to pay a fee for it. He and others discussed the fee arrangement with the chairman of the company. The chairman pointed out that, heretofore, the agents were used to getting services like this for free; but he agreed to give it a try, warning Hunziker and the others to “tread lightly.”
Hunziker began talking to prospective agencies about the new service that Continental was offering. The reception of the concept was excellent. Most agents realized how important it was to provide mentoring to young agents. Furthermore, there was little resistance to paying an additional fee for this service.
It became clear to Hunziker that this was a valuable service that he was providing to the agency system and, more important, it was considered to be valuable by the agencies that would be prospective clients.
It looked like a win, but financial troubles in the company that emerged at that time made it clear that Continental might not be able or willing to sustain this effort. “The handwriting was on the wall,” Hunziker recalls.
After some soul searching, he and two other associates left Continental to form Force III.
Proof is in the pudding
After due consideration, SKS decided to establish an arrangement with Hunziker to provide sales management services for some of the agency’s younger producers. Initially, the relationship was developed around services for four SKS producers.
Hunziker would attend SKS’s monthly sales meeting and then work individually with the four producers. He would cover a variety of topics at the general sales meetings (e.g., cold-calling, handling objections, presentation skills, etc.). The individual producer meetings usually involved discussions of the agents’ individual marketing plans. A detailed review of the prior month’s activities and successes was always a part of the meetings, and time was always available to discuss any problem areas.
Reception by the production staff has been great, SKS reports. After just four years, Hunziker has increased his efforts from four producers to 12, and he now spends three days a month on site. As the program has developed, Dietz notes, “Tom has kind of become my eyes and ears with this small group of young agents.”
Hunziker keeps detailed records on number of calls, number of appointments, and number of proposals and he provides management with valuable information prior to leaving. In addition to the sales management function, Hunziker also assists with various aspects of the hiring process.
Conclusion
While Force III was originally assisting just a small group of young producers for SKS, its involvement has expanded during the intervening years. Dietz notes that the entire sales organization is beginning to utilize some of Hunziker’s ideas. For example, each of SKS’s producers is required to make a presentation at the end of the year about his or her results.
Dietz points out: “The best discussions are coming from our young producers—because they are so well prepared and they utilize structured, well-organized, results-oriented presentations. The format is now used by the whole office. “Over the years, Tom has become part of the SKS team, but he is not an employee,” Dietz says.
Hunziker for his part realizes how important it is to develop a sales process. He indicates that, “Most firms don’t set sales objectives other than revenue.” He believes that there need to be other goals as well. An organization should have other measurable activities because, he says, “Revenue in this business does not ‘just happen’; you have to make it happen.”
Further to the point, “You have to be proactive, and that is all about activity.” Revenue, he says, “is just one part of the puzzle.”
For more information:
Force III Consulting Group, Inc.
Web site: www.forceiii.com |
