CUSTOMER SERVICE FOCUS

HOW PRODUCTIVE ARE YOUR CSRs?

Efficient CSRs hold one of the keys to an agency’s success

Jim Cuprisin, CIC, CRM, ARP

Agency owners must strike a fine balance—to be staffed with an adequate number of CSRs without being overstaffed—in order to operate a profitable and growing agency.

Customer service representa-tives, or CSRs, are the primary link to account retention. According to a National Alliance Research Academy study, roughly 46% of all independent agency employees are CSRs, so it is particularly important for agency owners and managers to find intelligent, hard-working people to fill these roles.

Agency owners must strike a fine balance—to be staffed with an adequate number of CSRs without being overstaffed—in order to operate a profitable and growing agency. Understaffing will result in a reduction of quality service, and overstaffing will unnecessarily cut into agency profits. The National Alliance Research Academy’s Growth and Performance Standards (GPS) study provides staffing and productivity measures for evaluating the service staffs of agencies.

Just how many CSRs and support staff do agencies really need? Other support staff persons include: CSR assistants, receptionists, file clerks, claims persons, accountants, computer personnel, and others. Staffing requirements vary by agency size, as detailed by the numbers from the GPS study in Table 1.

All agencies operate in slightly different ways, with varying responsibilities for their employees, so staffing numbers can justifiably be different. These numbers, however, do offer reliable standards, and significant deviations should be examined further. An agency with fewer CSRs than average may require that its producers do a greater share of the service work on accounts, or its operation may simply be more efficient. Conversely, an agency with a high number of CSRs may require little service work from its producers. The point is, variances from the standards may be justified in some cases and not in others.

CSR productivity

Two of the most important standards for measuring CSR productivity are accounts per CSR and commission per CSR. In Table 2, you can examine these survey results from the GPS study, for both commercial lines (C/L) and personal lines (P/L).

In Table 2, notice that commercial lines CSRs handle 340 accounts annually for the smallest agency revenue range where data is available, and that this average drops to 217 commercial accounts per CSR in the largest revenue range. The primary reason for the drop in number of accounts is that the average size of commercial lines accounts generally increases as agencies increase in size. The data in Table 2 reinforce this point, showing that the average size of a commercial lines account varies from $394 in the smaller agencies to $1,173 in the larger agencies. Larger accounts are more complex, and require more servicing than smaller accounts.

Commercial lines CSRs do, however, increase their productivity (as measured by commission per CSR) as agencies increase in size. The commission per commercial lines CSR increases from $189,000 to $255,000. Some efficiencies are achieved in handling larger accounts, and CSRs in larger agencies may receive assistance from other support staff persons. Plus, larger agencies may have sophisticated automation systems, allowing for greater efficiency.

There is no identifiable trend in accounts per CSR in personal lines. This productivity measure varies from 736 to 962. Unlike commercial lines, personal lines accounts do not increase much with agency size. CSRs should be able to handle the same number of accounts in agencies of varying sizes, everything else being equal. The GPS statistics show that CSRs in both the smallest and largest agencies handle a larger number of personal lines accounts. The smaller agencies may write a greater percentage of personal lines business and may be more efficient in handling this type of business. In the larger agencies, CSRs may receive assistance from other support staff persons or may have use of advanced automation features, accounting for higher production numbers.

Personal lines commission per CSR is fairly constant with agency size, except in larger agencies. The personal lines accounts are slightly larger here, accounting for a small amount of CSRs’ increased productivity, but the higher productivity numbers could be attributed mainly to the CSRs’ receiving more assistance or relying on advanced automation features in the larger agencies.

Two key measures

There are two other measures related to productivity and profitability: revenues per person and compensation per support staff person. The GPS numbers are presented in Table 3 below.

The measure of revenues per person reflects not only on the servicing work of CSRs, but also on the productivity of producers and other agency employees. This measure of overall agency productivity varies from $64,000 in the smallest agencies to $108,000 in the largest agencies. Some economies are achieved with selling and servicing larger accounts, often leading to higher productivity numbers in the larger agencies. Producers who concentrate on the medium to larger accounts typically have the highest productivity numbers. Likewise, the CSRs who service these accounts also achieve higher productivity in terms of commission or revenue.

It behooves agency owners and managers to examine more than their employees’ productivity numbers. They need to see how their productivity compares to their compensation. In the GPS study, compensation per person increases along with an increase in agency size. Compensation per person is comprised of the compensation amounts of all employees, including benefits, and is calculated by dividing this total by the sum of all agency employees, including owners.

Agency spread is simply the difference between revenues per person and compensation per person. A higher spread is better for agency owners, as this will result in more money to reinvest in the agency.

The GPS study sheds light on an important number regarding staff compensation: compensation per support staff person. This number is calculated by taking all compensa-tion for CSRs and other support staff (excluding benefits) and dividing the total by the total number of support staff, including CSRs. Again, this number generally increases with an increase in agency size. Agency owners must ask the question, “What is the amount of servicing work that CSRs are doing relative to how much they are being paid?”

Summing up

Productive CSRs are central to the success of any agency, especially because nearly one half of all agency employees are CSRs. The amount of commission, plus the number of accounts CSRs are handling should align with their compensation and the volume of servicing work they conduct.

Likewise, producers and all other agency employees should be evaluated for their productivity. Revenues per person and spread are two important indicators to use when evaluating the agency as a whole.

The bottom line? Top-notch CSRs are essential to an agency’s success. CSRs must consistently deliver optimal service to retain a high percentage of accounts, and they must be productive in terms of how much commission they handle. Size of accounts and agency size can affect CSRs’ productivity numbers. While strong sales production and management are keys for agency success, the impact of CSRs cannot and should not be overlooked or underestimated. *

The author
Jim Cuprisin, CIC, CRM, ARP, is the research director for The National Alliance Research Academy and editor of Resources magazine. He also has past experience as an underwriter with two insurance companies. For more information on The National Alliance, the CISR program, or the GPS study, go to www.TheNationalAlliance.com.