Agency Marketing Technology Opportunity management Calculating the potential return before investing agency sales resources By Steve Anderson In this series of columns we have been describing the steps necessary for an agency to create a successful marketing system. We believe there are five components that make up a successful marketing system: prospect management, opportunity management, campaign management, submission management, and results management. In our last column (December 2005 issue) we described what was necessary to find and manage prospects—prospect management. In this column we will describe what we mean by opportunity management. In the early ’90s I had just joined an agency in Texas as a producer. I was very motivated to build a book of business as quickly as possible, so I identified a list of potential prospects and began contacting them to set up an appointment. I was particularly excited about one prospect with whom I was able to get an appointment. I drove out to the client’s office and proceeded to go through the fact-finding process. During the process I discovered that the current agent was the brother-in-law of the CFO. The likelihood of my being able to write this account was extremely low. I had wasted time and effort in pursuing this particular prospect. This was my first lesson in understanding how managing opportunities helps the entire marketing process. Opportunity management is the process of qualifying a prospect and assessing what it will take for you to close the deal. Finding prospects and identifying additional information about them is only the first step of the process that ends with an order to bind coverage along with receiving a check. Opportunity management helps each producer find the answers to four critical questions: Is this a real opportunity? Producers are natural optimists and too often neglect to dig deep enough and establish whether the prospect is merely keeping the current agent honest. Is there executive support from one or more influential players for a change? What degree of political and financial risk is involved? Is there a strong case for making the purchase? Will we be competitive? Second, a producer needs to critically evaluate his or her relationship with the client, look at whether their solution is best for the client, understand how the buying decision will be made, and establish whether the agency has the necessary resources to win the deal. Can we win the deal? Third, a number of factors influence the producer’s ability to win a deal: the right markets, the agency track record, executive relationships, corporate politics, competitors’ strengths, the cultural fit, and other factors. Do we really want this deal? Finally, we have all won deals that turned out to be “clients from hell”—deals you wish the competition had won. So it is vital to ask the tough questions. What is the upside and what is the downside? Will this account be profitable and will it have strategic value for the agency? Is the revenue big enough to justify the sales effort? We find that for most agencies this qualification process is very informal. A few agencies require producers to complete a prequalification checklist prior to being able to work on the account. A larger number of agencies allow producers to arbitrarily decide the likelihood that they will be able to close a deal. And many agencies do not require producers to track this type at all. This informal process leads to agency owners and/or sales managers being surprised at the end of the year when production goals have not been met. Formalizing this process allows the agency to predefine what a “good prospect” looks like for the agency. At one agency we recently visited, a “good prospect” is defined as a company in the food processing business, within 100 miles of the agency, with at least 100 employees. Defining prospects this way helps the agency to concentrate its resources on those prospects with whom they have a higher likelihood of being successful. There are many sales trainers who will help an agency establish what the best prequalification questions should be. Here are just a few ideas of the types of questions that you should be asking: • How long has the prospect been with their current agent? • Are there any problems with their insurance program? • What is the revenue potential of the account? • What is the potential for referrals from this account? • Is the prospect more interested in price or coverage? • If price is a primary issue, how much lower do you need to be in order to get the business? • Are you meeting with the ultimate decision maker or someone else in the organization? • How will a final decision be made? • How far away is the prospect, geographically, from the agency? Once you determine the answers to these questions, a value should be assigned to each potential answer. For example, when you ask the question, “How long have you been with your current agent?” the answers might be one year, five years, or 10 years. If it is one year, you might assign a low value of 1. You may not want to work with a client who switches to a different agent often. On the other hand, you might assign it a higher value if you believe that there is not a strong relationship with the current agent and that you would be able to step in. The values assigned to each of the questions will depend on your sales philosophy and the sales process you have created for your agency. Once values are assigned for each of the potential answers to the prequalification questions and this information is tracked, sales managers will have more of the information they need to successfully manage the sales process and direct agency resources to those prospects that have a higher likelihood of becoming clients. This increases sales effectiveness and at the same time reduces agency overhead costs. When you begin asking these kinds of questions, you will find that many prospects are not worth working on. This will allow you to focus your efforts where they really count. * The author |
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