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Marketing Agency of them Month

Shrinking to grow

S.C. agency loses 80% of its customers and prospers

By Dennis H. Pillsbury

When we first visited Commonwealth Insurance Group, Charleston, South Carolina, in May 2000, the agency still wrote both commercial and personal lines of business, as well as group health. The agency was only three years old and the founder, Todd Tyler, was making as many as 50 cold calls a day to prospects and nearly as many to companies to try to get appointments and writing letters as well. He was young and aggressive and was succeeding.

But as the agency grew, and hard-charging new producers were added to the fold, also making up to 50 cold calls a day, Todd noticed that “we were tripping all over each other. We had 10 producers at the time, which meant we were making 500 calls a day. It’s no surprise there was some duplication and confusion. We had to find a way to work smarter.”

Of course, that’s easier said than done. Money was still coming in the door and it was difficult to find a way to “work smarter” that didn’t involve giving up some income. Giving up income is never easy, especially when you’ve worked so hard to develop after starting from scratch only a few years earlier.

How it all began

Todd became interested in insurance when he was working for a commercial real estate developer. “I saw how much we were paying in insurance premiums and then I asked our insurance broker about his commission percentage. That’s when I realized that I wanted to be in that business. I left the real estate developer and went to work for an insurance agency. I stayed there for about a year and then went to work for another agency. That also lasted about a year. But I realized that what I really wanted was to run my own agency, so I left that agency to pursue that dream.”

Todd continues, “I got lots of advice—most of it from people who told me I was crazy. They told me how difficult it was for a new agency to get company appointments. They pointed out that it wasn’t a real good time to be out of a job since my wife Elizabeth was six months pregnant. And they were right, but that didn’t stop me. I went about the process of setting up Commonwealth Insurance Group in February of 1997 and officially opened the doors on April 1, 1997.” His son Russell was born a little more than a week earlier on March 21, 1997. “That’s a birthday we certainly don’t forget.”

Todd was convinced that the naysayers were wrong. He thought companies would flock to give appointments to an ambitious, hard-working agent who had shown he could sell insurance during his short stints at the two agencies. “Boy, was I wrong,” Todd admits. “The biggest hurdle that I did not foresee was getting appointments. Companies that had indicated they would work with me suddenly disappeared. They didn’t want to take a chance on damaging their relationship with my previous employer. My entire staff—that would be my office manager and myself—was cold calling companies trying to get appointments. Fortunately, I had a good friend at Ohio Casualty Group and he was able to convince the company to take a chance with me. And that’s paid off for both of us. Today, we are Ohio Casualty’s largest agency in South Carolina. And Ohio Casualty has a reputation for being a careful, conservative company, which also proved propitious. Other companies suddenly became willing to take a chance with us and we soon had other appointments.”

Running fast, but getting nowhere

As mentioned previously, things were pretty hectic at Commonwealth by the start of the new millennium. Everyone was running pretty fast to keep up with the constant flow of new business and to keep servicing the current book of business, especially the personal lines business that represented 80% of the agency’s customers.

“Servicing and selling the personal lines business took up an inordinate amount of time, but represented only about 17% of our revenue. I had just finished reading Jim Collins’ book, Good To Great, and it convinced me that we needed to refocus our efforts,” Todd remembers. “I realized that we were not good at selling personal lines, probably because we didn’t enjoy it. We really weren’t making any money doing it. The income stream it produced was going right out the door in the form of expenses and lost opportunities on the commercial side. We had 35 employees and about one-third of them were there to service the personal lines book. That didn’t make sense, so we decided to leave personal lines and focus on commercial lines and corporate benefits. By 2002, we had sold more than $4 million to a local competitor and reduced our workforce to 24.”

Breathing room

“I felt like the weight of the world was off my shoulders,” Todd admits. “We were able to really focus on customers and I was able to focus on managing the agency and building a sales culture. I love sales management, but I never had time to breathe, much less manage.”

One of the first things that Todd did in his role as sales manager was to make Good To Great required reading. “Every new employee has to read the book and provide an acceptable synopsis in order to remain employed,” Todd says. He then focused on developing a planning process that would provide the underpinning for future growth. The result was a 55-page workbook, “Dream/Plan/Act,” that helps producers do both personal and business goal planning on an annual basis. Every producer has to delineate his or her top five goals for the upcoming year at a November retreat. The goals can be either personal or business or a combination of the two. “This helps to create team unity,” Todd points out. “And, by having the goals out in the open, it also creates peer pressure that helps everyone achieve their goals.”

At the same time, corporate sales goals were set up, including a desire to double revenues every three years. The first campaign based on this goal was “3 x 6 - Burn the Ships,” under which the goal was to reach $3 million in revenue by 2006. The idea came from the story of Cortez who started his campaign to conquer Mexico by burning his ships so his troops would have no fallback position. Apparently, no one wanted to be stranded. The agency closed out 2006 at $3.4 million in revenue, helped substantially by revenue growth of 51.6% in 2006. The new campaign is “Business 6 x 9 - All Roads Lead To Success.” Yep. That’s $6 million by 2009.

Constant reinforcement

There’s an old saying that nothing succeeds like success, and that’s a key ingredient of the sales culture that Todd has developed at Commonwealth. Meetings are celebrations of success where “the competitive people that we have brought into the agency want to be part of the story. We have weekly sales meetings that include a ‘book club’ discussion where we discuss a chapter of a sales book we are studying,” Todd says. The current reading material is Randy Schwantz’s How To Get Your Competition Fired.

“We also break our annual sales goals into smaller quarterly goals that we call 90-day sprints,” Todd says. “This short burst allows us to focus on our sales goals with a laser-like clarity. At the end of each quarter, we have a team-building outing to celebrate our successes.

“And we don’t just expect our sales people to succeed without help. We typically spend $20,000 to $30,000 a year in sales training and consulting,” Todd says. “That’s an absolute necessity. We typically hire producers straight out of college, then mentor and train them to succeed. They’re eager to succeed, and my job is to provide them with the tools so they can. Marsh, Berry & Company, Inc., has been tremendously helpful in this regard. We use both their consulting and sales management divisions to help us stay on track.”

Todd continues, “We also let everyone at the agency know where we are. Our numbers, both corporate totals and individual successes, are displayed on the wall on huge, 8-foot long charts. Our producers are constantly pushing to become the revenue leaders and win the quarterly prize. Our last prize was a watch worth several thousand dollars, and the winner outpaced the second-place finisher by a mere $1,700 in revenue production.”

Keeping the business

Of course, landing the business is only half the battle. Service is also exceedingly important in making certain that the business stays on the books and also serves as a source of new business through referrals. “One of the dramatic changes for us has been the reduction in cold calling (although we still do some) and the increase in referral business that has come about since we re-focused on fewer clients for whom we could offer superior service,” Todd points out.

“We work just as hard at retaining our service people as we do our successful producers,” Todd continues. “We were lucky to get some people from a major regional broker, including five high-level account managers, who saw an opportunity to be part of a team. We offer good salaries and incentives. Their pay is based on profitability. The account manager handles all the service for the producers.

“As part of our emphasis on service, we recently introduced RECON 365, our proprietary proactive risk management program that we developed around the concept of risk management audits, similar to what The Addis Group offers,” Todd says, pointing out that Scott Addis (president of The Addis Group, King of Prussia, Pennsylvania, Rough Notes Marketing Agency of the Month, August 1999) has been a “tremendous teacher and mentor for me. He has been a big influence in helping us see the innovative concepts built around risk management education and follow-through as a sales tool as opposed to simply selling insurance products.”

Todd also saw opportunities to focus on specific niche markets where Commonwealth Insurance Group had already achieved a certain market penetration. “We wrote a number of golf courses and were able to develop a program of insurance and risk management services that we presented to the National Golf Course Owners Association. In August of 2005, our Clubsurance™ program was selected as the preferred provider of insurance by the NGCOA and we have begun marketing it to the NGCOA’s 5,000-plus members across the United States.”

Commonwealth has shown resilience and flexibility, key ingredients for success in the constantly changing world of risk finance. The agency’s goal is to be one of the Top 100 privately held agencies by 2012. We at Rough Notes think they’ll make it, and we’re pleased to recognize Commonwealth Insurance Group as our Marketing Agency of the Month. *

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