You can follow your sales manager’s lead and generate great results, or …
Whenever I talk to agency owners, the topic of “organic” growth always comes up. Typically, they just can’t understand why their organic growth rates are so low.
Personally, I think most can’t see the forest for the trees. Otherwise they’d realize that the problem stems from a lack of sales management and leadership. If your net-new revenue is growing by only 3% to 4%, what kind of sales organization are you? More important, what are you doing to boost your anemic rate of growth?
I know what I would do! During our ProducerFit programs, I always talk about what I’d do if I were your sales manager. I’ll say to the group, “If I were your sales manager, you’d actually have to follow all of the strategies that I’ve outlined here today” (or not follow them and work for a different agency!). And then I remind them of the definition of a head coach: the person who makes you do what you don’t want to do in order to achieve what you want to achieve.
… you’ve often heard me discuss the importance of maintaining a full pipeline … But it’s equally important to know what your pipeline is worth. Do you know the monetized value of your pipeline?
Similarly, either you follow your sales manager’s lead and generate great results, or you get fired. It’s that simple!
Of course, some great producers don’t need a lot of management, which is fine. But as we espouse in our programs, you’re considered a producer in training until you reach $1 million of commission income.
Recently I received a call from one of my long-time clients and friends who was frustrated and concerned about his recent lack of true net-new organic growth. He said he realized that the buck stopped with him and that he wasn’t doing a great job as the “offensive coordinator” for his sales team. He feared he was slipping, and he asked me directly, “Roger, I’ve heard you discuss this at several meetings over the years: If you were my agency’s sales manager, what would you do?” I told him the following, which I’d like to share with you.
First, there are two sides to sales management. To illustrate, I often diagram them as two slightly overlapping circles. The circle on the right represents “Mentoring and Coaching,” while the left circle represents “Monitoring and Accountability.” The two circles define the sales manager’s role, although it’s rare that one person possesses the unique abilities to do both exceptionally well. But because most agency principals have natural talents on the right side, let’s start there.
Mentoring and coaching
I’d start by holding a group meeting with all of my producers to explain what they could expect during the goal setting and planning process. Next I’d conduct in-depth, one-on-one planning sessions with each of them.
All plans should consist of three main parts, based on the following questions:
- Where am I today? Beyond numbers alone, this is the reality of your book of business and prospect pipelines.
- Where do I want to go? This is more than just deciding what you want your gross commission income and net-new revenue to be. Rather, it’s a matter of defining future ideal clients and creating a business model around them. For example, do you want 50 clients paying you $20,000 each or 40 clients paying $25,000 each? Also, what kinds of clients or industries do you want to target?
- How will I get there? “By working hard and selling insurance” is not the right answer! What specific strategies and behaviors will you follow to get where you want to go?
There’s much more to planning than asking, “How much new business will you write this coming year?” or saying, “We need you to do $100,000 of new commission this year.” The problem with each approach is that it sets the bar too high for some and too low for others. Also, there’s no accountability for arbitrary numbers (which may help explain why only about 35% of all salespeople hit their goals each year).
To be meaningful, goals must be individually tailored to each producer, and then tracked and monitored monthly to ensure that they’re being met.
My process starts by scrutinizing the producer’s existing book of business with an in-depth review of every account. The purpose of this exercise is to determine the producer’s Guaranteed Renewal Income (GRI). This is the minimum total amount of commission income the producer expects to earn, regardless of what happens to his or her existing book of business. To arrive at the most accurate possible figure, I would ask each producer the following questions:
- Are you positive this client will continue with us? As I’m sure you know, my focus is on continuing relationships, not renewing accounts. However, on a “continuation certainty scale” of one to 10 (with 10 being absolutely positive that the account will continue and one being not sure at all), accounts that rate less than an eight are not counted toward the GRI. That way, if the account does continue, it’s a bonus.
- What’s the estimated commission income on the account in the coming year? This will depend on a number of variables, including rates. Are the rates (both premium and commission) going up or down? Is the account growing or shrinking? For example, if the account is currently paying $5,000 in commission income but is growing tremendously and rates are stable, you can expect to make more money on the account next year. Conversely, if the account is contracting and the market is soft, your commission income will decrease. Obviously, income projections are not going to be perfect. Therefore, it’s best to be conservative in setting goals.
- What additional coverages or policies does the account need? This includes converting any part-time clients into full-time clients. It’s also the prime time to make any coverage improvements.
- What exit barriers need to be installed on the account? Have you installed them all? If not, this is the time to get them in place.
Once the producer’s existing book of business has been carefully examined, the next step is to determine the amount of new income required to meet the goal. This starts by reviewing what’s in the producer’s prospect pipeline.
I know you’ve often heard me discuss the importance of maintaining a full pipeline, which is essential to reaching sales goals. But it’s equally important to know what your pipeline is worth. Do you know the monetized value of your pipeline (MVP)? If not, there’s a simple formula to help you arrive at a reasonable estimate.
To calculate your MVP, make a list of your most serious prospects (the people you have either already met, spoken with initially, or been referred to) and estimate the total potential commission income you’d receive on those accounts if you wrote them all. Next, multiply that number by your conversion rate (the percentage of first appointments that move on to the second) and multiply that number by the closing ratio. That figure is your MVP.
For example, if your pipeline has $200,000 of potential revenue and your conversion rate is 50%, that’s $100,000. If your closing ratio is 75%, your MVP would be $75,000. Please note: If your MVP isn’t at least two times your annual sales goal, you’re in trouble.
So let’s say your sales goal is $100,000. With $400,000 of value in your pipeline and a 50% conversion rate and a 50% closing ratio, you’d have $200,000 of monetized value. And that’s where you’d need to be because it’s twice your $100,000 sales goal.
Once you’ve determined that your MVP is satisfactory, it’s time to devise a strategy for approaching each prospect. In fact, we’ve created a Targeted Account Strategy Plan that includes questions such as: Why is this a targeted account? What’s the best way to get in the door and talk to them? What are our unfair advantages? How will we differentiate ourselves on this account?
The reality is that only a small percentage of producers will do this much work. But those who do will be the most successful ones!
Next month, in Part II, we’ll continue this discussion in the conclusion of “If I Were Your Sales Manager.” In it, I’ll further explore The Better Way to reach your goals and attain success.
Roger Sitkins, CEO of Sitkins Group, Inc., is the nation’s number one “Agency Results Coach.” In addition to establishing The Sitkins 100™ and Sitkins International, he is the creator of The Vertical Growth Experience™. His latest offering is The Better Way Agency, a web-based training program that shows agency owners ways to make significant improvements in all areas of the agency. To learn more, go to www.thebetterwayagency.com