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The Gift of Sales Management

March 13, 2019

What is the greatest gift of high performing insurance agencies?  The gift of Sales Management!

Sales Management represents the planning, development, execution and achievement of business development goals using available resources effectively and efficiently.  The gift of Sales Management is both a science and an art.

 

The Science and Art of Sales Management

The science of Sales Management reflects the design and implementation of a step-by-step operational process – a system – that incorporates each stage of the sales cycle.  The scientific approach includes a rigorous application of process, tools and strategies bundled into a system which is understood and whole heartedly embraced by the entire organization.

The art of sales management, on the other hand, is all about the soft skills of team members including relationship building, presentation techniques, active listening as well as guiding and influencing decisions.  While the science of sales management serves as the foundation of the sales platform, the art represents the creative flair and natural talents to which individuals apply the process and utilize the tools to achieve success.  By itself, the science is inefficient to achieve sales effectiveness.  The art of sales – a person’s competence, knowledge and motivation supported by the process – is the ultimate differentiator.

The combination of the science and art of sales management instills pride in an organization.  It is this sense of pride that fuels each employee’s passion for excellence and dedication to enhancing the customer experience.

Corporate Culture and Sales Management

In the formative years of an agency, the principals are required to be rainmakers.  As the business evolves, the owners impart their business development skills and passion for sales to others in the agency to sustain growth.  It is here where many organizations face a significant challenge.  As the 500 B.C. Chinese military strategist, Sun Tzu, wrote in The Art of War, “Your strengths will eventually become a weakness.”  Let’s examine the competencies of the Producer/Principal as compared to the Sales Manager.

Gift Sales Table

The role reversal for many agency leaders represents a huge hurdle.  Yet, in order to create a scalable business model – one that is not dependent upon a single person or two to bring in the lion’s share of the business – a company wide sales culture must evolve.  A true sales culture forms when every member of an organization feels a part of, and is connected to, the sales process.

A productive corporate culture represents the perfect blend of the science and art of sales management as measured by the attitude employees have about the environment in which they work.  The leaders of high performance organic growth agencies empower staff to understand the link between sales management and business outcomes including customer loyalty, referrals, cross sell opportunities, growth, retention and profitability.  They have also discovered that by engaging, mobilizing and harnessing the power of the entire organization, they can effectively and predictably boost revenue, profit and agency value.  These Best Practice firms integrate sales management into all aspects of the organization with the goal of creating a robust, resource rich experience for the prospective client.

Are you looking to develop a true sales culture in your organization? Be sure to check out our 5 elements that will help your agency open the Gift of Sales Management.

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

 

 

How to Create a Strategic Roadmap for Sales Success

March 9, 2019

What separates a high-performing sales organization from average and underperforming ones?

Steve J. Martin, author of Yes!: 50 Scientifically Proven Ways to be Persuasive, recently conducted an extensive survey to discover the answer and learned that high-performing sales organizations employ a structured sales process and hold their team members to  a high level of accountability by consistently measuring their new business activity and results.

In fact, 50 percent of the high-performing sales organizations had processes in place for delivery, quality, and performance that they closely monitored and enforced.

These findings also show that a random approach to business development is dangerous and negatively impacts time, reputation, confidence, and money.  Let’s look at how you can implement a more strategic roadmap to achieve your business development goals.

The Art and Science of a Strategic Roadmap

What is a roadmap?  It’s a means to connect your vision, value proposition, and goals with strategic actions that are required to achieve them.

The process for creating a strategic roadmap will facilitate your ability to develop a dynamic and responsive plan – a system – that incorporates each stage of the sales cycle.  The scientific approach to your strategic roadmap includes a rigorous application of process, tools, and strategies bundled into a system that is understood and wholeheartedly embraced by your entire organization.

The art of a strategic roadmap, on the other hand, is all about your soft skills and those of your team, and includes relationship building, presentation techniques, active listening, and guidance that influences decisions.  While the science of your strategic roadmap serves as the foundation of the sales platform, the art represents the creative flair and natural talents to which you and your team apply the process and use the tools to achieve success.  By itself, the science is inefficient to achieve sales effectiveness.  The art of sales – your competence, knowledge and motivation supported by the process – is the ultimate differentiator.

A well-designed strategic roadmap creates buy-in and instills pride in an organization.  It is this sense of pride that fuels each associate’s passion for excellence and dedication to enhancing the customer experience.

Value Proposition

The first route of the strategic roadmap is your value proposition. A value proposition is the reason for your existence.  It describes how you create value for others.  It allows you and your team to stand out in a crowded marketplace.  When all members of your staff understand and support the value proposition, they become engaged and active contributors to the sales culture.

Without a compelling value proposition supported by a unique process, the planning, development, execution and achievement of business development goals is an uphill battle.  A unique value proposition is a concise, clear, and compelling statement that describes why a potential customer should buy your particular product or service, how it exceeds that of the competition, and why it is worthy of the price they must pay.

Your firm’s value proposition should articulate the tangible results your customers will receive; the unique benefits you bring to bear that others cannot.

The Playbook

The Playbook represents the capabilities (i.e., plays) of your firm including, but not limited to, client acquisition, account management, and quality assurance strategies, systems, and tools. It is the second route of your strategic roadmap.

In the game of football, the staff and players spend countless hours studying their playbook.  The playbook allows the coaches to design and set strategy to enable the players to achieve results within the framework of a system.  While the coach never gets on the field, he demonstrates and rehearses strategies to achieve success.  When players execute a play properly, the coach rewards their performance.  When the execution is lacking, the coach gives them a pep talk and reviews the play.  There are occasions when the coach goes deep into the playbook to adjust the game plan in an effort to alter the outcome of the performance. When the game is over, the players and coaches analyze results so they can continue doing what they did right and learn from their mistakes.  With the playbook, the coach is able to execute, motivate and win!

High-performance organic growth agencies understand the importance of play and skill development.  It is for this reason they dedicate so much time to building their offensive (i.e., business development) and defensive (client retention/intimacy) systems.

Prospecting Component

The third section of the roadmap is Prospect Identification, Qualification and Service Delivery.  This critical component of your strategic roadmap includes methods to fill the pipelines, criteria filter to screen out “commodity shoppers,” and a planning process that flaunts your firm’s unique capabilities.

Research conducted by Beyond Insurance indicates that the vast majority of agencies lack a strategic approach to prospect identification, research and qualification.  In a survey administered to more than 7,000 agency principals and producers, Beyond Insurance uncovered the following:

Roadmap Table

In this route of your roadmap, Beyond Insurance recommends setting up a disciplined, strategic, and energized prospect research and qualification system that includes a “Prospect Research Evaluation Program (PREP)” Board.  To learn more about PREP, check out:  Prospect Research Evaluation Program (PREP)…Adding Discipline, Strategy, and Energy to Your Prospect Pipeline.

Success Indicators

The final route in your strategic roadmap is monitoring the results of your sales system. Critical indicators include, but are not limited to, activity-based performance, sales funnel forecasting, quality of new business appointments, as well as your hit ratio. These key performance indicators allow you to benchmark the effectiveness of your strategic roadmap and achieve results measured against targeted goals and objectives.

The quality and quantity of prospects in your sales funnel is particularly important – it lets you gauge the efficiency and impact of your roadmap.

Once you clearly understand each element of your strategic roadmap, you can use it as a guide toward success.  By having this framework, you can better direct your time and other resources to deploy it in a consistent but flexible fashion.  The roadmap will help you quickly determine what decisions need to be made and by when, and translate it into a 90-day project plan that you update once a quarter.

Remember, your strategic roadmap is dynamic and relevant.  It must be updated and communicated to be successful.  And it must connect visions with current and future actions.  The benefits of using your roadmap will be more new business, better relationships with your raving fan clients and centers of influence, and greater accountability for your actions.

Isn’t it about time you created a process and roadmap for your business development success?

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

 

 

4 Steps to Getting Strategic about Recruiting and Hiring Sales Talent

March 5, 2019

At Beyond Insurance, we have demonstrated how agencies can find success by taking a strategic and planned approach to recruitment and hiring. Here are four steps that you can implement to make the recruiting process more successful and less challenging:

Step 1:  Determine in advance exactly who you’re looking for.

Prior to starting to recruit, think thoroughly about the characteristics and skill sets of the ideal producer.  Just as you would not build a new house without an architectural blueprint, you should not hire a new producer without a profile of your ideal candidate. 

Articulate in writing what hurdles your producer will encounter as well as the resources you have to help them to be successful.

Carefully analyze your agency’s needs, and discuss them with the other leaders and managers within your organization.  What specific skills, expertise, qualifications, and experience do you and your agency need for the producer to fill? 

What type of culture does your agency have?  Is your agency in a stable/maintenance mode or in an aggressive growth mode?  Do you need a professional who can maintain and grow relationships with your existing clients? Or do you desire an aggressive business development specialist who can hit the ground running?

The most successful producers have the ability to serve in a consultative, diagnostic capacity, rather than basing their relationships on the transaction.  They are confident, diligent people whom your clients will trust – and whom you will trust in your business!

Taking the time to analyze your needs will enhance your ability to 1) create the ideal producer profile, 2) give you the parameters whereby you can weed out the wrong candidates and 3) attract the right ones.

Step 2:  Use your networks to identify candidates.

Many Fortune 500 companies use their associates to develop a pool of potential candidates.  They offer a bonus or reward to staff members who identify qualified candidates.  If you adopt this approach, it will allow you to tap into a trusted network of people – your staff – who know and understand your agency, culture, carriers, and clients.

LinkedIn is an excellent way to find good candidates as well.  Many of the best prospects are not actively seeking opportunities, but are open to a conversation with a progressive agency.  You can use LinkedIn to identify and reach out to potential candidates. You can also post the job description to the groups you belong to, asking them to refer appropriate candidates directly to you.  Ask yourself questions, such as, do their profiles make me want to talk to them?  Do they seem optimistic and enthusiastic?  Do their profiles tell a great story about them, their sales ability, and their potential fit in my agency?  Do their value propositions seem clear, concise, and compelling?  Or is their profile full of tentative words, such as, “I think, I hope, or I feel?” Twitter and Facebook also have the option of creating specialized groups based on particular interests.

While these social media tools can be extremely effective, don’t stop there.  Face-to-face contact with your personal network remains a critical tool for recruiting.  Network among your friends, peers, carriers, centers of influence and clients. They may be able to identify candidates perfectly suited to your agency.

Attend professional conferences and events. Think strategically about what niches and specialties you want your new producers to serve.  By attending conferences and events in those niches, you’ll have access to individuals who share a keen interest and specific knowledge in those classes of business.

Step 3:  Phone screen your candidates.

Have you had first-hand experience with a producer who charmed his or her way into being hired, only to under-deliver or not deliver at all once having the job? If so, you understand the importance of screening candidates and being discerning on the front end to avoid frustration and costs on the back end.

Are you an agency principal who hired an attractive candidate… someone who was charming and delightful during the interview but ultimately lacked the skills to perform as a successful producer?  While you terminated or shifted the responsibilities of this new hire, did you remain perplexed as to why this apparent superstar failed?  If so, you are not alone.

How can you avoid these types of situations?  Richard Abraham, one of the co-founders of SalesDrive and co-author of Never Hire a Bad Salesperson Again: Selecting Candidates Who Are Absolutely Driven to Succeed, said, “If the goal is sustained high performance, sales training has a diminishing return with low-drive salespeople. Eventually, the salesperson will revert back to low-drive performance, the behavioral mean.  There is no way around it. You need to start out with high-drive sales talent.”

Dr. Christopher Croner, co-founder of SalesDrive, discovered that high-performing salespeople share three innate personality traits:  1) Need for achievement, 2) Competiveness, and 3) Optimism.  These three traits come together to form “drive.”  Without this essential characteristic, a producer is not going to be successful over the long-term.

It is interesting to note that the research of SalesDrive indicates that most “hunter” salespeople share certain, innate characteristics that cannot be taught.  Therefore, if you want to identify and select hunters, it will serve you well to identify these characteristics BEFORE hiring – optimally even during the initial phone screening call. Below are a few tips:

Review your candidates’ resumes, letters, and referrals carefully.  Do they use words that demonstrate achievement, competitiveness and optimism? 

Before you invest any more time in the candidate, find out whether they hit quotas and met sales plans.

Set up brief phone interviews with candidates who appear, on the surface, to have sales drive.  During the phone interview, ask questions such as:

  1. “Where do you rank in sales on your current team?”  Not only will their answer show you their competitiveness, their stats are quantifiable.
  2. “What could your current (or former) agency have done better to support your business development initiatives?”
  3. “Where do you see yourself in three years?”

Do their answers to questions 2 and 3 communicate sour grapes, resentment, or unrealistic expectations?  Most people are optimistic when they talk about their future, but tend to be more candid when they look backwards.  Past results and behaviors are indicators of future success.  These questions will give you a clear sense of their achievement, competitiveness, and optimism – the three vital characteristics that make up sales drive.

The percentage of people who possess these characteristics is relatively low.  Therefore, it will require you to be deliberate and patient.  The payoff, however, in terms of avoiding the $150,000 cost of a bad hire plus the long-term upside of productivity will be significant.  You may need to go outside the insurance industry to find high-drive candidates.  You can teach people the business of insurance and risk management –but you cannot instill drive.

After the phone interviews, narrow your list down to two or three candidates. 

Step 4:  Measure the sales drive before you interview and hire.

The next step in the ideal recruiting process is an evaluation of the candidates before you bring them in for face-to-face interviews.  Studies show that 90% of all hiring decisions are based on job interviews.  Shockingly however, these job interviews are only 14% accurate in predicting the success of new hires. 

Even more startling, most hiring decisions are made within the first four minutes of the interview.  That means that most new producers are hired based solely on first impressions. 

By providing a validated, objective measure of a candidate’s sales drive, you can avoid hiring on gut instinct.  This will save you hours of time, frustration, and substantial amounts of money.

“Drive is the passion and determination that causes top producers to stop at nothing in their quest for success,” stated Abraham and Croner. It is for this reason that Beyond Insurance is an advocate of the pre-employment sales drive assessment.  And why members of the Beyond Insurance Global Network have experienced a dramatic increase in success for hiring new producers who not only can, but will sell. 

“The right assessment program will have a huge impact on an agency’s success,” says David Parsley, President of Parsley Performance Solutions.  “Assessment tools add science to the art of effective hiring.  To use the analogy of an archer, if an archer’s target is certain (a clear profile of what top producers look like an agreement amongst agency principals) and the arrow is straight (by using a validated assessment that meets EEOC standards), then hitting a “bull’s eye” of hiring a top performer will be achieved more often!”

The three characteristics of drive — need for achievement, competiveness and optimism — in combination with a targeted personality assessment and focused interview questions create a high probability of success as relates producer performance. 

These four steps will make your hiring process easier, more enjoyable, precise, and richly rewarding.  Most importantly, you will be able to filter out candidates who lack sales drive and interview those who have the potential for success in your agency. 

An improved hiring process will positively affect your bottom line through cost savings from reduced turnover and higher revenue from increased productivity – by hiring the right producer the first time.  It can cost $150,000 to hire a bad salesperson.  It’s time to get strategic about recruiting!

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

It’s Expensive to Hire a Bad Salesperson. It’s Time to Get Strategic about Recruiting!

March 4, 2019

Finding good producers/sales talent is one of the toughest challenges facing an agency owner, principal, or sales manager.  It’s been described as “walking through landmines”– too expensive, too time-consuming … and impossible to predict whether a candidate will be an asset to your agency or a hiring mistake. 

Yet despite these challenges, the strong and growing economy has many mid-sized agencies planning to add staff, with sales/marketing positions in high demand.

The U.S. Bureau of Labor statistics show that:

  • The unemployment rate for the insurance industry is at 2%, the lowest in seven years. 
  • The employment rate for insurance producers will increase by 16.7% by 2022.

This is good news, indicating that the insurance industry is stabilizing and returning to a pre-recession state not seen since 2007.  Agency principals are feeling more confident and optimistic about hiring again and setting aggressive revenue goals.

But are they finding qualified producers to fill those newly created positions?  Many agencies are experiencing difficulty recruiting individuals who have the skill, drive, and experience to sell…to hunt.  With such a high percentage of agencies desiring sales talent and the low unemployment rate within the industry, the challenge is designing a strategic and is designing a strategic and disciplined plan for talent identification and recruitment

Many principals have told the Beyond Insurance team that they have hired, trained, and mentored seemingly great producers, only to have them fail or leave shortly thereafter.  That’s a costly mistake.  Studies indicate that finding, training, and ramping up a new producer cost an agency $150,000 or more.

Recruiting qualified producers is a tough job.  The stakes are high because the risk of making the wrong hiring decision is serious.  But, believe it or not, sales recruiting doesn’t have to be a big headache for you or your firm.  It can be a fulfilling, effective process if you are strategic, disciplined, and appreciate the importance of your responsibility.

The Beyond Insurance Global Network is demonstrating how agencies can succeed by adopting advanced methods of selecting, promoting, and coaching their sales talent.  Member agencies are using the Beyond Insurance Success Model™ — an assessment process that determines “job fit” by comparing candidates to a model of sales excellence. The program was developed in concert with a study of the top producers within the Network and the validated features of a Profiles Sales Assessment. The results reliably predict on-the-job performance in seven critical sales behaviors: (1) prospecting, (2) call reluctance, (3) closing the sale, (4) self-starting, (5) working with a team, (6) building and maintaining relationships, and (7) compensation preference.

Agencies within the Beyond Insurance Global Network have been using this process to positively impact the selection, hiring, coaching, and retention of top producers.  The program includes a customized interview guide for each candidate to facilitate a more engaging, enjoyable, and productive interview process. Other reports help Network agencies manage new hires and determine how and where individuals fit into succession plans.

Check out 4 Steps to Getting Strategic about Recruiting and Hiring Sales Talent where we take a closer look at the steps needed to make your recruiting efforts more rewarding and less stressful.

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

3 Characteristics of Highly Successful Producers That Cannot Be Taught

March 1, 2019

Editor’s Note: In our previous article, we made the case that agencies are better off hiring high-potential candidates and training them versus hiring low-potential candidates who may have industry experience. Now, in part 2 of our series, we look at the characteristics of the highly successful producer.

After analyzing over 80 years of research, we discovered three core characteristics that most successful producers share and that cannot be taught. Moving into adulthood, producers either have them or they don’t.

  1. Need for achievement—A deep and self-motivated need to set and meet goals. Never satisfied with present results. Always looking to set the bar higher.
  2. Competiveness—Love of winning; fear of and distaste for losing. Even competitive with the buyer in a productive way as the competitive salesperson loves the persuasion process.
  3. Optimism—The body armor of all great producers who do not personalize rejection and are confident that the next call will be the winner.

All three of these characteristics must be in place to form the master trait that psychologists call “drive.” If they are, you can build and develop from there. If one or more of the characteristics of drive are not in place, however, there is a high risk that spending further time and money on training and mentoring will be wasteful. That is a high price to pay because many industry experts estimate that the average cost of developing a qualified insurance producer is $150,000 or more.

Does your agency ascertain whether these traits are in place prior to investing in a producer? Fortunately, the confluence of data and technology is leading to the development of ever more accurate assessment platforms. The Drive Test, for example, determines if these traits are in place with accuracy well above 70%, and that moves to over 80% with a Drive-influenced interview template. Any number of assessments are available; the key is to capture these three core aptitude traits by giving them the focus and weight they deserve.

As mentioned earlier, we are often asked if, given the choice, we would advise selecting a high-Drive candidate with no experience or a low-Drive candidate with experience. Nuances exist, but unless technical aptitude or skills are required, we strongly suggest the high-Drive candidate because without Drive, the subsequent training may prove to be moot over time.

Finally, a word about this information as it relates to acquiring another agency. The aptitude levels of the producers who come along with an acquisition may be an asset or a liability. You already know the value of the book of business you are acquiring. To the extent that you can hold that book and then expand it through more effective recruiting practices and a more productive business development team, it can yield huge dividends. Once again, it is essential that you assess and measure the three traits of drive.

In summary, today’s accelerating accumulation of data and analytics will allow you to reduce risk and improve long-term results when identifying and selecting talent. This goes for all job positions, but none more so than sales, which heretofore has been one of the most difficult recruiting challenges of all. There are not enough high-potential producers in the existing insurance landscape. But there are plenty of high-potential producers in the broader talent pool.

About the Authors

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

Christopher J. Croner, Ph.D., is a principal with SalesDrive, LLC. SalesDrive provides advanced salesperson selection assessments and resources to companies throughout the world.

A Case for Hiring Producers from Outside the Insurance Industry

February 28, 2019

Reduce risk and improve long-term results when identifying and selecting talent.

Each year, dozens of agency principals talk to me about the challenge of finding, hiring, and training new producers. Are you having a difficult time identifying top-notch candidates? When you make the hire, are you often perplexed with your inability to assess the degree to which the candidate will be a rainmaker? If you answered “yes” to both questions, you are not alone.

Recruiting, training, and developing new producers is a time-consuming and costly undertaking. A Reagan Consulting study on producer development states that it represents “a firm’s willingness to fund temporary losses on producers in anticipation of future returns.”

Dr. Christopher Croner of SalesDrive has been studying and addressing these issues for several years and shares his opinions and recommendations for hiring producers:

Whether you lead an insurance agency and are attempting to hire producers who will provide the requisite return on investment, or you are buying an agency and evaluating the talent pool in which you are investing, a strong case can be made to expand your pool of talent beyond the insurance industry. Put another way, if you are limiting your search to the insurance industry, you are putting a severe limitation on reaching your revenue potential. Let’s start with recruiting producers for your present operation, then move to a discussion in the acquisition context.

Data acquisition and analysis (sometimes called Big Data) has been exploding across the digital landscape. The ability to acquire large amounts of data quickly and easily, along with powerful technology to process it for analysis, is allowing researchers to accelerate their work and add more accuracy to their analytics. This is occurring in all fields, from science to medicine, from consumer behavior to entertainment. Most important, it is enabling you to more accurately assess employment candidate aptitudes and skill sets, including prospective producers.

Prior to these advances in research and technology, hiring producers was based primarily on validating past behavior as a predictor of future performance, as well as the intuition of the hiring manager. This approach is fraught with risks for several reasons:

  1. It is relatively easy for a candidate to embellish past performance and behavior.
  2. Most hiring managers are not trained psychologists, so interviews can be easily manipulated by candidates.
  3. Hiring managers often overestimate the accuracy of their intuitive guesses (often called “the golden gut,”) which, when tested for validation downstream, do not hold up in terms of sustained salesperson production and turnover. Managers rationalize that these results are acceptable in light of the difficult challenge of recruiting and developing high-performance producers, and often fall back on another cliché, the “80/20 rule,” in which it is standard that 20% of salespeople produce 80% of the results. The hiring manager falsely believes that is a “satisfactory outcome.” It is not!

To be frank, the 80/20 rule is a terrible outcome because of the high cost of turnover and the opportunity cost of accepting low production from any given producer over time. Now that research has discovered much more about the core aptitudes of successful salespeople and that technology— along with more informed interviewing techniques—allows you to identify those core attributes in advance of hiring, the odds of identifying a candidate with the potential to succeed can be substantially predicted.

That said, the improvement in research and diagnostics is also supporting the conclusion that high potential producers are rare and hard to find. When you couple this with the challenge that most successful producers are already satisfied with their positions, attracting high-potential people to stock your firm with “A” and “B” players takes diligence, strategy, and analytics.

It is our recommendation that you are better off hiring high-potential candidates and training them than bringing in low-potential candidates who may have industry experience. That of course raises the question of how we define potential. In part 2 of our series on hiring for potential, we look at the three core characteristics that most successful producers share and cannot be taught.

About the Authors

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

Christopher J. Croner, Ph.D., is a principal with SalesDrive, LLC. SalesDrive provides advanced salesperson selection assessments and resources to companies throughout the world.

So You Want to Start Your Own Insurance Agency? The Recipe for Success

February 15, 2019

On October 10, 1990, I started The Addis Group, an insurance brokerage and risk management consulting firm in King of Prussia, PA.  No name, no revenue, no carriers, no customers, no reputation: only a dream, a network of supportive friends and a unique process. 

Although it has been over 25 years, it seems like only yesterday that The Addis Group began.  What was the “recipe for success”?  In 1990, the following ingredients helped me answer the question “So you want to start your own insurance agency”? 

Network:  In assessing the opportunity for success, I went to my network (i.e., centers of influence and friends) to solicit their opinions.  I asked each person three questions: 

  1. Would you stand behind me? 
  2. Would you refer me?   
  3. Would you become a client?

The answers were all positive. 

Value Proposition:  I needed a unique “value proposition” – a process that was different from any other firm in the Philadelphia region.  This was necessary to attract and retain insurance carriers, staff and clients.  I also knew that my Network would be able to generate referrals if I armed them with a powerful, compelling story about The Addis Group’s approach. 

Marketing and Business Plan:  Essential to the endeavor was the crafting of a Marketing and Business Plan – a road map for the future of the firm.  This document also helped secure a credit line as well as attract insurance carriers. 

Insurance Carriers:  Insurance carrier partners were critical to the evolution of The Addis Group.  The firm could not exist without a handful of top notch insurance companies who embraced The Addis Group’s unique process.  I was aware that attracting these carriers was going to be a significant challenge that would require insurance premium volume commitments. 

Family Support:  This was a huge consideration.  Before venturing out on my own, I met with my wife (Bobbie) to confirm that I had her support.  In October, 1990, we had two boys (Andrew, age 9 and Jeffrey, age 7) and a third child on the way.  Bobbie and I thought deeply about the potential impact on our family as a result of the time and energy it would take to get the business off the ground.  We also measured the financial risk factor.  Fortunately, Bobbie was a registered nurse who was willing to do what it took to help the cash flow.

Passion and Purpose:  Last but not least, I had a passion and purpose to design a futuristic agency that would develop business through a unique business model.  At 34 years old, I had energy, determination, focus and drive.  I also had a heavy dose of fear.  I have come to learn that fear is an incredible motivator.  It was my daily gut check that got my engine running. 

The first few weeks were overwhelming.  So much to do with so little time.  Company name, logos, business cards, office space, credit line, health insurance, licensing, computer system, office equipment and so much more.  Researching a top notch team of professional advisers including legal, accounting, banking as well as preparing marketing and business plans for the insurance carriers. 

Now to the staff.  I was able to attract two outstanding individuals who shared my dream and vision.  One was an energetic, polished 26-year-old professional who had underwriting experience and a multi-talented, dedicated, experienced individual with brokerage experience and administrative capabilities.  Both loved the “recipe for success” and understood the risk issues. 

I had anticipated an uphill battle in attracting insurance companies.  Little did I know how difficult this task would be.  Meeting after meeting with Chubb, Fireman’s Fund, Hartford and others.  Each carrier asked for a significant premium volume commitment and questioned our ability to build a firm.  To respond to their issues, we put together a powerful Advisory Board to stand behind The Addis Group.  The Board consisted of business leaders representing a cross section of skills ranging from marketing to banking to legal to finance.  This move gave carriers comfort that The Addis Group was going to succeed. 

The spectrum of emotions that we experienced in year one went from exhilaration to disappointment.  Importantly, we never took our eyes off of our goals.  The recipe for success was built upon providing comprehensive Risk Management Audits three to four months after the insurance policy renewal.  Instead of starting with the traditional “bidding process,” The Addis Group focused on a 4-step process to identify and measure risk.  We invested countless hours with our prospects to improve their “Risk Profile” before negotiating the insurance transaction.  If a prospective customer did not want to invest time to go through our diagnostic, audit process, we simply placed them on our mailing list and moved on. 

In year two we gained confidence.  The carriers loved our approach.  They were seeing outstanding hit ratios and loss ratios.  They also felt part of our team.  In year three we fine tuned our marketing materials, prospect research and approach to developing business.  We also built our Mission Statement and Guiding Principles.   

Our five Guiding Principles were:

  1. Deliver significant value so our clients view our relationship as an investment – not a cost.
  2. Character and integrity are the cornerstones of business trust.  They shine through – particularly in tough times. 
  3. Be innovative and differentiated.  Bet on our vision for the future.  Imitate only as a last resort. 
  4. Surround ourselves with people who care – a lot.  Seek people with ambition, intelligence and motivation. 
  5. Our goals are our client’s dreams with deadlines! 

Years 3 through 5 were exhilarating.  We reinvested every penny back into the organization to attract talent, build technology and position ourselves within the community.  The recipe was working to perfection.  All of our stakeholders – Clients, Staff, Carriers, Centers of Influence and Community — were fueling our growth and success.  These stakeholders saw us as something unique. 

Community recognition followed.  The Addis Group was a Philadelphia finalist for Inc. Magazine’s Entrepreneur of the Year Award.  The Philadelphia Business Journal described the award as the “nation’s most prestigious recognition for leaders of some of the region’s hottest entrepreneurial companies”.  The Addis Group was placed in “Philadelphia 100” – the fastest growing privately held companies in the Philadelphia region.  And the firm was recognized as the Greater Philadelphia Chamber of Commerce “Business of the Year”,  as well as National Underwriter Magazine “Agency of the Year”.

As I look back upon the early years, there is no question that we would not have achieved success without the design and development of our network, value proposition, business plan, family support system, insurance carriers and passion and purpose. 

Do you want to start your own business?  The experience of The Addis Group gives evidence that it can be achieved.  However, you must start by asking yourself the following questions:

  1. Do I have a network of centers of influence and friends who will stand behind me, refer me and become clients?
  2. Do I have a unique “value proposition” to differentiate myself within the marketplace?
  3. Does my marketing and business plan lay out a road map for future success?
  4. Is my family supportive? 
  5. Will I be able to attract insurance carrier partners?
  6. Do I have the purpose and passion to build this enterprise? 

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.