Sales Production

There should be a general evaluation on what in fact your selling process is, how it will develop, and what results it will create. As the business begins to develop, a new agent will begin to feel the frustrations of serving an ever-growing number of clients, at the same time having to continually add to his client base in order to ensure long term growth.

Many agents spend significant time and effort developing their knowledge and skills to better market products and services. Often they are guilty of neglecting the proper management of their business.

Whether you are a sole proprietor working out of a general agency with no employees or president of your own corporation employing 50 people, you are still in business and must learn to manage your business enterprise. Whether you consider yourself to be a life insurance agent or a financial planner, what product lines and services you market, it makes no sense for you to be in business unless you make a profit.

The only way to determine your profitability is to keep proper and adequate records. With such records, you can then determine where you have been financially and predict where you are going.

Good management requires maximum service to clients while also maximizing profits. You must know the history of your operation for a specified period of time. This will enable you to make changes either in income or expenses to meet your profit goals. Efficiency and effectiveness should be every agent’s objective.

Regardless of the volume of business, a successful operation must perform on a profitable basis. A multi-million dollar producer can be losing money due to his business costs and a million-dollar producer may be running a successful and profitable operation because of proper management techniques.

One should always keep in mind that “the proper function of overhead is to produce a profit.”

Getting Started—Monitoring Activity for Results

Proper planning requires that you know where you are going as well as where you have been. You need some system for tracking your sales and marketing activities in order to develop “activity ratios” for predicting future marketing and sales results. The One Card System developed by MDRT member Al Granum is probably one of the best known and most successful system ever devised. The One Card System Control Book and Al Granum’s related products are available through the National Underwriter Co., Cincinnati, OH, 1-800-543-0874.

Illustration 1 is a sample Annual Review of Sales Results used with the Granum system. The “Total” column lists the number of qualified suspects obtained in each of the agent’s first nine years in the business. The columns to the right list the number of these suspects sold at the end of each year. For example, of the 40 suspects obtained in the first year six were sold by the end of that year (or 15%). by the end of the fourth year 12 had been sold (30%).

In Illustration 2, you see a computerized version of Mr. Granum’s system provided as a monthly monitoring service by one general agent for his associates. The key behind this successful system is turning the potentially haphazard process of client development into a science through accurate records and the development of ratios which gauge sales success based upon activity.

Notice the “Critical Ratios” section of Illustration 2. This tells the agent that based on his/her actual experience for every 11.39 suspects obtained 3.52 will lead to a completed fact-finder and 1.00 will purchase insurance. Although the agent cannot control who will buy or when, the number of suspects obtained is relatively controllable. These ratios tell the agent how many suspects must be obtained to result in the desired level of production.

Illustration 3 highlights the output of a fairly complex and sophisticated computer program to generate similar data. Regardless of the system that you use to develop them, these “activity ratios” are the key staring points in your annual planning. Once you know specifically what kind and what quantity of activity is required in your operation to generate one dollar of gross income, you are ready to begin the budget process.

Distribution

The agent should review the illustration showing the three (3) growth models and relate it to the forms of doing business section to determine how he/she should be distributing their products and services.

Management and Compensation

In this particular area, as is the case with all businesses, management is the most important factor. You, managing yourself, your people or your business, will make your business work for you. You should be prepared to evaluate aggressively and thoughtfully, the following areas:

Duties and responsibilities of all individuals should be set forth in some form of operating/procedure manual. For more detail, refer to Section 2 - Human Resources.

Care should be taken to hire people with strengths complementary to your own weaknesses. A part of your operating budget on an annual basis should be set for education and development of both yourself and your staff to develop and acquire the skills required to stay competitive in the marketplace.

Compensation