In speaking with insurance consultants around the country about what helps differentiate a successful retail agency from others and contributes to profitable growth, all unequivocally cite having a true sales and service culture where producers spend the majority of their time selling and customer service reps (CSRs) focus on providing first-rate service. The reality, however, is that in many agencies the handling of day-to-day back office processes gets in the way of personnel doing what they were hired to do – and the tasks at which they are most accomplished. While these processes, of course, are crucial to one’s operation, when producers and service reps spend 50% of their time performing tasks such as completing endorsements, certificates of insurance, renewals, loss runs, MVRs, billing and payment services, etc., it leaves a lot less time to cultivate prospects for new sales and few resources for rounding out accounts, cross-selling and delivering value to customers.
Let’s take a look at CSRs as an example. They spend a lot of time being reactive, fielding customer calls, making changes, getting quotes for producers, and completing on-line processes. They’re not focused on taking a proactive approach in finding areas where additional coverages can be sold and services provided to customers, in addition to solidifying long-term client relationships. In fact, they’re missing out on tremendous opportunities to help customers with additional insurance solutions, such as cyber protection and supply chain coverage, relating recent events to highlight how emerging risks can be addressed. They can also, for example, create initial conversations around the Affordable Care Act and the impact on businesses and how the agency can provide creative solutions, including performance-based health plans, telemedicine services, stop-loss medical plans, etc.
Incentive Compensation Plans to Foster Sales Culture, Elevate Productivity and Profitability
To help CSRs and others throughout the agency focus on sales and servicing and take a vested interest in the profitable growth of the firm, various plans among successful agencies have been implemented that shift the traditional salary-based compensation program to one that is incentive based.
For example, one incentive compensation-based approach that successful agencies utilize involves giving everyone in the firm some “skin in the game.” This approach is designed not only to reward producers, but also CSRs and others in the agency for their productivity and contribution to the agency’s profitable growth. One such program involves a three-year cycle where in year one, compensation growth at the end of the year is based on revenue growth for each department or for the agency, depending on the firm’s size. Salary increases are based on the growth of the book of business for the year. Everyone in the department or agency works together to help grow the book of business. Employees become personally invested in new production as well as client retention. If there is a 5% rate of growth, there will be a 5% salary increase.
In year two under this plan, growth is tied to profitability, which means that individuals are not only looking at growth but also at costs and achieving a profit level acceptable for the agency. If the business is not profitable, this will affect the amount of money each individual makes. Then in year three, the plan incorporates individual growth. If, for example, a CSR makes $60,000 on a $450,000 book of business, he or she is worth 15% of its value – which represents what the agency is paying him or her under the incentive compensation plan. The CSR’s income won’t go down, but will increase only if the growth level of the book of business exceeds the previous year’s highest levels. The needs of both the individual and those of the agency are taken into consideration, understanding that the only way an employee gets paid more is if the agency grows (and does so profitably), recognizing that the individual has been an integral part of the growth.
Moreover, each CSR doesn’t receive the same compensation under this type of plan. Instead you are now incentivizing highly productive employees, empowering them, and giving them control over their own income. Those who are productive and highly motivated will take care of customers and find opportunities to round out accounts and cross-sell. In addition, because service people now have a stake in the agency’s overall sales, they will begin to push producers to get out from behind their desks and sell.
Based in New York, ReSource Pro is the premier provider of business process outsourcing services for the insurance industry, working with retail agencies, Managing General Agents (MGAs), and regional carriers. Our processing centers in Qingdao and Jinan, China are wholly owned subsidiaries of the U.S. corporation.