Posted on 17 Nov 09
In our continued commitment to help our members’ sales effort and profitability, we have recently placed an emphasis on interviewing industry experts in these areas. This week we spoke with Robert J. Sutter, president of Keystone Legacy Development, a division of Keystone Insurers Group. With more than 20 years experience as a producer of large commercial accounts, and 15 years of experience in producer training under his belt, Robert is a former Marine Corp captain and has incorporated what he learned in the military into creating The Sales Culture Development Program™, designed to help agencies establish a true sales organization. Although the program is exclusively available to Keystone Insurers Group agency partners, Robert has graciously shared with us its overall philosophy and processes.
Annie George (AG): In interviewing several industry people about how we go about approaching sales, one common thread is clear…that independent agencies need to change the focus from being an operation that simply provides price quotes to one in which the consumer views the agency and its people as advisors, and consultants. This is what your program is about.
Robert Sutter (RS): “Exactly. Agencies are great service organizations but not sales organizations. Most of them don’t have an intentional focus on sales…sales are either generated from customer referrals or centers of influence.”
AG: How do we go about changing this culture, attitude?
RS: “As an agency, you need to first look at your value proposition. Establish your mission, your strategic plan. What are you offering to your customers? What makes you different, better? Who are your competitors and what are they offering? You want to look at the core values of your company and what it is you are offering to do.
“Many times I find that a lot of agencies are offering product, they represent carriers and sell their products. The more successful agencies are business solution-oriented rather than product-oriented. They provide risk management and go out to businesses and say, ‘Hire us and we will work to understand your objectives and where you are trying to go. We will design a risk management program that helps protect your assets … that may involve some insurance but there are other non-insurance methods for handling risk as well.’ The difference between the ‘product peddler’ and the treasured and valued advisor is that the ‘product peddler’ sees every opportunity as a chance to sell insurance and the valued advisor looks at how the potential client can avoid a particular loss or transfer the risk to somewhere else. The advisor exhausts these efforts before he/she sells insurance. And when the advisor does it well, the potential client thinks, ‘I am not being sold insurance, I am being educated in what insurance I really need to buy.’ The consumer then no longer feels like someone is pushing anything on him/her or trying to take advantage.”
Robert explains that it’s the role of expert that agency producers need to adopt. “It’s about the agency becoming the buyer of insurance and/or solutions on behalf of their clients,” says Robert. “It’s about purchasing/implementing solutions in an area in which the client is not well-versed or an expert. Most firms employ expert buyers for everything from vehicle purchases to raw materials to packaging materials; they have experts in each field and one doesn’t overlap with another. The person who buys packaging materials doesn’t buy automobiles and vice versa; each professional buyer has his/her own expertise and background. The individuals at firms, however, who buy insurance are not insurance people. Some folks employ a risk manager, but most don’t. In many businesses, the person buying insurance is the CFO, finance VP, business owner or president. His or her background is in business but he/she is an amateur in insurance and risk management. The sales organizations in agencies that I train go out and sell the idea of ‘Employ me to be your expert and I’ll help you buy as little insurance as you need and provide you with solutions.’ With this approach, you won’t end up simply trading dollars with an insurance company.”
AG: How does a producer get the consumer to buy in?
RS: “Generally, you get the consumer buy-in by explaining where vulnerabilities exist. You show consumers the landmines, areas where they think all is fine but actual problems exist. You have to call on people who believe they are happy with what they have. (People are not going to call you and say I am unhappy with my agent.) The challenge is to get them to suspend that belief long enough to probe a little bit, ask some questions. Take a look at the pitfalls that are generally overlooked by product providers…they are not looking into areas such as contracts, leases, purchase orders and a number of other places where landmines may exist. If you can point to a couple of these things and the loss potential that could result, you will get your prospects outside of their comfort factor.”
Most people, Robert explains, have a set comfort factor when it comes to loss. They are comfortable with a loss of X per occurrence but perhaps not more than 5 times that in a given year. If you show them anything outside that aggregate loss that they are willing to suffer, they will want to take the dialogue further. “You’ll begin to develop a relationship over time,” says Robert. “They will ‘fall out of love’ with the people they thought were doing a good job for them and decide that you are poised to better care for them. We have to actually displace someone in order to get someone’s business most of the time. It’s similar to a courtship.”
Robert says all you have to do is look at the 80/20 rule. Eighty percent of sales are made up of 20% of one’s top customers. Eighty percent of your personnel problems will come from 20% of your employees. And 80% of sales are made by the top 20% of your salespeople. If you believe this, the correlation, according to Robert, is perturbing: “This means that the remaining 20% of sales is being quoted by 80% of the sales force, which is why so many people are in the business of quoting. They are fighting for the leftovers. The top 20% of salespeople are the ones who are changing the debate and the role they are trying to play; they are trying to bring real value and become a part of a business team to get where they want to go.
“The 80/20 rule is further exacerbated if you look at the fact that only 10% of business is actually available to be shifted,” says Robert. “If you ask most agencies for their retention rate, they’ll say it’s about 90%, which means only 10% of business is up for grabs. The question then becomes which 10% is moving around – is it the 10% who simply want a quote or is it someone who has been demonstrated that he/she is not being as well handled or well served as he/she may have believed. It’s important if you want to be a successful sales organization that you find business that ought to move rather than waste your time with quoting accounts that say they are going to move but probably won’t.”
When discussing the key to establishing a sales organization and fostering that culture, Robert explains that you need to see a shift in the mindset of three parties:
1. Management must come on board and want to change its focus to be more intentional in what the agency does and stop squandering its resources.
2. Producers’ attitudes need adjusting…a lot of producers equate being busy with being productive, which is not always true. They’d rather quote business they have no chance of getting than cultivate a piece of business that they could obtain.
3. Staff -- without a concerted cultural shift among all employees, very often you’ll see the efforts of management and producers undermined if everyone doesn’t support the new initiative and attitude.
“One of the areas that gets people’s attention,” Robert says, “is that the insurance industry is one of the few businesses that doesn’t look at what it costs to go after a piece of business. If you are a manufacturer you have fixed and variable costs, which help you determine at what price you need to sell your product; you won’t sell it for any less than it costs to produce. In the insurance business, we simply average the cost. Let’s say that the average cost is 10% to12% of expenditures on Commercial business. This means that we have clients with a low-service, low-need intensity from whom we get a high commission due to their premium size. They in essence are being overcharged. Then we have a number of smaller accounts that require a lot of servicing and exercise our staff substantially and yet we don’t derive revenue commensurate with what it costs to handle these clients. So we look at overall agency volume, and we become comfortable with the average cost of doing business.
“I’m not sure you can get away with this in other businesses because most people won’t put up with it. But because most consumers don’t understand our compensation system, they don’t pay attention, especially during a soft market when premiums are competitive and low. In a hard market that changes. But I believe that we need to understand how much money it costs a firm to do business. We need to understand the worth of individual producers/principals and determine how many hours it takes to get a piece of business and how many hours it takes to handle it once we earn that business. If it’s not going to generate the kind of income our time is worth and the time involved by all parties, we shouldn’t go after that business. We ought to let others fight over it and target the kind of businesses that makes us money. We have to exceed the cost that it takes to handle an account.”
AG: As part of developing a sales culture, what is the impact on the staff?
RS: “When talking to principals about sales culture development, one of the things they have to come to grips with is to determine if they have the right people in the right seats. If they don’t, then they need to take some of the people they thought of as producers and figure out if there is a role for them in a service capacity within an agency, or whether they should be let go.
“There are several challenges when it comes to making employee changes. Many P/C agencies have a lot of money invested after one or two years of training producers. If a producer is not producing the way management wants, they hold out hope that he/she will get there. So we hold onto people much too long.
“Additionally, we often don’t hire true salespeople in the first place. Agencies tend to hire insurance people, who make excellent account executives, good Commercial Lines service representatives, but this doesn’t make a good producer… you need someone who can sell to strangers, find out with whom they are currently insured, and get the opportunity to show what the agency can do. We hire people who don’t have the skill sets to cultivate strangers and convert them to clients. Many spend a great deal of time, effort and money to try to bring a producer up to their actual “sales potential” when he/she was never meant to be a salesperson in the first place. Another issue is that many agencies employ family members, who may not have the traits that make up a good salesperson, but they are going to remain employed by the agency.
AG: Insurance is not like selling clothes. You need a good salesperson but also someone who understands risk management. How do you find that individual?
RS: “That is a valid question. Not everyone has to be a triple-threat player… if you look at the football teams of the ‘40s and ‘50s, a valuable player could kick, pass and run. But if you look at the way teams are set up today, the kicker is not generally a passer or a runner. Look at a law firm, for example, and how it functions. You will find folks who are wonderful litigators, they can get in front of a jury or judge and be very persuasive…they are salespeople… but they are not necessarily the best researchers in terms of case law or the best document drafters. Both the litigator and the researcher are great because they understand the law, but one is a “performer” before the court and the other is more of a technician, working in the law library or in front of the computer coming up with the facts, and all the details that make the proper case.
“The same is true in insurance agencies. Producers have to be fluent enough in insurance and risk management and how it all works in order to explain it, in order to find the landmines. They have to be good technicians in that regard, but they don’t have to be the best “hand-holder” or problem-solver once the client is on board. What you then see in a good sales organization is that there are people who are able to bring in the business and then there are great technicians to serve the client well.
“This is more difficult in smaller agencies because the owners don’t have the resources to staff this way, so in these cases you need the triple-threat players, which in most cases are the agency principals. But it’s difficult for these owners to replicate themselves and perpetuate the agency. They have to go and find someone who can do all three things or make it their mission to grow their agency and be large enough to staff it appropriately.
“Many organizations do team selling… one party is there to identify problems and persuade the prospect that they will be better served by choosing their agency, and the other individual serves as the technician to help navigate the process.“
Robert says that many agencies with which he has consulted sell based on “I” and not “we.” You hear a producer say, “I’m going to do this, and I am going to be your advisor.” When the prospect becomes a client and begins calling the producer for everything little thing and he/she now has to talk to a service person, as Robert explains, the client feels as though he/she has been baited and switched.
“A good sales organization sells the organization, not the individuals doing the selling,” says Robert. “You need to say, ‘If you become a client, our firm will…’ Explain the division of labor within the agency.”
The training program for Keystone agencies is a 12-month process that identifies: what needs to be changed; who needs to be changed; how to go about making that change happen; and evaluating the process. The program includes meeting every other month to every third month with management, providing assignments, solidifying management’s commitment and holding them accountable.
“A challenge for everyone,” says Robert, “is that we all say we want to do something, we want to change, but we slip back to old habits and no one is holding us accountable. A lot of the work is in facilitating the agencies to decide what they want to accomplish and in getting them to commit to their decision.
“The key in changing the culture to one of sales is not just identifying what needs to be done but getting the buy-in to do it, getting management to set timeframes and to stick to that schedule. We become a mirror for them that reflects what they have committed to.”
In addition to this exclusive Keystone agency program, an on-line sales training course, “Path to Professionalism,” is available nationwide to all agencies except in Pennsylvania, Ohio, Indiana, Virginia, Kentucky and North Carolina. In these six states, only Keystone partner agents may register for the course. “Path to Professionalism” provides state-of-the art, accessible 24/7 insurance sales instruction via videos. The program is comprised of 36 segmented sales videos, with accompanying slides and worksheets, is designed to shorten the learning curve for new producers, and is a great tool for experienced producers who want to sharpen their skills. You can sample the program by going to: http://www.keystonelegacydevelopment.com.
About Robert Sutter
Robert has been president of Keystone Legacy Development since August 2007. Prior to joining Keystone Insurers Group, he was a successful producer, sales trainer, and agency manager in two of the South's premiere regional brokerage firms. He is founder and president of Cross Sight Training which, since 1996, has trained and coached salespeople in more than fifty of the nation's leading agencies and brokerage houses.