Why Insurance Producers Fail

On June 24, I will be giving a presentation at the Independent Insurance Agents of Virginia (IIAV) annual conference titled, “Rob’s Secret Sauce to Hiring Insurance Producers.”  While preparing, I have also been thinking a lot about the reasons why sales professionals fail at their jobs.

Historically, across all industries, the failure rate amongst sales professionals is significantly higher than any other job function.

But in insurance sales? The failure rate is absurdly high.

Based on our own internal candidate data accumulated during the past ten years, in the WDC region, only 32% of all insurance producers make it past the three-year mark before being terminated or departing for another gig.

So why do so many insurance sales professionals fail?  And how can one mitigate this risk?

It is interesting just how similar the executive search business is to the insurance brokerage business.

It turns out that many of the same reasons why insurance sales producers are not successful are nearly the same reasons why my own recruiters sometimes fail.

There are two primary reasons:

It’s a Numbers Game: Activity drives Sales. And it is amazing just how many sales managers have not figured out the activity metrics of their own sales organization. Without a benchmarked process to track activity, there is no target for the sales producer to aim for and measure themselves against.

For sure, each organization is going to be a little different, but across my insurance client base, the activities necessary to drive new insurance sales are very similar.

A typical monthly activity metric for a sales producer working at a mid-market insurance agency: 1) 200 targeted emails/calls = 20 telcon/virtual presentations = 10 sales presentations = Two deals using a 5:1 closing ratio. Repeat the same process 3 – 5 times over the next 90 days.  That’s at least 25 closed deals in a year.  For most, that’s probably $125 – 150k per year in new commission revenues for someone just getting started in the business.  Not bad.

So why doesn’t every sales producer do this?

Because many times there are no communicated benchmarks and/or metrics to measure activity against. There is no real accountability.  The Sales Manager must own this process…and then enforce it. Make everyone accountable including themselves.  This is Extreme Ownership.

If benchmarks and metrics are not measured and communicated to the sales team on a regular basis and enforced, they do not exist.

So who determines the activity benchmarks?

Every sales leader should be determining their own metrics and benchmarks on a consistent basis.  The data is already present.  Just observe and track your existing successful producers.

Once this is done and effectively communicated to the producers AND measured each week or month in a group setting, your sales producers will either perform or realize they need help.

Post it in the conference room or in your company online team room so everyone can see how their activity fared against their peers. Believe me, nobody wants to be last.

For new hires, within 90 days you will know the posers from the producers. Keeping unproductive producers around too long is one of the costliest mistakes a sales organization can make.

It’s amazing how similar our sales models really are because I sit down with my recruiters every January and remind them of how much activity they will have to generate with prospective candidates to make $xxxx for the year.

After 20 years of doing this myself, I know the numbers. And at the end of the year, we tally up the activity from our CRM/pipeline reporting system and, sure enough, the sales commissions they generate from activity is within a margin of error of +/- 5%.

Amazing. As such, they look forward to their prospecting activities every day! Because they know the metrics.

Simple.

Action:  Do you know your activity metrics?  If not, meet with your successful producers and ask them.  Or just call me and I will share what I have with you as a starting point. If you are a producer without a sales leader, just pull the data off your CRM/EPIC system. It’s all there.

Ability to Connect: Throughout the years, my best entry level placements have been young teachers and journalists/reporters. Why is this so? Because they are willing and able to CONNECT with people. They not only have a wide range of experiences, but they have advanced active listening skills.

There are several attributes that are direct and accurate indicators of one’s ability to connect and communicate effectively.  These can be identified and measured on most assessment profile testing systems. 

The ability to actively listen, empathize, and seek clarification are three that sales attributes that immediately come to mind.

Not long ago, I had a national insurance brokerage client that invited me down to their headquarters office for some consultations on compensation structure.

At the conclusion, I was invited to a company function where their top insurance producers were present. I was challenged to mingle with them and determine who their #1 nationwide producer was.

The last person I talked with was a non-descript individual sitting off in the corner of the crowded bar area reading the WSJ.

I introduced myself and we ended up having a 30-minute conversation about a wide range of topics from family to sports to art to music to travel. This slightly pudgy and horn-rimmed individual could really establish common ground and connect.

I noticed that he was intently listening to me and taking it all in – processing and asking clarifying questions.  He was essentially mapping the conversation…sizing me up…gathering useful information. By the time I left the table, I really felt like I had made a new friend. He could really CONNECT.

Funny thing was that I asked him about his activity metrics and he knew his closing ratio to the decimal point.

It turned out that he was the #1 producer.

Action:  Use behavioral-based assessment profiling tests and behavioral-based interviewing techniques when interviewing prospective sales candidates.  Can they articulate their thoughts?  Can they tell a story?  Are they an active listener?  Can they establish common ground with you? Do they ask clarifying questions?  Did they ask for the job?

If you can attract, develop, and retain a team of sales producers who can naturally connect with prospective clients and track their activity against benchmarks on a consistent basis, you will be far ahead of your competition.

Your thoughts and feedback are important to us and greatly appreciated.