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Agent to Agent: "Shark Tank" Lessons

Nancy Doucette photo Aug2010Cropped171x200.jpgBy Nancy Doucette

Chances are, you’ve seen the Friday evening reality show “Shark Tank” where viewers watch would-be entrepreneurs seek funding for their projects from a panel of hugely successful entrepreneurs/investors that includes media and sports mogul Mark Cuban, technology company magnate Robert Herjavec, and Barbara Corcoran, who made her mark in real estate. Panel members have also contributed to the recently released book Shark Tank: Jump Start Your Business.

Successful agency owners consistently look for ways to jump-start their businesses. Rough Notes magazine cover agents Stu Durland, AAI, AINS, vice president of Seely & Durland Insurance in Warwick, New York, and Jeff Kweder, president of Shepherd Insurance & Financial Services, Carmel, Indiana, are two such agency principals.

Durland implemented an incentive-based compensation plan in his 10-person Best Practices agency about six years ago. It’s proven to be a wise decision and he says the plan continues to evolve.

Kweder has seen the Shepherd agency grow from two people in 1984 to nearly 150 today. In the past four years, the agency has hired some 60 new employees. For the past 10 years, he says Shepherd has enjoyed double-digit organic growth.

Let’s learn more about how these two leaders continuously jump-start their organizations.

Home-grown Sales Talent

“Our primary sales force is our client relations professionals,” says Durland. He recalls that in 2008, the agency was on the leading edge of believing in and implementing Real Time capabilities using Applied’s agency management software. “The CSRs had more time thanks to the efficiencies Real Time processes deliver,” he says. The additional time could be used to develop more of a sales culture in the agency, where the mix of business is roughly 55% commercial and 45% personal lines. The first step would be to demonstrate to the CSRs that they had been selling all along.

“In individual conversations with each CSR we provided a three-year picture of the new business they’d handled in each of the previous three years,” he explains. Then came the scary part of the conversation. “We averaged out the new business commissions each CSR brought in and reduced their salary by that amount, with the guarantee that if they fell short on the commission side the first year, we would make them whole. I didn’t want them to worry that they would be making less money.”

Seely & Durland revamped the CSR job description and pay structure, resulting in the new, incentive-based client relations professional (CRP) position. Since then, each CRP has made more money and no one left the agency as a result of the new approach.

The Shark Tank lesson? Believe in what you’re selling. In this case, Durland was selling the idea that the agency’s service people were in fact sales people.

He points out that incentive-based compensation isn’t for every agency and for those that do implement it, there are various approaches. “Every agency has to handle the transition the way that best suits their operation,” he notes. “Some may see fit to keep paying CSRs the same amount and add commission on top of it, or some type of bonus. There is no one ‘best way’ of doing this.”

Seely & Durland pays a bonus when a CRP brings in two accounts up front and a bit more of a bonus for three accounts. “So if you write a package, you get a bonus on top of the normal commission. There’s incentive to do the right thing,” Durland says.

He says there are now posters of a tennis player executing a serve and the motto: “Serve + 1” displayed around the office. “The idea is: complete the service element of the call — the change of car or the billing question — and then do one more thing … look to see if there’s a policy we’re not currently writing, or a coverage endorsement the client doesn’t have. Take this opportunity to open a dialogue with the client. If nothing else, make sure we have the client’s email address and cell phone number. Just fill in any gaps,” Durland offers.

With the benefit of perspective, Durland says: “To do this right, you really need to help CSRs learn how to sell — teach them some sales techniques. Early on we just relied on their existing capabilities.”

So in the summer of 2013, based on a recommendation from an industry friend, Durland invested in a year-long program offered by Sales Consultant Sheldon Snodgrass of The Steady Sales Group (www.steadysales.com). “You can’t just send someone to a class and expect them to be sales oriented at that point,” Durland comments. Snodgrass visited the agency to set the groundwork. Every month after that, the staff gathers for a teleconference to review sales techniques learned last month and go over some new ones.

“One simple thing we’ve learned is how to ask a question differently,” Durland says. “Suppose we write the homeowners but not the auto. Rather than say: ‘I see we don’t write your auto insurance. May I give you a quote?’ Instead say: ‘I see we don’t write your auto insurance. May I ask why?’

“More times than not, the customer will tell you why. Maybe it’s because they have a relative who is also an agent or maybe they just never thought about it. In any event, you have the information; you can document your system and set up an activity if there’s an opportunity.

“We are big proponents of incentive-based compensation,” Durland concludes. “It’s a great way to grow your business. Train the people you already have to improve their sales capabilities. But if you don’t have the Real Time workflows and technology in place to free up the CSRs’ time, they probably won’t have as much time to sell.”

Gung-ho on Growth

“We’ve been focused on growth since the day I started here, 30 years ago,” declares Jeff Kweder. During that time the agency has grown from a two-person, exclusively personal lines agency located in a garage to six locations around Indiana with 25% of the business in personal lines, 40% in commercial, 30% in benefits, and 5% in financial services. “We’ll end 2014 with between $19 million and $20 million in revenue,” he reports.

“For the last six or seven years, we’ve focused on a dual strategy of organic growth — including investing in new producers — along with strategic acquisitions,” he adds.

Ten years ago, Kweder was sales manager for the agency. At that point he says there were 8 or 10 producers. Today there are 45 and 10 of them are new to the agency — and the insurance business — within the last 18 months.

Kweder says the agency doesn’t have a secret recipe for finding sales talent but they do have a method. “The management team is always networking — looking for people with Type A personalities, driven, family oriented. They want to build a house, have kids, they’re not afraid of taking on debt, they’re calculated risk takers. We hire former athletes — the over-achieving athletes who had to work really hard to be good. They have the work ethic, the competitive drive, a passion for success.”

The Shark Tank lesson? Know what motivates people. In this case, Shepherd finds people with specific material or monetary goals who have the drive to achieve them.

“We’ve hired golf pros, people from rental car agencies, IT and banking professionals. Our director of sales was a national sales manager for an IT company. Between 85% and 90% of our producers come from outside the insurance business. We use personality profiles — Omnia is one of them — and we abide by the test results. If the tests say the person isn’t a good fit, we don’t hire that individual,” he says.

Kweder adds proudly, “Our wash-out ratio with producers is very low — 80% are making it after three years.”

The agency also brings in interns from nearby universities with insurance and risk management programs. “We have hired the majority of them,” Kweder says. One of those interns rose quickly through the ranks and in just three years became Shepherd’s middle market sales director.

Recalling his days as sales manager, Kweder says the agency didn’t have a formal sales training program. In 2005, he sought to remedy that by partnering with Blueprint Consulting Group (www.blueprintselling.com). Brothers Jeff, Chad and Brian Jenkins each bring a different skill set and experience to the quarterly sales training sessions, he says. “We would focus on differentiation — needs-based selling, red flag selling — not price selling. We would concentrate on stewardship, risk management and carrier strength — the value-addeds — getting away from products being commoditized.”

Kweder says Shepherd now has Blueprint Consulting Group on retainer so one or more of the Jenkins brothers now visit the agency every six to eight weeks. Additionally, they’re on call. “We can pick up the phone or send an email to discuss a specific situation.” They also help mentor the new producers, but the seasoned producers have access to Blueprint as well.

Kweder notes that by following Blueprint’s advice, the agency’s hit ratio has improved. “We don’t waste time on ‘opportunities’ that really aren’t opportunities,” he says.

He continues: “One of our mantras is: ‘Win all ties.’ So if we’re up against an incumbent and we can come close or match their price, we expect to be able to win the account based on our value-added services, product knowledge, and our ability to manage their losses.”

Kweder describes the agency’s producer compensation model as “contrarian.” He explains: “We look at any new account in a two-year cycle. Our commission structure rewards the second year (the first renewal). In other words, the second year’s commission is more than the first.

“Over time the producer will have a significant engagement with the client because they have the financial incentive,” he says.

“At times our shareholders shake their heads over why we keep investing in new producers, new technology, and acquisitions,” Kweder concludes. “Our philosophy is: grow or the business is at risk.”

Nancy Doucette is managing editor for Rough Notes magazine.