Compensation Ideas: Unique Situation; Inside Producer, Supplied Leads w/Benefits

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AustinAgent
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Compensation Ideas: Unique Situation; Inside Producer, Supplied Leads w/Benefits

Post by AustinAgent » Thu May 09, 2019 8:34 am

All,

I'm hoping to get some 3rd party input on a topic that has been beaten to death a thousand times in different ways, but I'm needing to get a 'feel' for a reasonable comp plan for a new hire. I am in the Austin, Texas area and starting a new niche P&C agency (primarily commercial) that is well-funded from a parent company in a complimentary vertical. This position is an inside sales agent whose primary responsibility is going to be to dial the phone and solicit new business on accounts and leads that we (the agency/company) provide. There is no travel and no outside sales expenses like mileage, entertainment etc. I plan on building out a large team in the coming 6 months, but this is my first hire for this agency. I had producers in my own agency, but that was a few years ago and under difference circumstances. Here are the details.

- 99% of leads are provided to the agent. These are either existing clients of the parent company or active prospects of the parent company. All the agent has to do is contact them and try and solicit business
- The agent will also have a full suite of employee benefits, many of which are paid or contributed to from the company (health, FSA, 401K, unlimited PTO (within reason), dental, vision)
- The agent is not responsible for creating quotes or servicing the accounts, myself or a CSR will do all of that as the team grows. The agent's job is to dial the phone, develop opportunities and then sell the quotes we provide without all of the servicing distractions.
- Ideally this agent should also be fluent in Spanish
- In reality, I'm probably expecting to end up hiring someone in his or her early to late 20's with 2-4 years experience (with commercial knowledge) with no professional designation that isn't an experienced outside producer with a book of business and that's trainable. I expect to spend time developing product knowledge, working on sales skills, etc. This will be an inside sales producer working in the niche construction/contractor industry.

COMPENSATION:

I'm thinking about a $35-$40K salary (plus benefits and all of the above) but I'm stuck on the commission breakdown. I want to provide financial motivation for selling and retaining business, but I'm also providing the leads, the service work, and benefits. What do you guys think (in reality)?

- 35% new business and 15-25% renewal
- 35% new business and no renewal
- 30% new business and 15% renewal
- Something altogether different?

I want to be able to retain and grow these agents (professionally and financially) as the company grows and give them incentive to stay (not a lot of younger people coming into the insurance industry) and it's going to be a demanding sales quota, but I don;t want to give away the farm for someone with little experience and no book of business who isn't servicing the accounts or generating his/her own leads either.

Thoughts???

FurriePrincess
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Re: Compensation Ideas: Unique Situation; Inside Producer, Supplied Leads w/Benefits

Post by FurriePrincess » Fri May 10, 2019 3:28 pm

I worked for an agency of similar make up for 25 years. Our producers did not own the business they wrote, it belonged to the agency. On occasion they were permitted to bring in business that they did own that was not a part of the agency program. They did travel and have expense reimbursements. I cannot easily compare your salary as my exposure was too many years ago. However, they did receive 35 to 50% first year commission (subject to adjustment for cancellations/audits, etc.) and 15-25% on renewals. They were responsible for obtaining renewal data such as payrolls/gross sales, etc. Benefits were included, and toward the end of the agency's existence, company cars were provided.

If you are providing all the back office quoting, billing, servicing, the lower percentages might be appropriate with a bonus if target production levels are reached and persistency maintained.

Be very sure of the ownership of the clients and policies in a legally binding contract.

gforaker
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Re: Compensation Ideas: Unique Situation; Inside Producer, Supplied Leads w/Benefits

Post by gforaker » Mon May 20, 2019 11:24 am

If you are serious about no ownership and no contact or duties after sale, then why would you consider any kind of renewal commission? Pay them well for what they do, but don't pay them for what they don't do. I can see a small bonus for retention of renewing the first year or maybe just a slight holdback of first year commissions to make sure they selected and sold the right customer.

AustinAgent
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Re: Compensation Ideas: Unique Situation; Inside Producer, Supplied Leads w/Benefits

Post by AustinAgent » Wed May 22, 2019 10:42 am

Thank you both for the reply, you made some good points. I have removed the renewal commission/bonus because as gforaker stated, the agents aren't really doing anything with the account post-binding, so it doesn't make sense to pay for tasks and efforts not being performed. Thank you as well FurriePrincess, that was helpful. I've decided to pay a first-year 35% commission as a financial motivator to sell business (some of our accounts are in the $10K - $100K range), so for a new 20-30 year old agent earning a stable salary with benefits and working inside with no travel and most leads provided and not doing any quoting, I feel it's a pretty good deal and he/she can add several thousand dollars more each month to his/her salary and both parties benefit. I don't want to overpay, but I also want to have enough salary and commission incentive in this situation to be able to get good candidates and expect good sales performance and to maintain a long-term (relatively-speaking) employee to reduce business interruption and attrition costs. Thank you both for your input.

fmi
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Re: Compensation Ideas: Unique Situation; Inside Producer, Supplied Leads w/Benefits

Post by fmi » Sun May 26, 2019 5:55 pm

As agency owners we need to start paying our producers differently. The traditional way has been to either pay one hundred percent commission or pay a salary plus commission. What about offering producers a set salary for example $60,000 a year with a production requirement tied in. If the producers don't meet there goals they get a pay reduction each time. People are more afraid of losing their salary then they would be of having a salary plus commission. Once people get used to making a certain amount they will work harder to keep it versus making more money on a potential commission opportunity. It's great that you are providing leads to your producers that way they can spend more time selling then hunting.
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MBRCatz
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Re: Compensation Ideas: Unique Situation; Inside Producer, Supplied Leads w/Benefits

Post by MBRCatz » Tue May 28, 2019 10:30 am

@FMI - that sounds like salary plus commission, adjustable downwards only. Where's the incentive to exceed the production requirements?? I don't see a high performer or experienced producer going for that deal. I see a low performer jumping on for six months or so.

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