Effort versus Success

I wrote two columns in the summer of 2012 that elicited more online comments and emails than any article, out of the hundreds, that I’ve written.

One column’s subject was that producers are paid to produce. If they do not produce, they are not producers, regardless of the title. In other words, the title does not make the man. Results make the man.

Many of the negative responses to this article were clearly scribed by people who cannot sell. They want the title “producer” to be the seal of success, regardless of their results. Their protests were clearly motivated by the fear they would be discovered for what they really are, people responsible for sales but cannot sell.

Others, without intending to do so, wrote that they were owed sales. These writers feel the agency or the companies owe them sales. They think the agency should generate walk-in and call-in business so all they have to do is take orders. They envision a stereotypical retail business where marketing generates the leads and someone on the phone or behind the counter then makes the sale. Some direct writers work this way and if this is appealing, then those folks should probably go work for a part of the insurance industry that actively uses that sales model.

Others are just simply confused. They are confused about effort and success. In other words, they wrote that since sales is hard – really, really, really hard in the words of one protester – they should not be knocked for not making sales. They are trying their hardest and effort should suffice.

Sales is indeed very hard work. I’ve been selling for 25 years. However, how much effort sales requires is a moot point. As Winston Churchill wrote, “It’s not enough that we do our best; sometimes we have to do what’s required.”

Sales Plateau

When an industry has an average 90 percent retention rate (which means if your retention rate is 90 percent, you only earn a “C” for retention), it is easy to get comfortable with average results. And anyone comfortable with average results is a sitting duck. These agencies and producers get comfortable and begin taking clients for granted. Once a book is built, retention is high enough to even cease thinking about new sales.

This is the sales plateau agency owners dread their producers reaching. Because sales is tough work, once a person makes enough money the tendency is to migrate to what is easy. This is especially true if a producer is given accounts from an owner, other producers, walk-ins, call-ins, email-ins, programs, or even if they buy a book because these producers never made the initial sale.

A huge difference exists between producers who find and sell new clients and people who take orders and people who service accounts, regardless of how effectively they take orders or service accounts. Taking orders effectively in the appropriate business model and servicing accounts are important. But they do not make a person a producer.

I have interviewed dozens and dozens of these “producers.” Deep down most know they cannot sell and they’re scared of anything that might expose them. The same reaction can happen with insurance companies that have nothing special to sell.

Many of these producers wonder why they cannot close sales of more sophisticated accounts since they are bringing a good price to the table. Others wonder why they are losing large, sophisticated accounts since they are still friends, they are local, they have a good price and they’ve had the account forever.

These producers are taken aback when their friendly, life-long account quotes them. And to lose the account, especially after being asked to complete an RFP, is a low blow. These people take the loss of larger, sophisticated accounts personally. They never really had to prove anything to get the account, and then they lost the account because they did not or could not prove their worth.

Coverage Checklists

My second column that raised so much ire was a tongue-in-cheek article about how not using coverage checklists is good for an agency just like another drink is good for someone with cirrhosis. Based on the comments and phone calls I received, many readers took this seriously.

It was sad, too, that many readers got the satire but disagreed with the appropriateness of using coverage checklists.

One reader wrote: “One other reason to use checklists is it creates larger E&O claims. Every checklist I have seen misses likely items a [sic] insured is going to encounter. I struggled to find a comprehensive checklist and there is none. They are OK on BOP accounts, but beyond that, marginal value. [sic] best checklist, talk to client and their staff as well as search Internet to see what they are doing.”

Given that between 100 and 1,000 checklists exist including ones that are four to six pages of small print, I doubt this person searched that hard for comprehensive checklists. More important, it is impossible for a coverage checklist to create an errors and omissions (E&O) exposure.

To prove this point, take this person’s perspective about needing a thorough checklist.

Let’s assume a detailed one has 300 coverages listed and misses one. It then misses 0.3 percent or .003 coverages for each one it gets correct.

What will be the missed percentage of a typical producer working off the top of his or her head in a fast, organized, professional manner in front of a client?

After doing E&O audits for almost 20 years, with 100 percent certainty I can warrant that 98 percent of all producers will miss far more than 0.3 percent of the coverages.

Now let’s say that a producer misses 100 coverages, including ones the client needed, instead of .003. What are the odds then for being sued?

Some producers seem to think that omissions do not count as errors. Which is better: to omit an offer of coverage for one out of 300 coverages or 20, 40, 100 or 200 out of 300 coverages?

A consultant who works with large, sophisticated accounts wrote me, too. This person stated: “I see evidence from many contractors and consultants hoping to secure vendor contracts. It is apparent from gaping holes in coverage that their agents and brokers have not used checklists. Guess which contractors and consultants get my recommendation? The ones whose agents and brokers use coverage checklists.”

People with their head in the sand tend to keep their head in the sand for as long as possible. This article is not for them. It is for all the truly proactive producers willing to put forth the effort a checklist requires.

The way to stand out is to acquire technical expertise and combine it with a message of quality built by using a coverage checklist. This provides the credibility to overcome age discrimination and build a book far more quickly.

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