Agencies that establish an effective centralized marketing department as part of an overall strategic plan will experience a significant competitive edge over their competitors who do not have such a department. This is because a centralized marketing department streamlines operations, allowing an agency to strengthen sales through a focused marketing and selling effort.
A marketing department is not the answer for everyone. Agencies that probably would not benefit from one include smaller agencies-those with fewer than 10 employees and three producers-as well as agencies that sell mostly personal lines, BOPs or small commercial lines accounts.
Even large agencies that sell mainly large commercial lines accounts may not have the right culture for a marketing department to flourish. For example, producers or CSRs may feel that they are the only ones who can properly market their large accounts. This attitude, if not changed, will doom any centralized marketing plan to failure.
A centralized marketing department will work only in agencies that are interested in growth and whose primary goal is new sales. The owners must be proactive and willing to spend money in order to make money. Producers must be able to expand their current book of business and should not be “maxed-out.” Continual coordination with the sales manager/department is key to its success.
The primary goal of a centralized marketing department is to free up the producers to sell and let the CSRs service the existing accounts. It is a way of establishing a refinement of the responsibilities for the tasks required when selling new business and maintaining existing clients.
Typically, this department will handle all the marketing of new business for medium to large accounts and only the renewal of the large accounts. Sometimes on renewal, the marketer will only need to provide advice to the CSR and producer since they know the account so well. It is important to avoid duplication of efforts.
How it works best
The process starts when a producer generates a new prospect and creates an application to be marketed. The application is then forwarded to the marketing department where it’s reviewed for accuracy. The prospect also needs to fit into the agency’s predetermined guidelines for business that they will accept. Performing a screening process will limit the number of quotes and prospects the agency handles; however, it will improve the hit ratio and overall productivity.
It is important for the producer and the marketing person to sit down and discuss the risk so all the issues are understood. For very large accounts the marketing person should even visit the risk with the producer. The goal is to transfer the marketing responsibility from the producer to the marketing department. This allows the producer to focus on new sales rather than handle the details of marketing a piece of business, especially the administrative responsibilities of obtaining the quote.
Centralization should streamline the marketing process for an agency. Since the contact with the underwriters will be limited to just a few people, a good rapport can be developed. Consistency with the applications and better hit ratios will also win respect from insurers, which favor the use of centralized marketing.
Very often, producers who do their own marketing will block as many markets as possible and request quotes from companies that are not interested or not competitive in that class of business. This action creates unnecessary paperwork for both the agency and carriers and diminishes productivity for all involved.
A centralized marketing department operating properly will limit the blocking of markets and unnecessary quoting by accepting only risks that the agency has a chance of writing. The goal is to sell insurance-not to practice quoting. Improving the firm’s hit ratio can greatly improve profitability.
The marketing department is the ambassador from the agency to the insurance companies. Each agency will have its own limit on what the marketing department can or cannot do. Basic authority should include daily contact with underwriters and company marketing representatives. Also, the marketer needs to control what business the agency will or will not accept and which markets it will use.
The marketing department should also collect, evaluate and disseminate the latest product information. The marketers should become experts who train the sales staff about the strengths and weakness of the products they are selling, new coverages that are available and which markets are competitive with certain types of risks.
The marketing department should be responsible for seeing that company volume goals help direct the placement of business to maximize profitability and, in some cases, even negotiate contracts with the carriers.
Each agency needs to evaluate its culture so it can establish what authority and responsibility the marketing department should have. Extensive authority will create a backlash if the owners and producers do not like to delegate. Minimal authority will limit the usefulness of the department.
Profile of a “marketeer”
Who should an agency look for to staff its marketing department? It is imperative the person already possesses many basic skills so they can hit the ground running. An agency cannot afford the time and money to allow a person to grow into the position through on-the-job training.
A good marketing person will be highly technical. They must understand the underwriting issues affecting numerous types of risks. The person must be able to quickly determine the information needed to properly underwrite the risk and know how to obtain that information.
Equally important is the ability to say “no.” A marketing person needs to be strong enough that they can tell producers and agency owners that a particular risk does not meet agency guidelines or should be marketed only to certain companies. Saying “no” will allow an agency to follow its own rules and creates discipline and consistency within the ranks.
Sales and negotiating skills are also required. The marketing person must be able to work with all parties (clients, producers, CSRs and underwriters) to ensure a win-win for everyone. The marketer needs to develop a good relationship with the CSRs to make sure that CSRs don’t feel threatened or demoted if their marketing responsibilities are taken away.
Monitoring and tracking skills will be put to the test. This position calls for a very versatile and talented person who is detailed-oriented and well organized.
Where to look
So, who is this person who can act as a traffic cop to maintain internal controls, diplomatically negotiate with underwriters to get the best quote and possess the wisdom and knowledge of a well-seasoned expert? The best place to look first is within your own staff.
In many agencies, there is at least one long-term, loyal and knowledgeable CSR who can fill the role. The only rub is that this person tends to be the right arm of an agency owner or key producer. Owners need to have a strong vision of the future and appreciate the long-term benefits of promoting a great CSR rather than react to any short-term discomfort they may personally experience.
There are also some excellent outside sources managers can tap. Company people such as underwriters may qualify for the role. Hiring an experienced person from another agency or national broker will certainly meet an agency’s needs.
Whoever fills the marketing person role should be compensated properly according to the responsibility that they have and the gains the agency receives because of their efforts. A good compensation plan would include both a flat salary and a performance bonus.
The bonus program should be based on new business production, account retention, improved hit ratio and possibly contingent commissions earned by the agency. A compensation structure set up in this manner will provide financial security as well as incentives for high performance.
For example, an agency prior to using a marketer may have generated an average of $50,000 in new commissions annually. Due to the marketer’s efforts, new sales jumped to $150,000. A sample bonus program could pay the marketer 1 percent to 5 percent for all new business over the original $50,000 threshold. A multiplying factor on that earned bonus could be used when targeted hit ratios and account retention is reached.
The agency may choose to pay 3 percent on the $100,000 increase in new sales, or $3,000. If the targeted hit ratio is reached the bonus could double, and if the targeted account retention level is reached the bonus could double again. This bonus would be in addition to a reasonable flat salary.
Review the cost of compensation for the marketer in conjunction with adjusting producer compensation, since the producers are the beneficiaries of the marketer’s efforts.
One should not attempt to venture down the marketing department path in a half-hearted attempt to increase sales. The process, staffing and structure need to be well thought out and it must be accepted by everyone, otherwise it will not work.
A centralized marketing department is not for everyone, but those who effectively implement it will experience an increase in new sales and efficiency. Once incorporated, company relationships, client retention and hit ratios should all improve.
financial and management consulting for inde-
pendent insurance agents and brokers. They can
be reached at (707) 935-6565, by e-mail at
firstname.lastname@example.org, or visit
Was this article valuable?
Here are more articles you may enjoy.