Many agencies are at a complete loss as to why they aren’t getting the results they need. The frustration builds when they can’t get their team to change behaviors necessary to produce those results. Figuring out why they don’t change isn’t rocket science, my friends.
Like I always say, "Any organization that rewards its high performers the same way it rewards average performers will, very soon, find itself with a whole bunch of average."
So look no further than your compensation model(s). You must reward (financially) the behaviors that drive the results you need.
Align results and rewards
It is a misaligned reward system that causes most agencies to struggle with growth. You must reward the right behaviors at the right time in the right way to ensure you achieve your desired outcomes.
I appreciated a story I came across that illustrates this idea in practice. The story took place at a campground.
There was an older couple already set up at camp. As they were sitting around the campfire enjoying themselves, a young family rolled in in an SUV.
The father had barely stopped the car when three young children jumped out with an incredible sense of urgency. One child hurriedly unloaded coolers, backpacks and other camping equipment. With equally impressive speed, the other two children set up the tents.
Beyond impressed, the older couple later commented to the young parents, “Wow, you all sure well work well as a team!”
To which the mother responded, “Thanks! We learned a long time ago how important it is to have the right reward system in place. And, in our family, nobody gets to go to the bathroom until camp has been set up.” 😂
Talk about rewarding the right behaviors at the right time in the right way! Insurance agencies would find a more predictable path to growth if they followed this example.
See also: How Social Selling Can Boost Results
The job salespeople do is difficult. This is one of the reasons salespeople are paid so well.
There aren’t many who are bold enough to face so much rejection daily. Picking up the phone and calling a stranger is intimidating for most. Being skilled enough to show buyers a path to better results takes practice, knowledge and excellent communication skills.
It is a rare gift that salespeople possess.
Too often, salespeople leverage this ability until something "unfortunate" happens; they are successful and become comfortable and complacent. At this point, too many move into maintenance mode, making just enough new sales to maintain the size of their book of business and their income level.
Don't get comfortable
Many of you won't agree with me on my next point. This is inexcusable. In my opinion, salespeople should not be allowed to stop producing once they become comfortable. Salespeople are hired to sell, and they should be expected to always sell.
I feel so strongly about this because the issue isn’t only about them and their income. The entire organization depends on them doing their job. The owners and leaders of the agency can’t be confident in making new investments or hiring additional staff if there isn’t predictable growth.
Maybe worst of all, the rest of the non-production team members' opportunity to get raises and bonuses and have an evolving professional career depends on the salespeople doing their job of selling.
It’s the compensation formula, stupid
Again, it isn’t hard to figure out why this happens.
Agencies tend to pay producers the same commission percentage on accounts they don't lose (renewals) as they do for going out and adding a brand-new client. This is even though there is a whole support team in place to service that existing account.
How do you think the producer's behaviors would change if they were paid significantly more for a new account than for a retained account? They would be more focused on writing new business.
Those same agencies will pay the exact commission percentages to a producer who only stumbles on to one or two micro accounts a year as they do to a producer who consistently rings the bell with accounts that fit the agency's target profile.
How do you feel the producer’s behavior would change if they had a graduated commission schedule that increased with the size and frequency of new accounts added? The producer would be more consistent in writing new business and looking for larger opportunities.
And another thing
Speaking of servicing existing accounts...service team members are usually paid a flat salary regardless of the size of the books they service or the rate at which they retain the clients in that book.
Do you think you would have a more motivated service team if their compensation grew (at least partially) along with the book of business they service? I suspect you would.
I know many of you won’t agree with me, but I believe most agencies should:
- Pay higher producer commission for new business than they do currently
- Also, pay lower commission on renewals than they are now
- Provide significant, over-the-top, bonus opportunities when a producer has over-the-top new business production
- Tie a small percentage of the service team's compensation to the size of the book they handle
The behaviors you tolerate become the behaviors you promote, and the behaviors you reward become the habits of your team.
See also: Managing Your Personal Brand
No one compensation model is perfect for everyone. But you must build the compensation model that is right for you.
Don't make doing so more complicated than it needs to be:
- Determine the results you need from each position.
- Identify the behaviors that drive those results.
- Build a compensation plan that rewards those behaviors.
I understand that changing existing compensation models isn't easy; I've done it before myself. However, what is even more difficult is allowing your current model to hold everyone back.
When you hire the right people for the right job and reward them in the right way – it’s magic for everyone.
You can find the article originally published here.