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Key for Hiring Successful Producers

Here’s a chilling stat: For every two producers you hire, only one will pan out.

According to a well-referenced study by Reagan Consulting, just over half of new agents and brokers are successful. The other 44% wash out before they can be of value to the organization. The picture gets even more ominous when you consider that as many as 60% of firms aren’t hiring enough producers to meet their growth goals. That makes retaining producers and validating them quickly particularly important.

Plenty of organizations have robust hiring departments and devote a lot of resources to attracting and landing top candidates. But far too many firms squander this top talent once a new employee is through the front door, and good producers end up leaving the organization.

This isn’t only a drain on resources; with the average cost to replace an employee amounting to as much as two times his or her annual salary, it hurts your bottom line, too.

While poor hires likely lead to some of the turnover, the more common cause is subpar onboarding and early employee training programs.

See also: Why You Need Happy Producers (Part 2)  

The benefits of a formal onboarding program

Every organization has an onboarding program, whether they realize it or not. Keep a new hire waiting in the lobby until his direct supervisor shows up a half-hour later? Shuffling the new hire from introduction to introduction and forgetting to tell him where the bathroom is? That’s your onboarding program. Undoing those early negative impressions is a real uphill battle.

Study after study has shown that formalizing your onboarding program is key to maximizing its success. Employees are 69% more likely to stay with an organization for up to three years if it has a formalized onboarding process, according to the Society for Human Resource Management (SHRM).

Considering Reagan Consulting’s finding that it takes an average of 32 months to validate successful producers, keeping agents and brokers around beyond the three-year mark can have a huge impact on an agency’s bottom line.

An effective, formal onboarding process doesn’t just keep employees around longer, it can also significantly expedite the time to validate and improve employee engagement. SHRM researchers identified additional advantages that ultimately benefit both employees and employers:

  • Higher job satisfaction
  • Organizational commitment
  • Higher performance levels
  • Career effectiveness
  • Lowered stress

What’s more, a formal onboarding process can help managers more quickly identify producers who aren’t a good fit for the organization. Spotting red flags during the onboarding process can help you make adjustments (up to and including termination) before you’ve spent too much time and resources on the employee. This enables organizations to identify the financial impact—positive or negative—earlier in the validation process and adjust accordingly.

Effectively onboarding all new producers

Your formalized producer-onboarding process needs to be consistent across all new producer hires to ensure more useful benchmarks and metrics. But developing a program that works for the many different kinds of producers is challenging. Each hire brings his or her own set of experiences and gaps in skills. Broadly, new producers typically fall into one of four categories based on their experience with sales and the insurance industry:

  • No experience — little to no familiarity with sales or the insurance industry
  • Sales experience — familiarity with the sales process but little to no exposure to the insurance industry and agent/broker processes
  • Insurance experience — knowledge of the industry but little to no sales experience
  • Established producer — proven agent or broker who may have worked for a competitor

Onboarding processes need to add value for all of these groups. A robust, fully formed onboarding program should begin well before an employee’s first day and extend well past the six-month mark. But the entire program doesn’t have to be built at once. Start with something as simple as sending an email. When Google reminded hiring managers to plan an employee’s first day, the new hire got up to speed 25% faster and reached peak productivity a full month earlier, all thanks to that leg up on day one.

See also: Happy Producers, Happy Customers  

Focus on onboarding efforts that give producers a better idea of what your company’s all about, beginning with company culture and specific company processes and procedures. When done right, explaining HR policies and company handbook rules can reveal a lot about your organizational culture.

As you work to formalize your onboarding process, make sure to regularly check in with managers and new hires to verify the effectiveness of your efforts and find areas for improvement.

4 Key Elements for Onboarding Producers

The benefits of a formalized onboarding program are well-established. Across all industries, companies use onboarding to achieve three primary goals, according to research from Aberdeen:

  • Engage new hires in company culture
  • Improve new-hire productivity
  • Reduce first-year turnover

In the insurance industry, where just shy of 50% of new-producer hires reach validation, these three onboarding objectives are closely related and even more crucial to the success of agencies and brokerages.

Yet, only 32% of companies currently have a formalized onboarding program, Aberdeen reports. As we’ve mentioned previously, onboarding programs must be formalized to create any lasting, demonstrable effect. New producer hires must have a similar experience throughout their first several months on the job to determine which actions further the goals.

The proven approach is to establish a framework for the onboarding process that is required of all producers, complete with a set schedule, key milestones and benchmarks. With that focus on structure and schedule in mind, here’s an overview of The Institutes Producer Accelerator, featuring Polestar, a successful four-part producer onboarding program

1. Getting started — the first month

The first four weeks of any new job are a whirlwind. Producers are tasked with shoring up their sales expertise and insurance industry specifics while also ingraining themselves in their new company’s culture. Finding the right balance of these elements will depend heavily on the producer and his or her job history. A sales pro with little hands-on experience in the insurance business will have very different needs from a recent risk management and insurance graduate who’s never made a sales call. Similarly, a successful producer from a competitor may have all the knowledge and experience needed to succeed but may need to learn new basic processes to fit with your organization’s culture.

The best approach for most producers is to create a blend of training and refresher content on sales and insurance basics with a heavy dose of your company culture. Make sure that your program covers insurance topics, like client loss exposures and commercial liability, as well as sales and time management principles, like understanding the sales cycle and best practices for delegation.

See also: How New Producers Can Get Fast Start  

Producers should also be introduced to senior managers who can detail the company’s culture in the context of its business strategy, competitors and industry landscape. Most importantly, during the first month of a new producer’s tenure, he or she should be matched with a mentor. According to research from Reagan Consulting, 55% of new producers have a mentor—most often a senior producer or sales leader. Reagan researchers concluded that mentors offer the most help to producers hired from outside the insurance industry and individuals with little sales experience.

2. Building relationships — months two and three

For new producers, their second and third months should optimize their performance in their new roles within your organization. That means continued meetings with mentors with a heavy focus on goals and objectives, along with specific challenges facing your firm. It’s also a time to continue building insurance and productivity know-how.

The second onboarding phase centers on helping the producer establish strong relationships—not only with mentors, co-workers and company leadership, but clients, as well. Weeks five through 12 should focus heavily on refining producers’ sales tactics and targeting specific trouble areas commonly facing new producers, including asking for referrals and shifting from price to value when working with prospective clients. These skills are best learned in a coaching-call environment where the producer and coach role-play specific interactions and the coach provides highly tailored feedback.

3. Expanding skills — months three and four

After a few months on the job, new producers should begin to switch from learning material to maintaining their knowledge and staying current on the insurance industry and sales best practices. New producers should identify the industry publications they’ll use to keep up with the industry. They can also take advantage of webinars and other forms of group learning, where insight from other producers is often just as valuable as the material being presented.

It’s also a time for producers to start developing specialties to set themselves apart and present unique value to the organization. Producers should work with their mentor to select a specialty industry to focus on and familiarize themselves with industry trends, like data analytics and other technological advances.

See also: 4 Good Ways to Welcome Employees  

4. Developing strategies — months five and six

As a producer enters the sixth month on the job, formalized onboarding should begin to taper off in favor of more specific career guidance through mentors or direct supervisors. At this point, producers are probably not fully verified, but their path toward greater success and productivity should be relatively clear. Part of their transition to a fully contributing team member may be to start networking at industry meetings and seminars and providing unofficial mentoring resources to more recent producer hires.

Why You Need Happy Producers (Part 2)

In our previous post, we addressed the reasons for transforming producer management and compensation processes. In this post, we will cover key considerations when planning a transformation.

The transformation process begins with defining a clear and comprehensive compensation strategy to confirm the key functions of producer lifecycle and compensation management. Licensing, reporting hierarchies, contracting, commissions plan rationalization and debt management are some of the most critical functions that require enterprise level alignment and can lead to a significant change in the producer experience. Early discovery of such complexities can help you identify areas that may require strategic enterprise alignment and business champions. It also can help you identify your organization’s top priorities and pain points.

Take the contracting process. At face value, onboarding producers to sell your products is seemingly straightforward: recruit, onboard, appoint and help sell. However, upon closer examination, many organizations find this process cumbersome for both field and back office employees because it burdens them with a highly manual, paper-based data entry workflow that is subject to human error and inefficiencies.

See also: Agents: Here’s How to Differentiate  

One of the the first touchpoints with your organization for producers is the onboarding process, which sets the tone for the field’s expectations of how easy it is to do business with you. Looking just a little beyond the producer experience, onboarding and contracting processes are anchored by licensing and appointment criteria that have immediate compliance implications. When taking into account the regulatory and state-specific rules governing insurance producer eligibility, as well as your organization’s own requirements and offerings (e.g., backdating appointments, just-in-time appointments), the contracting process typically is quite nuanced and complex. Neither a technology solution nor an operating model adjustment is a silver bullet to improve vague, inconsistent, poorly documented or non-compliant rules and processes.

The same concerns hold true for other aspects of producer lifecycle management, like reconciling producers’ debt or maintaining a producer’s reporting and compensation hierarchy. For example, when a producer is advanced for business with one line of service, do you recoup earnings from other lines of service to repay company debt? Is there a time window or debt threshold before cross-company recoupment occurs? Are there legal limitations? And, at an even more basic level, how do you want to manage debt, and is it something the field is interested in or concerned about? And, for hierarchies, do production and compensation follow the same arrangement? What exceptions do you currently allow, and what will you permit in the future? Without first answering such questions, incorporating field perspective or the organization’s long-term roadmap, you run the risk of 1) limiting the impact and quality of transformation you will ultimately undertake and 2) replicating current functionality in future-state platforms as a quick fix.

Before looking to the vendor marketplace for ideas on available products and services, take the time to fundamentally understand how your organization operates today and, perhaps more importantly, how you’d like to operate in the future. In doing so, you can first define where your organization is going and how you will differentiate yourself with producer servicing before selecting the best solution to get you there. Transformation partners can be especially helpful during this strategic phase, offering market insights that can help your organization plan for the future while promoting enterprise alignment and exceeding market parity. This type of holistic, forward-thinking, business-led exercise can prepare your organization to make the most of a transformative journey without feeling rushed into strategic decision making in the midst of implementation.

See also: The New Agent-Customer Relationship  

In summary, the entire insurance industry is undergoing disruption from changing producer demographics, decreasing agent population, tighter margins, greater pressure on expense reduction, increasing producer expectations for service resulting from digital disruption and evolving customer segments that are always on the lookout for the “cheapest and best” way to buy insurance. Accordingly, the need to differentiate yourself with producers is more crucial than ever and managing the vital producer and compensation management function is critical.

After all, doesn’t a happy producer get you a happy customer? What are the other key areas within producer management and compensation that you think will improve your producer experience?

Happy Producers, Happy Customers

Producer management and compensation is an essential downstream process and a critical component of the insurance value chain. It is in place before a policy is even sold and extends all the way into billing and claims. It occupies a unique place in insurance organizations, connecting data, processes and people in distribution, marketing, actuarial, operations, finance, servicing and even human resources. To attract and retain producers and encourage more sales, insurers must:

–Meet evolving producer expectations to increase the ease of doing business and service them in an on-demand, omni-channel manner.

–Design attractive and flexible compensation plans, administer them accurately and ensure timely payments via preferred modes.

Historically, transforming this integral function hasn’t been top of mind at insurance companies. However, producer management and compensation transformation has recently become a hot topic. In this two-part blog series, we’ll lay out the current landscape and share what we’ve seen in successful transformations.

See also: 5 Rules for Hiring Quality Producers  

First and foremost, transformation is all about what matters to you most and where you, as an insurance leader, want to create the biggest impact for the function and the producers you serve. Contrary to popular belief, not all transformations require platform replacements; in fact, many can be surgical enhancements to your current state (e.g., service-focused operating model improvements and enhancement of distribution capabilities for the field through digital portals). However, there exist key business drivers that can significantly affect your business and help anchor these efforts. These drivers, which we list below, answer the fundamental question, “Why transform?” and can help you make the case for change:

  • Service-oriented operating model, to deliver differentiated experiences and effectively manage demand via a producer-focused, service-centric operating model.
  • Producer self-service, to increase access, transparency and visibility through a service-centric platform with producer portals that enable easy viewing and generation of reports and statements.
  • Optimized operational efficiency, to create efficiencies throughout the organization and provide flexibility to administer and manage compensation.
  • Increased process automation, to provide operational efficiency and accuracy with centralized automated processing and administration.
  • Data-driven decision making, to provide insights that can generate greater productivity from producers and operational teams, as well as explore analytic endeavors like incentive analytics and penetration models.

See also: Key to Digitizing Customer Experience  

If these drivers resonate, then you know the “Why?” Your next question is likely, “How?” This is where most insurers are tempted to issue an RFP, start a vendor bake-off, mobilize teams and start implementing. However, as we address in the next post, there are key considerations before starting this journey that will help you create an overall vision, establish guiding principles and provide a framework to stay true to your business drivers and transformation goals.

Who Owns the Customer Experience?

Who owns the customer? For insurance companies that work through intermediaries, it’s a controversial question that often stirs spirited debate between carriers and producers. But there’s another question that’s even more important: Who owns the customer experience?

Regardless of who insurers think owns the customer, the reality is that key parts of the policyholder experience are shaped by external parties—the agents, brokers and financial professionals who distribute insurers’ products.

This presents a difficult challenge for insurance companies, many of whom have kicked off customer-experience improvement initiatives in recent years. After all, how do you holistically manage the customer experience when you don’t control it in its entirety?

Some carriers skirt the issue by focusing on what they do control—customer touchpoints such as billing, correspondence, 800-line interactions, etc. That’s a reasonable approach to start with, but it has its limits.

Consumers don’t always know where the lines are drawn between carrier and agent, where the handoffs occur between the two parties. Their experience, and overall brand impression, is shaped by a wide array of touchpoints spanning pre-sale to post-sale, field office to home office.

For this reason, it’s neither practical nor prudent for carriers to ignore those elements of the customer experience that are administered by their field producers.

But how can a carrier insert itself into aspects of the customer experience that are clearly overseen by the producer? How can the insurer propagate customer-experience best practices beyond the walls of its headquarters and into its field offices, where so many significant consumer interactions occur?

Whether the company works with captive agents or independent brokers, this can be a thorny issue. Many financial professionals consider themselves to be entrepreneurs, and they have strongly held opinions about how to run their businesses.

Overcoming that sentiment requires some diplomacy. If producers sense that the carrier is encroaching on their territory, dictating the “right” way to do business, then friction will ensue, and the insurer’s customer-experience improvements will be relegated to the home office—a poor outcome for carrier, distributor and their shared customers.

So, if you’re an insurer looking to engage your field force in a constructive effort to improve the customer experience, consider these five tips:

1. Acknowledge shared ownership

Disarm territorial sensitivities by readily acknowledging that you don’t own the whole customer experience. Neither the carrier nor the distributor can claim such ownership, because each plays an instrumental role in shaping policyholder impressions.

Such an admission by carrier executives sends an important signal to the field, opening the door to a more collaborative approach for shaping the customer experience, from pre-sale to post-sale.

2. Make the case for action

Demonstrate to field partners, in a vivid and compelling way, why focusing on an improved customer experience is smart business.

The field may acknowledge that happy, loyal customers are good for business —but do they truly grasp how powerfully the customer experience can influence the top and bottom lines? Particularly in the insurance industry, given the economics of up-front commissions and long product tails, small improvements in retention can have a surprisingly significant impact on profitability. Even just from a sales standpoint, an increase in qualified referrals from positive word-of-mouth can be a game changer for any insurance agent/broker.

Perhaps one of the most convincing illustrations of how a great customer experience drives business results is an analysis of stock market performance for customer-experience “leaders” and “laggards”: For the past six years, customer-experience leaders generated a total return that was three times higher on average than the S&P 500.

This is the kind of head-turning data that insurers should put in front of field producers who are skeptical about investing time, energy or money into improving the customer experience.

Whether you’re a public or a private company, the message here is clear: A great customer experience pays off, paving the way for higher revenues, lower operating expenses and better overall financial performance.

3. Educate and equip

Given their entrepreneurial disposition, most agents and brokers won’t take kindly to having the mechanics of their organization’s customer experience dictated by some far-removed insurance company.

Instead of prescribing solutions, carriers would be better served providing tools and education to their field offices. In this way, the insurer can help equip its producers with the knowledge they need to effectively diagnose, and then differentiate, their organization’s customer experience.

That’s a much better solution over the long term, as it helps the field office embed customer-experience management best practices into its operations, as opposed to just tweaking a few isolated customer touchpoints.

Note that this is about more than just traditional “customer service” training. It’s about giving the field office a strategic understanding of the operating principles that customer experience legends rely on to create raving fans.

What great companies like Amazon, Apple, Disney and Costco have in common is an ideology around the design and delivery of their customer experience (see the sidebar that follows). Help your field understand and embrace a similar ideology, and you’ll influence their business practices for years to come.
4. Open the feedback spigot

One example of an ideological component that customer-experience legends share is a commitment to soliciting and acting on customer feedback.

Oftentimes, there is an arrogance in organizations— a belief among executives that they know what delights and what frustrates their customers, what will strengthen their brand experience and what will weaken it.

But as J.C. Penney learned during its recent meltdown, businesspeople can have a myopic view when it comes to understanding what truly makes customers happy.

Help your field offices avoid that pitfall by supplementing internal views with external ones. Carriers can use their purchasing power to bring robust “voice of the customer” survey programs to their affiliated agents and brokers. At the very least, they can offer field offices tutorials about feedback instruments.

Armed with these feedback instruments, your field offices can cultivate customer insights that will help them first shape, and then continually recalibrate, their experience improvement efforts.

5. Co-create the experience

For some parts of the insurance customer experience, field and home office interactions are so intertwined that it makes sense to tackle them with a united front (application and underwriting being a classic example).

This is perhaps the highest step on the customer-experience management maturity curve, where manufacturer and distributor work together to shape an experience that’s impressive and seamless.

Assuming all parties have been educated in the same customer-experience engineering principles, it can be valuable to bring field producers and home office representatives together to dissect, diagnose and redesign a particular piece of the policyholder journey.

By incorporating field and home office perspectives up front, a joint experience design effort is likely to yield a better outcome for all involved.

In today’s social media-connected, information-rich marketplace, customers are more empowered than ever. Nobody truly “owns” them.

But ownership of the customer experience is a different matter altogether. Great companies do take ownership of that, by very deliberately managing the many touchpoints that shape customer perceptions. Great companies even seek to influence parts of the experience that, on first blush, might seem out of their scope. (Consider how Amazon famously obsesses over the experience of physically opening a package once you receive it from their shipping partners.)

For insurance companies that don’t sell directly to consumers, the path to a differentiated customer experience must cross through their field offices—hence the importance of involving and influencing that key constituency. By deftly engaging distributors in the customer-experience improvement effort, insurers can make progress on two important fronts—creating a more positive impression not just on their policyholders, but also on their producers.

The 'Secret Sauce' of Customer-Experience Legends

Companies that do customer experience well tend to use a specific set of operating principles to help shape their customer interactions, from sales to service. The principles that elicit customer delight are remarkably consistent across industries and even demographics.

Below are three examples of such principles, which fans of Amazon, Disney and Ritz-Carlton are sure to recognize:

1. Make it effortless

Be it at point of sale or point of service, the less effort customers must invest to accomplish something with your company, the more likely they are to be loyal to your firm. Look for opportunities to minimize the amount of physical and mental effort that people must expend to, among other things, understand your value proposition, navigate your product portfolio, interpret your customer communications and secure post-sale service. (Case in point: Amazon’s patented One-Click purchase button, which makes it absolutely effortless to buy from them.)

2. Capitalize on cognitive science

Customer experience is about perception, and there are proven ways to leverage principles of cognitive science (i.e., how the mind works) to improve people’s perceptions about their interactions with your business. One example of this is giving customers the “perception of control,” because it’s human nature that we feel better when we’re in control of things and ambiguity is removed from our lives. Something as simple as clearly setting expectations for customers can make all the difference—e.g., how long will I be standing in this line, how many steps are in this purchase process, when will I next hear from you? (Case in point: DisneyWorld’s FastPass, which lets park guests avoid standing in line for popular attractions, making them feel like they’re more in control of their vacation.)

3. Be an advocate

It’s rare that people see companies paying more than lip service to the concept of putting customers first. For this reason, when people come across a company that truly advocates for its customers in a very tangible way, it cultivates stronger engagement and loyalty. One decidedly low-tech but highly effective way to accomplish this is by fostering a workplace culture of exceptional ownership. When your front line—the people actually delivering the customer experience—take personal accountability for owning every request that comes to them, it projects a refreshing sense of advocacy that will distinguish your firm from the “not my job… pass the buck” mentality that customers typically encounter. (Case in point: Ritz-Carlton, whose staff, when asked for directions within the hotel, will refrain from pointing guests in the right direction—instead, they personally escort them, to ensure the guest gets exactly where they need to be.)

This article first appeared in LOMA Resource.