(“Strictly Sales” is written by the faculty of the Dynamics of Selling program. This month's column is from Thomas Barrett.)

WITH A softening market leading to declining premiums, your agency might be 10% to 15% smaller than it was in 2004. The time has come to bring in new production sources to make up that gap, and that could mean hiring a new producer.

The rate of success for newly hired salespeople varies greatly from agency to agency. We hear of failure rates of 50%, 75% and even 90%. One large bank-owned agency has a “stick rate” of 25%, which we find to be the norm in our business. The No. 1 reason producers fail? Lack of training.

Chris Burand, who writes the “For the Manager” column for American Agent & Broker, suggests that unless your agency generates more than $5 million in revenue, you should hire and train producers one at a time. We tend to agree with Chris. Each agency should have a development budget (unless you're selling out), and you should keep your eyes open for opportunities to hire new salespeople. When those opportunities present themselves, you should have the resources to act.

No matter how much you like a candidate, if he or she doesn't possess a sales aptitude (which you can determine by testing), then you'll never make him or her a success. Good producers are aggressive, money-motivated, self-starters with a desire to compete and win. They have enormous egos and handle rejection well. They love taking chances, enjoy new challenges and quickly become bored with the mundane task of servicing accounts. They do not have to come from our industry or be renowned for their ability to quote policy language.

Conducting the interview

Selecting new producers starts with interviewing and evaluating candidates. Here are some tools that should be used in these processes.

–The telephone interview: This interview enables the interviewer to screen out unqualified prospects. The interviewer should work from a script with all the necessary questions. We suggest that the sales manager make these calls. Besides enabling the interviewer to screen out unqualified candidates, the phone interview allows the screener to assess three crucial qualities: poise, phone voice and aggressiveness.

–The face-to-face interview: This interview enables the sales manager to gauge the candidate's sales skills. The interview should be scripted and should use open-ended questions to elicit extended responses.

–The r?sum?: Look for gaps in employment histories and partial information. Look for information about prior positions held and the candidate's performance. Check the references.

–Testing: Use a service like Omni or Caliper that can provide an unbiased assessment of the candidate's personality traits and raw intellect.

Issues surrounding the offer

Either at the time you offer a candidate a position, or after the candidate accepts, there are many issues to discuss, including the following:

oPosition title.
oStart date.
oBenefits.
oCompensation.
oEmployment agreement.
oOwnership of accounts.
oNon-piracy provision.
oDeferred compensation.
oEmployee manual review.
oVacation or military leave.
oTravel expense policy.
oEducation expense policy.
oEntertainment expense policy.
oOffice and support.
oStandards of performance.
oReview of procedures.
oProduction goals and validation schedule.
oTraining.
oIntroduction to office team.
The training process

Develop a formal training process before you hire a producer; from the outset, you must plan for his or her success. Many carriers have producer-training programs (e.g., Chubb), as do organizations like The National Alliance. Once new producers return from school, they need a structured work environment. You'll invest almost $200,000 in each before you know if they'll work out, so what's a few more thousand to assure they have the training to give them the foundation they need?
Someone needs to manage new producers. While larger agencies usually have sales managers, smaller ones tend to rely on an existing principal or producer. Either way, managers should have a plan outlining their responsibilities, which can include identifying the niches in which new producers will work, choosing mentors for the new producers, helping them with phone and sales skills, planning for joint sales calls (after which managers critique new producers' performance) and going with them on their first few presentations, to make sure they have the skills to close.

Jeff Wodicka, national program director for the Dynamics of Selling program, has determined that only 2% of potential candidates have the necessary traits and skills to become “super producers.” Another 18% couldn't become successful if you invested a million dollars in their training. The remaining 80% are in the “average” category. Candidates in this group probably aren't like you, so remember to identify the core skills needed for producer success, and understand that with training you may get them into the top 20%. Don't spend your career looking for the top 2%–most already have jobs.

The return on investment in a new producer doesn't come overnight. You'll have 24 months and more than $200,000 invested in a candidate before you know whether he or she will make it. All the more reason to make sure you have a plan to train the new producer. Your expectations for new producers will vary, depending on what they are selling (e.g., personal lines, commercial lines, benefits, financial services). Usually new producers are started off on a salary. If so, they need to at least validate their positions. For instance, if you pay producers 40% of commissions, and start a new producer at a $40,000 annual salary, the producer must bring in at least $100,000 in commissions to validate his position.

Identify the classes in which you want the producer to work. We live in a world of specialists. If you train producers in particular industries and have them work only on accounts in those niches, you increase their chances for success. Identify a business class, introduce a new producer to current clients you already have in that class, and encourage him to develop relationships and referrals. Help the producer learn the niche inside out. Besides knowledge, the producer will gain a working vocabulary of the business and the confidence to approach prospects.

A recap of the process

The key to hiring and developing successful producers is having a pro-cess. Here is a checklist of the major steps.

oDefine the specific goal.
oState the steps needed to achieve the goal.
oAssign the individual responsible for managing the producer.
oDetermine the dates on which each step will be accomplished (a timeline).
oDetermine the agency needs.
oCreate a position description.
oEstablish a budget.
oCreate documents (producer agree-ment, agency training materials, sales and marketing track).
oCreate an action plan.
oCommunicate the action plan.
oIdentify recruiting sources and methods.
oBegin the recruiting process.
oImplement the selection process.
oDeliver the job offer.

Training and marketing are the agency's responsibility. A training program should get your producer productive within six months, and you should see validation within 24 months. Now is the time to get your agency into the growth mode, if you expect to increase in size and compete with those acquiring your competitors.

Good selling!

Tom Barrett is president of the Midwest and Southeast regions of SIAA Inc., a partnering of more than 1,600 agencies writing $3.5 billion annually in property-casualty premium. He also serves on the national faculties for the Dynamics of Selling program, Marketing & Sales Ruble Seminars and the MEGA Seminars for the National Alliance. He welcomes correspondence at [email protected]. For more information on Dynamics of Selling, call (800) 633-2165 or visit www.TheNationalAlliance.com.