Increase Your Production By Building A Business

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The worlds top insurance salespeople are not the worlds best salespeople–they are the worlds best entrepreneurs.

When I came into the business over 32 years ago, I was hired as a life insurance salesperson. Back then it was possible to be a top advisor by mastering the art of selling. Today, the paradigm has shifted–to be at the top you need to master the art of business.

After years of research, I have discovered that high-performing producers do the same things, which can be broken down into eight best practice behaviors. (See sidebar on page 11.)

We can use these eight best practices as a basis for creating our own successful businesses. But top advisors dont simply follow these eight practices; rather, they integrate them into four systems: business management, marketing, relationship management and resource management.

Business Management. Business management is the cornerstone of any top advisors business. One area that often is ignored when we talk about the business management of an advisors practice is the financial management side. To be successful, you need to look at your business in terms of the financials. Understand that your success depends on mastery of and control of five financial levers of your business: product mix, case size, number of sales, seasonal volatility and cyclical volatility.

When you learn to control these five levers you will be able to predict who you will sell to, what you will sell and when–next week, next month, next year, the next three years and five years.

The first decision you have to make is to determine what mix of products you will offer. Do you want to offer a broad array of products, or would you rather be more of a specialist with a much more narrow focus?

Case size is really a function of the market in which you want to work or the type of work you want to do. Do you want to move up market and write larger but fewer cases? Or, do you want to increase your number of cases?

Seasonal volatility will be determined by two factors. One is when you are working in the business. For example, if you take two months off–July and August–thats going to have an impact on your revenue in those months. The second factor is based on circumstances outside of your control. For example, if you are involved heavily in the 401(k) business, youre probably going to be quite busy in the first few months of the year.

Cyclical volatility is a function of markets. Over time, the markets show an upward linear progression, but short-term, markets look much more volatile. Right now were in a down market and thats having an impact. Cyclical volatility in your business typically moves in three-, five-, eight- and 10-year cycles.

Align these five financial levers with the other three systems–marketing, relationship management and resource management–and your payoff will be the following: youll make more money, youll have more quality time for friends and family, your business will be more fun, and youll create long-term security.

Marketing. A well-designed marketing plan will help you establish a brand among your target audience. It will keep your pipeline full of quality prospects that will become quality clients.

What percentage of your revenue do you invest in branding? Too many advisors dont allocate a portion of their revenue to marketing. By contrast, top advisors will spend on average somewhere between 12%-15% of their gross revenue on marketing. Dont confuse marketing with selling. Marketing is what gets you face to face with your prospects. Selling is what you do when youre face to face.

In building a marketing system, top advisors follow the first best practice of creating and utilizing a marketing plan. In that plan, they establish a cluster of four to eight robust marketing strategies.

For example, many planners want to increase their average case size. How do you do that? Its a marketing and branding challenge. Increasing your average case size means moving up market, but to do that you have to use marketing initiatives that will help you build your brand and get you face to face with wealthy individuals. A direct mail campaign is not going to do that, but running a series of concept lunches may.

A concept lunch is where you invite a number of clients and ask them to bring guests. After a few minutes for meet and greet, the host gets up and welcomes everybody. The host then gives a brief three-minute introduction and everybody goes around the table and introduces him or herself. After lunch the host presents a concept.

In building a brand, focus on obtaining introductions, as opposed to gaining referrals, is best practice number six. Using this “indirect influence” is one of the most effective ways to make an impact and have influence with a new prospect.

When you obtain introductions, you are piggybacking on the credibility your client has with your prospect. For example, telling someone who doesnt know you that you do great work is not very credible, but if someone he or she knows and trusts says that about you, thats a different story.

So if you get a name, rather than picking up the phone and calling that person, think about people that are acquainted with both you and your prospect.

Once you have a pipeline full of high-quality prospects, one of your other business systems kicks into gear–your relationship management system.

Relationship Management. Some people refer to it as a sales system or a sales and service system. But a relationship management system is much more than that–it comprises everything you do to upgrade your prospects into clients and to keep them for life.

One of the most important aspects of your business as an advisor is how you apply the third best practice–understand how people make decisions. Essentially this means mastering the three truths of decision-making: one, that all decisions are value-based; two, that all decisions are confidence-based; and three, that all decisions are risk-based.

This may mean changing how you interact with your clients. One clear indication of how well you apply this best practice is how you answer your prospects question about your competition.

When prospects ask you about other advisors in the community that may be competing for your business, dont be negative. Understand that people make decisions based on confidence. Negative comments about your competition may be more of a reflection of your fear of competition than an objective opinion.

Negative comments dont inspire confidence. They do nothing to help or encourage your prospects to work with you. In fact, these comments may even drive those prospects toward your competitors–who probably never said a bad word about you. Avoid putting down the competition and instead focus on inspiring confidence.

Apply best practice number four–help prospects buy. People love to buy but hate to be sold. One of the measures of how well you apply this best practice is the degree to which you focus on your clients agenda, their journey. Focus on building relationships, and creating urgency and action by discovering, developing and appealing to your clients own internal agendas.

Fulfill your relationship management system by applying the fifth best practice–create client capital. Client capital is the most important measure of the success of your business and it appears nowhere on your balance sheet or your income statement. Client capital is the sum of three elements–the depth and breadth of your client relationships, and the degree of loyalty your clients have with you. The most important measure of depth is the number of products and services they buy from you. The most important measure of breadth is the number of people who will willingly introduce you to others.

Resource Management. Weve talked about having more fun and more time, and making more money. To a large extent, your ability to do these things depends on how well you create a resource management system. For many advisors, the lack of a resource strategy is what holds them back from achieving the success they dream of.

Resource management is all about working at your optimal level, doing what you do best and doing it as often as possible.

For some advisors, the obstacle to optimizing is a mindset. A mindset that has them playing what I call a finite game. Its a mindset where they believe that there is only so much business, that they have to get it themselves and that they cannot depend upon others. Many advisors with this mindset tend to operate as a business of one, bumping up against a ceiling of complexity that limits how much they can produce. They think that in order to be more successful, they have to carve out more of the pie.

But the reality is its not about getting a bigger piece of the pie, its about creating a bigger pie. To break through your ceiling of complexity, you have to redefine the game, where your business in essence has the power of one, and that power is you, to a business that has the power of many. You need to begin harnessing the time, energy, creativity and intelligence of others.

Begin applying the seventh and eighth best practices–delegate and utilize resources. Look at the people currently working for you. Are they only capable of tasks that are in the $15 to $20/hour range? A lot of advisors tend to hire people who we would call low-stratum capable. These are the people who can work on $15-$20/hour tasks. The problem here is that if you want to work on $500/hour tasks and your employees are only capable of working on $15-$20 /hour tasks, then all the tasks that fall between $20/hour and $500/hour are done by you.

You need someone capable of overseeing and running complex marketing strategies. This doesnt mean you have to hire more people, you may just need a different mix of capabilities with the people you have. This may, however, involve changing your staff.

Leverage your staff and a team of external resources to ensure that you operate at your highest level as much as possible.

By following the best practices of the highest-performing insurance people and the highest-performing entrepreneurs, all of us will be able to create the momentum we need for continued success.

is founder and principal of The Covenant Group, Toronto, Ontario, Canada. He can be reached via e-mail at info@covenantgroup.com.

This is an abridged version of a presentation he gave at the MDRT meeting in Las Vegas.


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 30, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.