A better way to plan your annual insurance sales–and why you should get rid of some of your clients

David Estrada explains how to make 2017 a bumper year for your insurance business – by examining what you’ve done as well as what you want to do

Insurance News

By David Estrada

Annual sales planning is not necessarily a popular concept. Just the idea can make people feel skeptical and trapped. Many people reject the idea of annual sales planning because they say there is no way to look into a crystal ball and see into the future. Some producers are reluctant to lay out a plan and communicate it to leadership because they don't want their plan micromanaged throughout the year. It’s also a common feeling among many producers, that a lot of what happened the previous year in terms of sales occurred by happenstance or luck or ‘just being out there’, or something happened by random chance that led to a sale. So how can they be expected to quantify that in a predictable and measurable business plan for the following year? While these feelings have a reasonable degree of validity based on certain circumstances, I plan to show you what makes sales planning a good idea and some practical ways to carry it out.

The Present and the Past
Many people think of annual sales planning as a strictly forward-looking enterprise, but I think the most valuable way to approach sales planning is to start by looking at the present and the past. Sales planning is a great opportunity to ask questions like these:

  • What is the state of my insurance practice today?
  • What happened in the 12 months leading up to this moment? What worked? What didn't work?
  • What initiatives did I launch? Which ones gained the most traction? Which ones don’t deserve more effort?

Forecasting is important, but the most productive course of action, in my view, is a rigorous examination of precisely where your business is today and what events have led up to its current state over the last 12 months.

A clear assessment of your practice as it exists today is key to the planning process. Without a point of origin, how can you make it to your destination? Let's assume you want to drive to Uluru. Won’t your route be much different if you start in Sydney versus if you start in Adelaide? It's great to identify a clear destination, but it's virtually impossible to identify the steps required to get there without a clear understanding of the point of origin.

Assessing the Present
To assess the present state of your practice, there are many good options. A book analysis is a useful tool for identifying your point of origin. It's a perfect time to map out the renewal months for your accounts, and the size of those accounts. Ask yourself where your business is coming from. I've been fooled on this one a number of times throughout my career. There would always be a handful of people that would send me a ton of business, but, for whatever reason, I wasn't calling on them as often as I should have to continue developing the relationship. Perhaps I was taking it for granted – shame on me! But there were other people who I spent a lot of time with—people, as it turned out, who didn't provide or contribute anything back to the relationship. It happens; sometimes we err towards people we like to spend time with because they are fun to talk to, be with, play golf with, go to social events with, whatever reason – yet from a business perspective can be a total waste of time.  It’s something to keep an eye on and a judgement call we all have to make.

Now is a great time to take a look at how well you know your top clients. Do you have a good relationship with them? What do you know about them personally and when was the last time you spoke with them? How often do you speak with them?

This is also a good time to look at the smaller elements of your book and consider whether they serve your book of business and the growth of your practice or if they are they a drag on your progress. It’s smart to look at these small accounts and apply a test – if they pass the test keep them, if they do not, purge them.  A reasonable test would ask the following questions:

  • Do they have the opportunity to grow or are they static?
  • Are they a good ambassador for your firm?
  • Even though they're small, are they making introductions for you to more desirable pieces of business?
  • Are they attached to the other side of the house where perhaps they represent a significant amount of revenue?
  • Is this cross-sell business from a producer on the other side of the house that is essentially sending you small business now to see if you prove yourself before sending you larger pieces of business?

If so, keep them…if not, you should purge them because they are inert material to your book and damaging your ability to grow it.  Remember that a key element to growing your book over time will be to increase the average size account in your book of business.  It is a normal and healthy act to do a sweep of your book every year during the annual planning process to see if there are opportunities to purge small business from your book.  By purge, I mean transferring fully to an account manager to run, sending it to an internal Small Business Unit (SBU) your firm has set up, or selling the block to one of many entities that purchase small account business and using that money to recapitalize your business and pursue larger accounts.  

Annual sales planning is a good time to do a best practice analysis. What are you doing to win new business in the field and how does that compare with the top performers in your industry? Cash flow analyses and projections are important as well. How much are you writing each year, and if you keep writing at your current rate, where will you be in three, five, and seven years? Extrapolating your new business run rate and factoring in your attrition rate will give you a sense of where you’ll end up in five years. Are you happy with that? If not, you need to make adjustments to increase your new business run rate to achieve your goals. You can’t do the annual sales planning process justice without this information.

David E Estrada is the founder and managing director of Rain Maker Advisory.

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