Who is responsible for sales management in most firms? Often the task falls to the owner or the top producer. This is not necessarily a good idea because sales
management can take away time from the manager’s own sales efforts. Good producers do not always make good managers.
Sales management, as important as it is, does not have to be a full-time job in most firms. If goals are set prope
rly, communicated, and monitored, if the right people are hired and developed, and if management will rem
ove any unreasonable obstacles to production, producers essentially should manage themselves. They simp
ly need to know that their performance is being monitored and that poor performance will not be tolerated.
Producer Performance
What is an acceptable level of producer performance for e
xperienced, “seasoned” producers? It depends on a number of factors, such as:
Available producer support
Sales skills of the producer
Size and type of accounts in the geographic area
The competition
The local economy
The markets represented
If performance standards are not set for producers, they will set their own–which most likely will be lower than what management expects.
Management can use the performance of the best producer who
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has ever worked for the firm as a guideline for evaluating “top” producer performance.
The average property and casualty commissions per producer of
firms in our database range from $250,000 to $400,000. The range is based on the size of the firm. These commis
sions include “house” accounts and direct-bill commissions, whic
h are not necessarily commissions “handled.” Well-run firms have $500,000 to $700,000 in commissions per producer.
In surveys in which owners are asked what size book they would expect experienced producers to handle after thre
years in the firm, they report $150,000 to $250,000 in commissions handled, based on the size of the firm. As resp
ects to their expectations for new business produced each yea
r in addition to the books handled, the range is $50,000 to $100,000, based on the size of the firm.
For new producers without experience, approximately $80,000 to $100,000 in commissions handled is expected after three years and new
business of $25,000 to $40,000 in commissions per year. For new produc
ers with experience (and without existing books of business), $150,000 to $200,000 in commissions ha
ndled is expected in three years, with $35,000 to $50,000 in new commissions produced per year.
Production Goals
Producers should be involved in the goal-setting process. Each year, every producer (including seasoned producers) s
hould be given a new production requirement. For example, 10% to 25% growth, net of attrition, depending on the size of their book.
The producer should let management know how this production will be accomplished (for example, the numbe
r of quotes and policies that need to be written to accomplish his or her annual objective).
Based on the producer’s own hit ratio and size of account written, it should be determined whether or not the producti
on goal is achievable. The goals should be broken down into monthly quote-to-write activity to make it easier to manage a producer’s performance.
Management needs two sales goals for each producer. One goal is the required new business increase in the number of accounts or commissions handled by the producer. The second goal should specify the type of account, as well as the sou
rce of the new business to be pursued (such as account development, writing new accounts from referrals, target marketing or direct-mail programs, etc.).