Anyone in the financial services industry, would be very familiar with the Rule of 72 - dividing 72 by the annual rate of return to get an estimate of how many years it will take for an investment to double. Here's another "Rule of 72" to make sure you take actions.
According to Troy Korsgaden, a general agent with Farmers Insurance, think of the number 72 as hours. That’s the time you have to execute something, an idea perhaps, before it is gone forever, stored somewhere in the backwoods of your brain, or scribbled on a piece of paper tucked in the deep recesses of a drawer in your desk.
“It's the law of 72. If you get information and don’t take action on it in 72 hours, you will never do it. It’s a use it or lose it situation,” he said.
In “They Can Make or Break You: The Customer Experience” on GAMA International, he gives a virtual smorgasbord for success for financial advisers, and for good reason. It’s a fast-changing world, he said, and “if we are going to compete in this new world, we have to execute ideas and make sure they are sustainable.”
Korsgaden is also an industry consultant and founder of Korsgaden International, which teaches insurance agents how to become profitable and grow their business.
Other than the number 72, he also emphasised the importance of processes, recruiting the right people and technology.
Processes:
Putting the right processes in place can help. Setting up processes includes things like holding consistent client meetings, systematic and consistent marketing and business planning, and execution. With processes in place, everything becomes more predictable and stability gets added to the work day.
For instance, it’s beneficial to know ahead of time how much commission should be devoted to payroll and how much to spend on marketing. Don’t guess. Korgaden said 30 percent of gross commissions should be devoted to payroll. “We believe that to be profitable you have to spend the right money on payroll.” For marketing, it’s between 5 percent and 7 percent. Also, have a plan prepared for agent training. Have books, tapes and videos on hand and bring in speakers.
Another way to boost productivity is to set up a system in which agents need to meet four families, people or businesses per day. Agents can stop in on the way to work, as they head to lunch, after lunch on the way back to the office or on the way home. “This is easy to do and it can be not easy to do. We all get busy during the day,” Korsgaden said.
But, he pointed out, consider the meeting an introduction instead of a sale. It’s a matter of making the connection. And it’s potentially a lucrative connection because the average household has 10 sales opportunities. Four stops a day means 40 sales opportunities a day that could come at a later time. “If they have a question, I want to be the first person they think of,” Korsgaden said. “I believe that systems are one of the keys to success. A system is a repeatable process.”
Recruiting the right people:
Hiring the right people is also critical to success of agencies, and process is important. “We are slow to hire,” he said. “We look for people with different styles, different educations. We look for people in all walks of life. Slow to hire means a multi-interview process.”
For Korsgaden, hiring is a four-step process. He interviews candidates in person first. The second interview is over the telephone to gauge how the candidate performs on the phone, the third includes members of the team and fourth is a third-party vendor. “The phone is one of our greatest business tools, so they have to be able to communicate on the phone,” Korsgaden said. The questions the candidate are asked are carefully scripted, “to make sure they can communicate with clients,” he said. The third party vendor includes a test that has the potential to make or break a candidate. “They ask them the questions – we want to know they are going to be good at sales and service,” Korsgaden said. “Tests help get a better quality candidate.”
Technology:
These days, being up to date on technology is critical, Korsgaden said. You should ask yourself: Are you ready for 2020? Is your agency leveraging technology? Does tech play a foundational role? Agencies also must be “Omni-channel.” That means clients need to be able to interact in whatever channel that they choose, whether it is in person, through email, texting, or phone. Measure and monitoring technology can help drive productivity and boost business revenue, he said. “You can’t just embrace it,” Korsgaden said. “You've got to be in front of it.”