I recently visited a brokerage client, one you would call small to mid-sized. One of the primary commercial account executives talked about the frustration of working on ‘waste of time’ activities like generating certificates or processing endorsements for small accounts that really didn’t generate a lot of revenue.
Make no mistake, this is a common scenario. Many account executives and producers tell us they spend too much of their day on time-consuming, service-oriented tasks that take away from their primary job – making sales. This is part of the sales trap: taking any and all money that comes in through the door, without much thought to the cost to service the business.
Most brokerages don’t have a quick way to calculate how much it costs to service an account. What is the profit per client relationship? Is more being spent on servicing the file than is generated from it?
Service and administrative tasks are vital factors in client retention. Clients need certificates, endorsements and renewals. These are required tasks for any commercial broker. But is it cost effective to have producers doing this work? No.
The question really comes down to how well your staff activities are in line with the value they bring to your brokerage.
The Ford model: Divide and conquer
Henry Ford popularized the idea of division of labour in the industrial era with his singular task-focused approach to manufacturing automobiles. Even though this is a centuries-old concept, many commercial brokerages have not adopted the idea of division of labour and still employ the ‘I do everything, from start to finish’ approach to managing customer accounts.
Customers can be easily transitioned to work with different staff members once the agreed upon stage has been reached. This is typically when the sale is made. The result? Freeing up time for producers and account executives to search out and cultivate more profitable clients with more substantial commission revenue.
In addition, the cost to service per client will go down as CSRs or administrative staff, who now handle the non-revenue generating activities, typically have lower salaries than producers. The cost-benefit equation becomes more balanced.
Consistency of process creates confidence
Once you establish value-oriented tasks and activities for sales and service, the next step is to create a consistent process to manage those tasks. There are several benefits to standardizing your commercial workflows. But one of the main reasons is to create a culture of confidence.
Managing all commercial files in an automated and consistent process, from sale to bind to renewal, builds confidence in all staff members. Why? Because implementing a standardized process removes the anxiety that something, like an endorsement request, will be forgotten, or misplaced.
This allows producers, account executives, and principals to be confident that servicing tasks will be handled properly. It also gives the CSRs and junior account execs the confidence to carry out the tasks efficiently and properly.
Refocus on your value
According to industry best practices, top producers should spend at least 30% of their time in new business sales activities. Are you missing this mark because you spend too much time in other activities such as servicing customers or marketing smaller accounts? Perhaps it’s time to measure the value of your work – and your time.