The Care and Feeding of Successful Insurance Sales

A statistic quoted in a recent issue of Managers Magazine reports a turn of the century dropout rate of 75 to 90 percent among all salespeople hired over any given four year period. Today, with more professional management, 89 more years of experience, advanced recruiting and training methods, enhanced product lines, powerful marketing tools and global media support, the insurance industry still loses between 75 and 90 percent of new recruits every four years.

Managers who want to expend more energy in selling insurance, while taking less time for recruiting, hiring and firing, can look to industry leaders who regularly beat the average turnover statistics. Managers, such as State Farm’s senior agency vice president and senior agency officer, Don D Rood and Allstate’s vice president of sales, William V. Henderson, implement scientific systems that ensure recruiting and training success. In this case, success is measured in low dropout rates and high productivity over a long time. Salespeople who sign on with State Farm and Allstate are in for the long haul. Between them, Henderson and Rood manage over 30,000 salespeople.

In this exclusive PSP look at how two insurance industry giants recruit, hire and train professional salespeople, Henderson and Rood share insights and experiences that show just why their companies have managed their way to consistent success.

It may sound like old-fashioned corn pone but Allstate’s Bill Henderson says, “Caring is the very basis on which our business is built. When you fail to care for your customers, their needs, their potential losses or their well-being, then you’re in the wrong business.” Selling insurance, it seems, is a step-by-step process of building trust and mutual respect between client and agent. If that trust is broken, the links connecting the chain weaken and, when tension builds, the chain will likely snap under the pressure.

Tensions come in all forms, from lackadaisical service for an existing account to agents who make renewal period pitches for a competing company’s products. Such giants as State Farm and Allstate ensure their own consistent success by carefully building a sturdy foundation based on time tested principles of service, commitment, loyalty, hard work, self-confidence, solid business and people skills, and the combined opportunity to work within the company management or to reach for an entrepreneurial dream.

A System That Works

“The system is our secret,” claims State Farm’s Don D (the D is part of his first name) Rood. Recruitment to retention ratios vary among independents and company agents, however, in the combined life and health company agencies where retention falls somewhere around 48 percent out of every 100 after four years. State Farm’s retention is 78 out of 100. Rood explains that success in simple language.

“We do not recruit anyone from another insurance company to become a State Farm agent. We’d rather have a schoolteacher, doctor, lawyer, editor – and we have them all. We look for people who understand that our system has something special going for it. We look for someone who has ability and stability – someone who will be a good neighbor within the community,” he explains.

When asked how State Farm teaches good neighboring, Rood shakes his head and answers, “You can’t teach somebody how to be a good neighbor. It doesn’t matter what your background is, whether you’re a man or a woman, if you’re part of an ethnic minority or if you’re experienced or not in selling – if we have to explain what a good neighbor is, you’re probably not a candidate.”

Allstate’s Henderson sums up the same premise in different words. “Our customers are buying a promise of service. We’re selling peace of mind for loved ones or belongings of value. In my pretty long career, I have found that someone who has sold insurance for another company and failed, will not make it with us.”

It’s tough to start up a new agency business,” he goes on, “you have to do a lot of scratching. If you’re not organized and you don’t have the commitment to maintain a steady, hard work load over a long period of time, then you’re not a candidate for Allstate. An ambitious, self-confident, well-educated, hard working person who has had some business experience and taken a few hard knocks is what we would consider a good candidate.”

Both State Farm and Allstate have a rigorous hiring process which further weeds out people unlikely to achieve success through a steady purposeful effort over a long time. A series of interviews that are designed to show success patterns, followed by extensive aptitude testing, are all fairly standard, although Allstate and State Farm have devised their own tests and rigorous standards for passing.

At this point, the two companies veer into different directions. State Farm favors intensive precontract training while the candidate is still with a previous employer. The company walks the neophyte through the entire State Farm program. At every step during this four or five month process, if either State Farm or the candidate feels this is not going to work out, there is an agreement to call it quits with no further obligation on either side. It’s what Rood calls “a no obligation program.”

The State Farm evaluations during this process look at a prospective agent’s eagerness and excitement level before offering him or her the chance to become a trainee. Next comes a two-year intensive training program that covers the basics of selling and service, as well as a thorough steeping in the policies and practices of good neighboring. “By the time trainees have gotten through the two-year program, they’re on their own with support from home. We have trained them and now it’s their job to build an agency,” says Rood.

Natural skills with handling people, absorbing information, selling without huckstering and follow through on promises are all qualities State Farm looks for during the precontract phase. “If you have natural skills,” explains Rood, “we can always sharpen them.” Although State Farm’s system doesn’t promise to make average achievers into stars, it has a place for any goals an individual chooses to set. On the other hand, Rood claims the system is set up to accept trainees who start at a much higher than average level overall. Average at State Farm is well above national norms. “We have no set requirements for a State Farm agency in terms of volume or quota. We don’t have to have all stars. We’re looking for honest, decent, hard working, good neighbors,” says Rood. Chances are, if a person has those qualities, selling success will be almost automatic.

“I’ve seen a lot of people who could be a success in some fields who would never make it in insurance,” claims Allstate’s Henderson, who goes on to explain, “Insurance takes a skill to sell people something they can’t touch, see or feel. Word pictures have to be drawn more effectively if I’m going to get you to buy something you can’t use until you have some kind of property damage, you’re injured, you retire or someone dies. You’ve got to be able to get to the prospect’s motivation to care for their loved ones and that takes skillful selling.” Bankers can sell rates and the cash benefits of a CD; car dealers can put you behind the wheel; and when you have to run a computer, you need software. In selling insurance, the agent is part of the product and trust is the saleable commodity.

Selecting The Best

Allstate’s selection process begins with commitment. “In selling insurance, you’ve got to make sure the client understands the need is there,” says Henderson, “and a lot of turnover is caused by agents who don’t have the commitment to stick with a sale to the end.” The sticking process is based on organization, according to Henderson, who says that an Allstate agent must be organized, self-disciplined and willing to work long hours. “Good agents who start out in this business think nothing of working 12-hour days. And I’m talking about organized, productive hours, not just putting in time,” he explains. “I can test people for aptitude all day long, but there is no test that I know of for commitment. I wish I had one. Commitment comes from way deep down inside and that emerges as a part of character.”

Henderson also credits the Allstate system for start-up success. “The system,” he claims, “gets them comfortable with selling insurance but the individual perpetuates that over the long haul.” Henderson also credits Allstate’s low turnover rate to its new program called The Neighborhood Office Agent, an entrepreneurial innovation that has worked out well for the old guard company. In addition, after Allstate’s battery of aptitude tests to determine if the candidate is well-suited to the insurance field, there is initial training while the candidate is getting licensed, and product training before bringing the new recruit into Allstate’s national sales training center.

“We think our center is one of the best in the business,” says Henderson. “They go through an intensive two-week program before we send them into the field for a five-week installation program with their individual market sales manager. This three-step process tells us at every step along the way whether we’ve made a mistake by selecting that person. The faster you find out your mistake in hiring someone, the better off for both of you.”

Both State Farm and Allstate see the value in a rigorous prescreening, testing and training program that’s designed to be so tough that real world selling will seem somewhat like a downhill coast. At Allstate, from opening volley of aptitude testing to the day a new recruit actually begins selling from his or her own office can be as long as six months. The number of new recruits the company trains each year equates to about 10 percent of the total number of working agents. That number just about matches Allstate’s turnover ratio.

Once a new agent has established a business, the reasons to stay add up. Building a loyal clientele, feeling close to the customers they service, helping people manage and protect their lives and investments, community recognition and financial rewards all top the list. Although State Farm doesn’t require a prescribed level of performance, the incentives to perform are there. Awards, trips and peer recognition are a part of the company structure. Whatever level an agent sets as a goal, there is an award waiting there.

A Chance To Win

In fact, everyone can be an achiever at State Farm; it’s a matter of choosing your own pathway to your own star. And what of plateaued agents? “Don’t worry about them,” advises Rood. “There are times when people have decided this is about where they want to be. As long as they are servicing the customer, compliment them for what they are doing instead of bugging them to produce more. I have found that by building the program around complimenting people who are doing things that make a difference, when there is a problem that person is going to be more responsive to solving it.

“After all,” Rood goes on, “if you’re on somebody’s back all the time, you’ll have to stay there to get anything from them.”

Allstate recognizes that salespeople reach what Henderson calls comfort zones. Therefore the company has incentive and recognition programs that motivate many an agent on to the next level. Allstate also encourages agents to go through industry training and qualification programs to build higher levels of professionalism and lay the groundwork for doing bigger things and building better accounts in the field. By appealing to an agent’s entrepreneurial spirit, the company hopes to help many break through a string of comfort zones by reaching for higher goals.

“There will always be people who nestle into a comfort zone,” reflects Henderson, “I’m going into my 27th year and the people I’ve known who have had problems always looked two jobs ahead before they satisfactorily wrestled with the one they were supposed to be taming at the moment.” Success is a matter of balancing one’s current capabilities with hoped for results.

Caring For The Customer

Rood and Henderson, who respect each others’ companies as formidable and professional competitors, both share stories of exceptional situations where agents acted out of plain human decency to solve a problem. It’s a small town attitude in a big time world – an attitude that can’t be quantified on a P and L statement in a board room, but makes a whole lot of difference when it comes time to ask for a client’s referral list. Since most insurance business comes from referrals, it’s important to maintain a dependable company store.

An Allstate customer called to settle a claim at a woman’s home and when he got there she told him that she had been insured with Allstate for 27 years and this was her second claim. The first one, 11 years earlier, was a kitchen floor and it hadn’t been handled to her satisfaction. The adjuster looked over the floor, went right back to his supervisor and they decided then and there to replace the woman’s floor, even though the claim was outdated. Ed Russ, Jr., a third generation State Farm president, has been known to take customer complaint calls and solve them himself. He feels responsible all the way down the line, from agency problems to corporate management to customer concerns. “In search of excellence” can stop looking when it gets to either of these outfits.

As Rood tells it, “When you get your insurance bill for renewal, you have to decide whether to stay with us or look around the marketplace. The deciding factor is often your agent. That person is working within a system that should be anticipating problems as well as giving guidance and counsel. They must be willing to do whatever is necessary to solve whatever problems occur.”

Henderson says that Allstate’s employees are empowered to solve problems right down the line. Even if it’s someone else’s account from another town or state, it’s an Allstate account and it deserves professional care and feeding. Success for Henderson is like riding a wave. “Don’t compare yourself with the other guy or where he is,” cautions this seasoned manager. “You’re going to be on top of the wave one minute and down in the bottom of it the next. The guy in the next boat is going up when you’re down, and down when you’re up. Keep in mind that you’re doing all the right things and when the tide comes in you’ll be all right. There’s no sense getting upset about setbacks and disappointments. You’ll only do yourself more harm than good.”

“Give yourself a chance to fail,” advises Rood. “To get a shot at success requires a willingness to stick your neck out and that means you will experience some failures. Kick off with what you think will work, then stick with it until you find out different. But, if it doesn’t work, you’ve got to be brave enough to pull out.” This sage advice comes from a man who tells the story of his son’s early baseball triumph. “He hit a home run and we were up cheering. After the game the coach told me, `That’s the worst thing that could happen to that kid.’ The coach was right. That boy was trying to belt one every time from then on, until he finally wised up and went back to just trying to hit the ball. That temporary success almost ruined his game,” Rood remembers.

If success attracts more of the same, then the system will attract people who can work it into prosperity for both the individual, the company and the customer. Rood suggests that managers should surround themselves with brave people who won’t be afraid to say, “That’s a rotten idea and here’s why.” A strong manager can yes himself right out of business unless the people around him have the courage to speak out.

Allstate and State Farm have proven that consistent success in the insurance business is built one block at a time with care, nurturing, feeding, patience, persistence, skill, hard work, commitment and courage. It may be the old-fashioned way, but caring about your customers and their need pays off for a lifetime.