Welcome, I’m Dave Eddleman with the Alexander Group, one of the leaders in the financial services practice area. I’m here today to share with you some summary findings of our insurance compensation survey. The survey of over 50 insurance carriers. A really great robust data set from which to draw. Let me just start with a few trends that we typically see in our engagements with our clients that really drive sales plan effectiveness or is it related to sales plan effectiveness?
One is around channel alignment, so their online channels are growing fast. Everyone knows that they’re here to stay, but there’s still a significant demand for field agents. Call center agents and remote agents. Many job roles, and I think that just adds to the complexity of which plans go to which roles, especially on the remote side, which is sort of a remnant of the pandemic. The turnover rate for those type of agents is kind of high. Typically comes up as an issue if there are a significant amount of remote agents. The middle piece there on improving plan design. It’s typically a combination of a standard commission rate plan, depending on what kind of lines we’re selling here, and a combination of, again, commission rates with bonuses. So trying to figure out which bonus and what the weighting of that bonus should be versus what the commission rate plan should be, is usually another area that is a challenge with our clients. That could be a bonus for growth of premium, retention of new customers, hitting your production goals, etc.
The last piece there, and it’s not insignificant is setting the right commission rates. It sounds easy, but a lot of these rates are legacy rates and going up or down and trying to correlate the right commission rates with the right level of production, along with, again, the combination with a bonus. Perhaps they don’t all use bonuses, but this is another large data set that we typically have to wrestle with. And if there is a change, it’s not just what the right commission would be for production and particular job role, but how fast we can move to that commission rate.
All right, well, let’s just get to the survey itself. Again, I said 50 carriers were involved here, a really nice data set, all the typical insurance lines, PNC, Life, Financial, both on the personal side and on small business commercial side. So what do you typically expect from insurance lines within 50 insurance carriers to the top left there, the sales roles, call center reps, field reps, different types of agent classifications as well as the management team. And those are typically different, not on commission rates, typically on sort of a standard sales comp plan that has a quota associated with it. So again, we’ve got a lot of different data sets here, a lot of great participation from insurance leaders. One of the things that I wanted to point out is just the overall effectiveness is how good are these comp plans in the insurance carrier world compared to other places in financial services or even other industries outside the financial services space? So I started off with this left side here, just looking at the overall effectiveness.
You can see scores of 6.8 and the usefulness of data 6.9 and flexibility at 6.9. These are relatively low in comparison to other industries. So, it just kind of says these are there’s some complexity here, and they’re not always satisfied with the efficacy of the comp plans. The last two columns there, 7.9 and 8.5, those are more prevalent. Those are good scores in terms of the accuracy of payouts and the timeliness of payouts. So from that standpoint, all is well on the right side. Again, just trying to balance sales compensation or incentive compensation in general with other pieces of sales enablement, for example sales process. What is the value messaging value proposition? How do I run a sales process playbook?
Another challenge is just enablement tools. Maybe it’s market segmentation and understanding what share of wallet is in a particular market, or how to navigate through target lists through for different types of reps. So there’s another issue goal setting. Wow, that’s always a really big issue. What is the right level of production for this? You know a starting out role a more seasoned role or a very seasoned rep out there. What is the right expectation for production and how do I correlate that production with the different kinds of commission rates? And then, lo and behold, incentive compensation. So you can see it’s one of many in the sales efficacy drive.
I think this all gets to the point where if we just get the right commission rate and we just get the right kind of bonus program, and all of that is all dialed in correctly with prevalent practice that everything is going to go well. There’s a lot of other pieces that are significantly linked to sales comp. We see this across industries, but it’s still true in the insurance carrier space. That’s not to say in sales comp or incentive comp is not important because it is. But there’s always other linkages. It usually comes back and anchors into the the job role and trying to figure out what they’re doing and what the level of influence in the sales motion of the typical job roles. But there’s many other pieces of the go-to-market model that are related to sales comp.
So I wanted to just give you a little a balance between the comp plan effectiveness and sales enablement and some other pieces that are vital to making sales comp work. Well, the last point I want to make here, this is the actual data from the survey, and I want to invite you now if there’s any need or you’d like to hear more about our data or have a separate briefing, we’ve got lots of data here that we’re glad to share with on a more customized basis. Here are the rates.
So, on the right we get asked this a lot. This is just your typical P and C rate for new premium. You can see the range of the commission rate range for new business. On the right hand side they’re 10 to 20%. It’s kind of broad. So again I think this goes to the complexity of should we at 12 or should we be at 18 or even with outside outside these guardrails of prevalent practice. We’ve seen all of that and again there’s a big cost difference between those rate tables and you can see there with the renewals and we get this question a lot. I wanted to this is why we got this data on here. There’s not a lot of difference. And there is an overlap between new business and new premium and renewals.
This is a common challenge trying to understand how do I put enough commission rate and enough emphasis and sales enablement on finding new customers versus sort of a comfort zone that agents often find when they’ve been in the business a long time that just earn commission rates on existing business. So, that difference trying to dial them in, how fast we can go between new business premium and renewals, even if we pay for renewals in some cases, which sometimes that’s not paid for. That kind of balance is important.
Thank you for listening. Appreciate your time. Again, please reach out to us. Join our sales compensation community. Here’s the QR code. wwww.AlexanderGroup.com. Reach out, and we would relish a second conversation. Thanks again.
