Forty degrees and endless rain in Milwaukee tends to get old, so I took my family on spring break this year for sun, desert scape and mountain climbing – which, turns out, is a lot like the broker world.
On the day of the mountain climb, I wanted to make sure the kids were motivated. I made a big production of showing them chocolate bars and specifying they were only for eating at the top of the mountain. With that, we headed skyward.
After an hour of strenuous climb, we weren’t even halfway. As I’m covered in sweat and dust and battling for oxygen, my sales skills kicked in and I mentioned that if we turned around, we could be at the ice cream store when it opened. My kids wouldn’t have it. Come hell or high water, we were eating chocolate bars at the top of the mountain. I loved it. An hour later we made it: exhausted, scraped up, but enjoying that chocolate.
How does this apply to brokers? Motivation. Brokers are trying to grow organically – and it is exactly like climbing a mountain. Brokers need to be motivated to climb over rocks, get bruised and do whatever it takes to reach their goals. While a chocolate bar won’t do it, the ability to buy many chocolate bars usually does.
Brokers who are paid simply to maintain books of business will never chase organic growth; compensation should reflect your goals as a firm, motivating proactive prospecting and discouraging complacency. For example, if a broker makes 36 per cent ongoing today, require him to grow his book by 8 per cent to stay at that number. If book growth is between zero and 7 per cent, make it 34 per cent. If below zero, it could drop to 30 per cent. Conversely, for growth greater than 8 per cent, offer potential for more. In addition, offer a one-time bonus on book growth over a certain amount.
Ready to rethink your compensation program? Some simple steps to begin:
- Define what you would like the compensation plan to accomplish (organic growth?)
- Review current plan to determine where it falls short (paying a lot to maintain)
- Think outside of the box and determine what motivates (Rolex for someone who writes 125 per cent of goal)
- Understand brokers will do what you pay them to do
- Make sure plan encompasses anyone who can bring in business (hint: potentially give account rounding bonuses to account managers)
- Establish book growth bonuses over a certain amount (such as $50,000)
- Make that ongoing percentage a reflection of book growth
- Identify activities for cross-sell and upsell and compensate on them
- Ensure marketing to generate new business is isolated with compensation tied directly to successful completion
- Identify your most profitable clients and design a plan that targets them
Think sales culture. What do you want the brokers to do to generate results? Cold call? Referral? Network? Prospect intro meetings? Whatever it is, pay them for it. For example, you expect them to set up 4 prospect intro meetings a month. Each of those are $50, meaning an extra $200 a month.
Another way of doing it is penalizing. Part of the ongoing percentage paid is the expectation the broker is doing sales activity. Expectation is 4 meetings a month. If they only do 2, give them $100 less in compensation.
I am using sample numbers here, but you get the idea. The incentive program needs to motivate the broker to chase organic growth. There are many ways to do this, all of which start with analysis of your current plan and putting everything on the table.
Climbing a mountain is a lot of fun. Doing it every day becomes a grind. If you are not getting the results you want, it is time to figure out what type of chocolate bars your brokers want, and then wait for them at the top of the mountain.
The best salespeople love a challenge and will climb over boulders and overcome obstacles. All you have to do is motivate them.