Why Motorcycle Mechanics Would Make Good Wholesalers

    Last year when my seven-year-old and ten-year-old sons started hinting that they wanted dirt bikes from Santa Claus, I had mixed emotions because of the danger that can accompany these things. I knew there were so many upsides to it though, I could picture the boys really making them their own as I know it’s easy customizing your dirt bike these days. But at the same time, I wondered if they were too young still, or if I felt comfortable enough to invest in these bikes and let them ride them. However, for me growing up in a blue-collar family from rural southwest Iowa, some of my best memories involved dirt bikes. Riding dirt bikes as a kid as young as 10 years old, I not only had a blast but I also learned responsibility and how to respect the things in life that can hurt you if you are careless. Yes, I do have some scars from the times my better judgement on dirt bikes escaped me! But it made me smarter and tougher. I loved it and I grew from it! Even though I’ve done this as a child, it is always a good idea to research and pick the best dirt bike.

    So after much deliberation with my wife Noelle, I did it. I bought three dirt bikes. Yes, I only have two kids so you know who the third bike was for. One thing we will need to look for is a rear stand for these motorbikes, the last thing we want is them falling over and breaking!

    I bought two of the “pre-enjoyed” dirt bikes off Craigslist. If you have ever bought anything off Craigslist you know that many times the seller “forgets” to mention to you some of the item’s imperfections. You usually learn about these problems after you write the check and take the item home. I was not naive to this and in fact, expected it. But the price was right. After a couple rides with my seven-year old’s Kawasaki 110, it wouldn’t start. Now, I had never had the courage as a kid to do open heart surgery on a motorcycle, but then again we didn’t have YouTube when I was a kid. So, a couple of videos later, I diagnosed the problem and fixed the burnt out piston and rings.

    Throughout the weeklong process of researching and fixing this bike, I learned a lot about the internal combustion engine. Of course, I highly doubt that I’m as well versed in the inner workings of an engine as a mechanic at Two Fingers Automotive might be, but I’m certainly not totally clueless on the subject. The most valuable lesson I learned was that an internal combustion engine only needs four things to operate:

    • Fuel supply
    • Oxygen flow-Fuel doesn’t burn without oxygen.
    • A spark-To ignite the fuel and oxygen mixture.
    • Compression-A fire is just a fire. However, when you compress/seal a fire, it explodes. This explosion is what creates the energy that moves the piston up and down which in turn cranks the rear wheel on the motorcycle.

    Without any one of the above four things, the engine will not run optimally. It was profound to me that the engines that I thought were so complicated were conceptually quite simple! Only four things were needed!

    We all know that if you have gas, oxygen, and a spark, you will get fire. We also know that if the fire is compressed or sealed, it will explode. This is a 100 percent certainty and therefore is very simple to understand. If you have these four items, the engine has no option but to operate in some way, shape or form.

    What is my point with all of this? My point is that whether it is a motorcycle engine or a BGA (Brokerage General Agency), there are some things that are certain, like the pull of gravity-or that gasoline plus oxygen plus a spark equals fire. Similarly, I want to discuss the four functions that if a BGA conducts successfully, their engine has no choice but to run.

    1. Recruiting-There is no problem that you cannot recruit your way out of. A little bit of hyperbole, yes, but if you have been in the business long enough you have experienced what I am talking about. You may have experienced a year where a couple large recruits made your year for you. For example, if you were a $1 million life shop and sales were down by 20 percent, then by recruiting a couple good producers that do $100,000 each with you all of the sudden you are out of the hole! Again, there is not a problem you cannot recruit your way out of.

    Ideas on recruiting:

    • Considering that 40 percent of independent agents have written with three or more BGAs over the last year,1 it comes down to standing out from the pack. Make yourself different than those three BGAs that have gotten the producer’s attention already.
    • Use video technology to personalize and humanize your company while recruiting. Statistics show that after watching a video, 64 percent of users are more likely to buy a product.2 Plus, the most effective type of video content is a testimonial.2 Use your satisfied producers to tell your story to the producers you are recruiting. If you are emailing the videos, make sure you put “video” in the subject line. Also, when the prospects open the email, make sure it is more than just a video link they see. Have a snapshot of a frame from a video.
    • Cross pollinate product lines. If you offer multiple product lines (life, annuity, LTCI, linked benefits, etc.), does the compensation model your marketers have incentivize them to make agent introductions to the marketers in the other product area? Many BGAs lose sight of the fact that they can recruit from other product areas within their own walls.
    • Be persistent! I have noticed that every week my wife and I get a Jiffy Lube coupon for $10 off an oil change. One week she pulled the coupon out of the mail and said, “How ironic we received this today! How did they know my change oil light came on yesterday?” I then said, “Honey, you have been getting those coupons every week and you are just now noticing it because your change oil light came on yesterday.” Be persistent with your recruiting efforts and you will eventually catch them in their “ah ha” moment.
    • If you live by product, you die by product. Just like I learned how to be a motorcycle mechanic (exaggeration), agents, and even consumers, can learn about products on their own through online resources like Google, YouTube or a product brochure. Thus, I believe that the reason 50 percent of producers say they plan to move or would consider moving business to a new BGA next year1 is because the message many BGAs send their agents is product focused. Carrier wholesalers are most guilty of the “walking brochure” mentality. Not only can someone learn about products on their own, we also know many products (and carriers) won’t stand the test of time. So why tie your horse to that wagon? What is the value you provide that stands the test of time? What would your producers say that value is? Have you surveyed them? I believe what stands the test of time is education, sales ideas, and mentoring.
    • Partner with a couple of your most respected carrier wholesalers to create a tactical plan around recruiting roadshows, webinars, content, marketing message creation, etc. The right wholesaler will have tons of ideas and resources around recruiting as well as education and sales ideas.

    2. Percent of agents producing-It doesn’t matter how many agents you have recruited if none of them are producing. I have some ideas on this:

    • Get recruits into production immediately. In my prior life I experienced statistics that demonstrated that if a recruit did not produce within 30 days of being recruited, the odds of them ever producing goes down substantially. Strike while they are in that “Jiffy Lube moment” and pay special attention to those first cases. That is your first date!
    • Don’t let recruiting cannibalize everything. Remember my example? A couple of good recruits can make your year. Well a couple of good recruits can also mask attrition with your existing agents. Do you pay attention to your attrition year after year? If you took the top 20 percent of your producers and what their production was in 2016 versus 2017, I bet you will see attrition in many cases-even if your business has grown overall. How do you manage this attrition? Again, 50 percent of producers say they plan to move or would consider moving business to a new BGA next year. Don’t lose sight of your existing producers, even those that have not yet produced with you. Do you produce newsletters to keep them in the know? Do you conduct meetings to create comradery? Do you have contests?
    • Many BGAs focus on recruiting new agents when 80 percent of their agents are not producing with them. Remember, just because those agents are not producing with you, it does not mean they are not producing at all. Again, 40 percent of independent producers have written with three or more BGAs over the last year.
    • Get reporting from your company wholesaler (North American preferably) and do a “fallen angels campaign.” For example, if you had a large amount of GUL (guaranteed universal life insurance) business in 2016 and you lost production in 2017 because of GUL repricing, etc., the reporting will show you who fell off in production. Next, create a plan with your wholesaler to target those producers.
    • Know your numbers! I call it the 20/80/20 rule-usually 20 percent or so of an MGA’s agents actually produce with them, and those agents represent 80 percent of the MGA’s business. Are your numbers in line with these numbers? If not, what can you do to improve them? Big agents are great, but be wary of concentration risk.

    3. Paid case ratio-It doesn’t matter how many cases your agents submit if those cases are not getting placed.

    • I believe that the biggest reason consumers get disappointed in a service or product is quite simply because of not meeting expectations that were laid out at the point of sale. Thus, field underwriting is important. If the client was quoted preferred and they got a standard, the case may not get placed. Continue to train the agents on field underwriting. Also, leverage the carriers’ underwriters for field underwriting training! If you have not done a meeting or webinar with underwriters presenting, you will find they typically attract great attendance.
    • Conference calls between the BGA’s back offices and the underwriter at the carrier can help significantly in education on the carrier’s nuances.
    • Do you train your agents on technological solutions like e-apps, expedited underwriting processes, drop ticket, etc.? These solutions can and do significantly help with the paid case ratio. One reason is because many times the apps cannot be submitted unless the fields are filled out properly. Another interesting reason that I have experienced is, when the carrier is able to decrease the cycle time from app submitted to issued, the placement rate goes up! Buyer’s remorse is less likely! If you are a BGA that does $1 million in production and can increase your paid case ratio by 10 percent, that is an extra $100,000 in sales.

    4. Average case size.

    • This is where cash value life insurance shines. For instance, in Q1 2018, the average indexed universal life insurance target premium was $7,4123 in comparison to GUL at $5,454 and term at $988. Educating your agents on the benefits of cash value life insurance can increase your average case size. Also remember, just because a producer does not write a certain product type with you, it does not mean that producer does not write that product type. Do you survey your field force to fully profile your agents?
    • If you are an annuity shop, do you market single premium life insurance to those annuity producers? Annuity producers are used to collecting large checks from consumers and therefore are very prone to single premium life production. Furthermore, single premium life usually has the simplified underwriting that annuity agents appreciate.
    • If the carrier’s underwriter approves more coverage than the client applied for, does the agent give the client the option to buy up their coverage?

    Let’s assume you did all of the above successfully-you were able to recruit the equivalent of 10 percent of your production, mitigate attrition, increase your paid case ratio by five percent, and increase your average case size by 10 percent. That is how you grow by 25 percent per year!

    Again, like gravity pulls and like gas, oxygen, spark and compression create an explosion, if you are…

    1. Bringing in new agents that are producing
    2. Managing attrition
    3. Getting the cases paid
    4. Getting reasonable sized cases

    …then your engine has no choice but to run. Now you may need to do some “engine tuning” in order to accomplish the above, such as linking the compensation of your staff to the above activities, product education, etc., but that is where the council of a good, seasoned mechanic/wholesaler can be invaluable.

    References:

    1. NAILBA Independent Life Brokerage Study 2016.
    2. Forbes 17 Stats and Facts Every Marketer Should Know About Video Marketing (September 6, 2017).
    3. LIMRA, US Retail Independent Life Insurance Sales (Q1 2018).

    The opinions and ideas expressed by Charlie Gipple are his own and not necessarily those of North American Company for Life and Health Insurance or its affiliates. North American Company does not endorse or promote these opinions and ideas.

    Craigslist, Kawasaki, YouTube, Jiffy Lube, and Google are not affiliated with nor endorse or promote North American Company for Life and Health Insurance or its products or services.

    Charlie Gipple, CFP®, CLU®, ChFC®, is the owner of CG Financial Group, one of the fastest growing annuity, life, and long term care IMOs in the industry. Gipple’s passion is to fill the educational void left by the reduction of available training and prospecting programs that exist for agents today. Gipple is personally involved with guiding and mentoring CG Financial Group agents in areas such as conducting seminars, advanced sales concepts, case design, or even joint sales meetings. Gipple believes that agents don’t need “product pitching,” they need mentorship, technology, and somebody to pick up the phone…

    Gipple can be reached by phone at 515-986-3065. Email: cgipple@cgfinancialgroupllc.com.