Effective Sales Management & Monitoring Producer Performance

August 7, 2023 by

Who is responsible for sales management in most firms? Often the task falls to the owner or the top producer in the firm. This is not necessarily a good idea, because sales management can take away time from the manager’s own sales efforts. And, good producers do not always make good managers.

Sales management, as important as it is, does not have to be a full-time job in most firms. If goals are set properly, communicated and monitored, if the right people are hired and developed, and if management will remove any unreasonable obstacles to production, producers essentially should manage themselves. They simply need to know that their performance is being monitored and that poor performance will not be tolerated.

Producer Performance

What is an acceptable level of producer performance for experienced, seasoned producers? It depends on a number of factors, such as:

  • Available producer support.
  • Sales skills of the producer.
  • Size and type of accounts in the geographic area.
  • The competition.
  • The local economy.
  • The markets represented.

If performance standards are not set for producers, they will set their own — which most likely will be lower than what management expects.

Management can use the performance of the best producer who has ever worked for the firm as a guideline for top producer performance. The average property/casualty commissions per producer of firms in our database is in the range of $250,000 to $400,000. The range is based on the size of the firm. These commissions include house accounts and direct-bill commissions, which are not necessarily commissions handled. Well-run firms have $500,000 to $700,000 in commissions per producer. In surveys in which owners are asked what size book they would expect experienced producers to handle after three years in the firm, they report $150,000 to $250,000 in commissions handled, based on the size of the firm. With respect to their expectations for new business produced each year in addition to the books handled, the range is $50,000 to $100,000, based on the size of the firm.

For new producers without experience, approximately $80,000 to $100,000 in commissions handled is expected after three years and new business of $25,000 to $40,000 in commissions per year. For new producers with experience (and without existing books of business) $150,000 to $200,000 in commissions handled is expected in three years, with $35,000 to $50,000 in new commissions produced per year.

Production Goals

Producers should be involved in the goal-setting process. Each year, every producer (including seasoned ones) should be given a new production requirement, for example 10%-25% growth, net of attrition, depending on the size of their book.

The producer should let management know how this production will be accomplished (for example, the number of quotes and policies that need to be written to accomplish his or her annual objective). Based on the producer’s own hit ratio and size of account written, it should be determined whether or not the production goal is achievable. The goals should be broken down into monthly quote-to-write activity to make it easier to manage producer performance.

Management actually needs two sales goals for each producer. One goal is the required new business increase in the number of accounts or commissions handled by the producer. The second goal should specify the type of account, as well as the source of the new business to be pursued such as account development, writing new accounts from referrals, target marketing or direct-mail programs, etc.

Sales Meetings

Effective weekly sales meetings need to be held so sales activity can be properly monitored. Specific sales activity should include new business produced, lost business, hit ratio for each producer, prospect activity, what referrals have been obtained from new sales, etc.

These meetings should provide owner and non-owner production staff with information on markets, sales goals, collection problems and service backlogs.

Producers have egos and need recognition. These meetings also are an excellent time to recognize superior performance, encourage double-teaming, and provide support through coaching and training.


Well-designed compensation plans make special provisions for above-average performance. This can be in the form of additional commissions for increasing levels of new production, additional perks, bonuses or other incentives. For example, an additional 5% in commissions could be paid per $50,000 in new production after a certain minimum commission goal is met.

Today, many firms pay more commission for new vs. renewal business (such as 40% new and 30% renewal commission).

In addition to structuring an effective compensation plan for producers, we recommend that owners compensate account managers over and above their salaries for their production efforts. In addition to account managers handling the phone calls, mail, claims and/or the renewal process, they often do a good job of account development in existing accounts.

Owners now realize they cannot afford to pay producers for sales or service work done by account managers. The key to compensating staff or producers is to pay based on the job performed. This is why many firms have stopped paying commercial producers for personal lines accounts and often have lowered the amount paid to producers for small commercial accounts.

We recommend that incentives for new business be paid to the service staff. We suggest giving a first-year commission percentage and/or a flat dollar amount per new policy. Usually, the firm easily can afford to pay the new commission for account managers on new business, as the amount given is often lower than what the firm would have paid in commission to producers for the same new accounts.

Support Producers

All producers need time to sell new accounts. In the firms we have worked with that provide support for good producers, there is better productivity and more growth for new production. Producer support can come from these three main areas: development of leads and appointments; assistance in marketing/placement; and servicing of accounts written.

Target Marketing

To achieve a high level of performance, producers need to target larger accounts, target certain classes of business, and write more lines of coverage for each account.

A sales assistant or even a telemarketer can help develop the leads for larger accounts and can target particular industries where the producer has some interest or expertise (that is, where he or she has written at least three of the same type of accounts).

The best source of new sales is referrals from a producer’s existing accounts, especially in his or her area of expertise.

Referrals should be sought from new accounts for which a difficult renewal has been placed and/or that has had excellent claims service.

Hit Ratios

Another sales management key is managing the producer’s hit ratio.

Producers can greatly improve their hit ratio on writing new accounts when they have good marketing/placement support. Some firms are using a central marketing person or department to help write new medium-size or large commercial accounts. A hit ratio of 20% to 25% is average for commercial lines, but obviously the closer to 100%, the better. In personal lines, the hit ratio is usually 40% to 60%.

Hit ratios can be improved when more time is spent qualifying the prospect. Key areas to uncover in the first critical 20- to 30-minute interview are: What is most important to the prospect in the insurance program? What are the politics, price and product the producer is competing against? Has the producer built a good rapport after this initial meeting, etc.?

Survey forms and collection of copies of existing policies should be completed in the second interview after the prospect has been properly qualified. If the producer hit ratios are improved, the firm’s expenses will be reduced greatly.

Sales Management Is Critical

To have a successful, growing firm, proper management of sales and producer performance is critical. Sales management can be easy if a process is established that monitors specific sales activity and performance. Effective sales management not only will reward the owners but will assist non-owner producers in achieving their goals.