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prospectingSell 26% More Policiesby Managing Your X-DatesAllstate agencies working with leadmanagement software have pioneereda sales process to easily follow-up and marketto prospects and existing clients usingX-dates, also known as “Win-backs.”Lost opportunities are an endangeredspecies for top-performing Allstate agencies.Agency owners are bolstering theirsales processes to automatically follow-upwith leads based off X-dates. As it stands,high performing Allstate agencies todayare closing an average of 15% of the newsales leads they buy or generate throughvarious marketing channels. But what dothese agencies do with the other 85% ofsales leads they are unable to close? Theydon’t give up, as many lower performingagencies do. Most successful agents establishin-house follow-up systems of theirown or utilize cutting edge technology tofacilitate their prospect contact programs.The important thing to remember is thatleads cost money, so preserving X-dates isalways a good idea because, until the saleis made or the prospect tells you not tocontact them again, the lead can alwaysdevelop into a sale.A new analysis recently conducted bya leading management software pioneerconcluded that, on average, high performingAllstate agencies gained 26% ofnew business by nurturing prospects andcontacting them near their policy renewaldates. Successful agencies leveragedthese second, third, or fourth opportunitiesto successfully sell more policieswithout additional investment.Insurance is a commodity that mostpeople will purchase throughout theirlifetime. With insurance policies renewingevery 6-12 months, there is alwaysan opportunity to win-back business youmay have initially lost. There are manyreasons why consumers switch insurancepolicies. Reasons for switchingcompanies include rate changes, coverageneeds that the current carrier cannotfulfill, poor customer service experiences,changes in personal financial situations,or an effective advertising campaign bya competitor. There are two reasons whyAllstate agents should remain vigilant atall times. First and foremost is becauseyour customers may be on the verge ofswitching, which is why customer reviewsand other customer contact programsare vital to your retention and ALIefforts. Second, is because some of yourcompetitors’ customers are also on theverge of switching, but you’ll never knowwho they are unless you re-contact yourX-dates. Therefore, if you are not carefullytracking when these X-dates approach,you are simply turning your backon these consumers while they are in theprocess of looking for a new insurancepolicy. That is why having a lead nurturingprocess in place is key to systematicallyfollow-up with X-dates.Many consumers change insurance carriersfrequently and an even higher percentagecompare carriers on the Internet.Added together, they represent a vast numberof consumers who are actively shoppingfor insurance, typically around their policyrenewal date. It is critical for any agencyto use the right tools to ensure that theseconsumers receive timely and relevant insurancemarketing from your agency. Withthe average agency closing around 10% ofnew insurance sales leads, this leaves aneven a larger pool of leads being lost – andnever to be found again, unless proactivefollow-up measures are established.The problem most Allstate agents face,when losing a deal to competition, is thatthey do not have a sales lead managementsystem to notate the X-date, automaticallymarket to prospects aroundthis date, and prompt agents or producersto follow-up. Without knowing andleveraging this critical piece of informationand without the right lead managementsolution, it is virtually impossibleto market and communicate to such asignificant number of leads. Without theright tools, it is impractical to properlyleverage X-date information.The most successful agencies employ asimple process to win-back these deals:1. Track the X-date for every lead2. Send scheduled emails leading intothe X-date to remain front-of-mind3. Follow-up each email with a call tomaximize the success of your email communicationsHaving a lead management systemand following a rigorous X-dating processwill help the average Allstate agencysell at least 26% more insurance policieswithout buying additional sales leads.Leads360 is the market and technologyleader in Web-based sales lead managementsolutions. Leads360 currently managesmore than 20,000,000 leads and servesover 4000 clients in the most competitivebusiness-to-consumer industries. For moreinformation, visit www.leads360.com.40 — Exclusivefocus Winter 2009/2010
agency financing tipsThe Driving Factors of Allstate Agency ValueWhat Story Is Your Agency Telling?BY PAUL CLARKECapitalismI think it is safe to state that the goalof any business owner is to maximize theamount of money they make. Certainly, weall want to have a good reputation withinthe market we serve, provide a valuableservice to our clients and enjoy our work,but we also want to make money.The ultimate prize for Allstate agencyowners is the end sales price received fortheir agencies—the eventual cashing outfollowing 5, 10 or 25 years of sweat andhard work. At some point in time, we allask ourselves, “What price would my agencyfetch today if I retire or decide to sell?”Granted, in the transfer of any assetthere are factors that affect the value of asingle agency that are out of the owner’scontrol. It may take some time to find abuyer who’s a good fit in terms of experience,credit quality and the capacity torepay the debt associated with purchasingthe business.So, for the purpose of this article, let’sconcentrate on the things we can control—that primarily being the quality of your bookof business nearing the time of sale.Market Value vs. Economic ValueBefore we address the factors that drivethe value of Allstate agencies, I think itis appropriate to address how we getfrom what usually begins as a handshakeagreement on price to closing and fundingthe agency acquisition transaction.Once a willing buyer and a willing sellerhave agreed on a price for an Allstate agency,market value has been set. However,money must be brought to the table for atrue transfer of market value to take place.In most cases, a third party lender is introducedto assist in facilitating the transfer ofmarket value from seller to buyer.The lender brings to the table a uniqueperspective as to the degree of fit betweenthe buying agent and agency in question.The net result of this process is the determinationof the loan amount and otherstructural elements of the transition thelender views as necessary in ensuring thesuccessful repayment of the loan. Of criticalimportance in determining a maximumloan limit is the economic value, or thelevel of support that an agency’s historicalcash flow brings to the transaction.To the extent that the market value(the price agreed upon by buyer and seller)for an Allstate agency exceeds its economicvalue (the value the cash flow willsupport), the difference represents thevalue a buyer has decided to pay for thepotential future earnings (i.e., earningsnot evidenced in the agency’s historicalperformance) of the agency.For buyers, the payment of a premiumfor agency potential is reasonablebecause their potential future return ontheir agency acquisition investment isunlimited, and thus offsets the risk theytake in paying the premium.For lenders, financing this premiumportion of the total purchase price isequally unreasonable because their futurereturn on the agency acquisitionfinancing transaction is fixed at their annualrate of interest charged on the loan,which offers no upside to offset the risktaken in financing the premium portion.The net result is that the portion of thepurchase price for an Allstate agency thatexceeds its economic value will have tobe paid by either a cash down paymentby the buyer or a seller note, or a combinationof the two.Unique IndustryAllstate agents are in a unique position,having a vibrant market of availablefinanciers willing to assist in the transferof value from seller to buyer. This vibrantlending market is a testament to a varietyof factors including:1) Allstate Insurance represents thebuyer of last resort, essentially setting afloor value of agency purchases at 1.5Xwith the Termination Payment Provision.2) Allstate Insurance, being a singlepayorsystem, allows banks to easily controltheir collateral—the cash. This is indirect contrast to independent agentswho have various contracts with variouspayors, making it virtually impossible forlenders to control the flow of cash in andout of the business.3) The general quality of the individualwho pursues this line of business, and thepre-screening by Allstate Insurance, producesa high-quality buyer pool for thoselenders that choose to participate in theAllstate niche.Other industries, such as financial planning,may only get 30% of their businessvalue at closing due to a lack of an organizedor mature lending environment.Without the current competitive lendingenvironment that Allstate agents now enjoy,a seller could either be forced to takeon all or part of the risk in the form of aseller note, or accept a reduced price dueto a lack of available bank financing.Winter 2009/2010 Exclusivefocus — 41
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