Home' Trinidad and Tobago Guardian : May 3rd 2015 Contents Client Situation
Miguel, 27, has been
selling insurance for
the past three years.
He enjoys the
that comes with the
job and is confident
that if he does the right things he will be a
top agent someday.
Six months ago, he moved into a two-bed-
room flat and pays a hefty rent of $4,500 per
month. He has car payments that are $3,500
and his other living expenses average $2,000
monthly. Miguel finds himself in an unsettling
situation whereby his monthly bills have
exceeded his commissions causing him to fall
back on payments and even incurring debt
just to stay afloat. Every now and again his
commissions would bail him out and he would
come up briefly for air.
Miguel earns a commission anywhere
between $2,500 and $3,500 from each policy
sold and averages between two to three clients
To achieve this, he would have had to meet
20 people after making about 100 calls. At
least one policy lapses every quarter and Miguel
feels the impact of it when his company "claws
back" his commissions; worsening his already
desperate financial position.
Despite his best efforts Miguel cannot seem
to get a handle on what he is doing wrong.
Nick's Assessment & Advice
Miguel is not unlike other self-employed
individuals. There is a direct correlation
between efforts and the results seen in the
bottom line. Like any business the formula is
simple: income minus expenses equals profit
Profits strengthen and build assets while
losses increase debts and deplete resources. If
losses are left unchecked for a prolonged period
of time, the business will eventually be forced
to close down leaving a trail of liabilities behind.
The great thing about Miguel s profession is
that he can write his own paychecks but the
flipside of the coin is that if he does not work
effectively, he does not eat.
While more work will invariably improve
his income, working smarter could mean less
effort for the same or greater results.
Using your numbers effectively
There is a saying that "anything that cannot
be measured cannot be managed". Miguel
knows his numbers but if he uses them more
effectively he can change his fortunes. Table
1 captures his data and gives us a base to for-
mulate a strategy.
Profit or loss
Three out of the four of the scenarios in
Table 1 reflect negative cash flows, which
explains why most of the time Miguel is incur-
ring some type of debt and is falling back on
payments. The months that he comes up for
air with a small surplus of $500; the extras
are immediately absorbed by accumulated
losses. What exacerbates his situation is that
over each quarter he experiences a lapse and
commissions are "clawed back" deepening his
By taking on a higher rent without a com-
mensurate increase in sales has put him in a
cash crunch leaving with few options. He can
consider reducing or eliminating the rent alto-
gether or quickly boosting sales or a combi-
nation of the two.
Eliminating rent is a no-brainer but the real
challenge is in increasing his income and doing
Miguel did not accept a sales job to live a
life of pinching pennies, which could help
right now. Rather, he envisions himself as a
top agent, earning a handsome paycheck that
affords him the lifestyle of comfort he desires.
The potential rewards for an agent are great
but it often comes at a high price, because of
public perception of the products. Notwith-
standing its indispensability to a good financial
plan, insurance premiums often compete for
dollars otherwise spent on immediate pleasures
such as entertainment, clothing and food.
Based on Miguel s numbers, if he wants
to increase his numbers, he simply has to
increase the number of calls he makes. To
double his income he has to make 200 phone
calls, which would get him 40 interviews
and allow him to close an average of five
At an average commission rate of $3,000
($2,500 + $3,500 = $6,000 / 2) his income
would jump to $15,000 (5 clients x $3,000)
While doubling his numbers would cer-
tainly double his results, the challenge Miguel
faces is where to find these potential clients
to call. This is not a problem unique to insur-
ance salespersons but faced by all business-
people who want to increase their sales.
When his pool of prospects dries up, he
may have no choice but to employ survival
tactics such as flipping the pages of a phone
book and making cold calls. But the approach
that would always stand the test of time is
to provide clients with an exemplary level
of service and earn the right to qualified
Ratios & prospecting
A closer look at Miguel s numbers tells a
story of the quality of his work and the results
he currently obtains.
First off, out of a maximum of 9 policies
sold in a quarter Miguel has one lapsed case.
This seems small in absolute terms but it
means that 11 per cent of his sales go bad
which is neither good for his bank account
nor his or his company s reputation. These
numbers are reflective of how well he assesses
people s needs, how effectively he presents
his recommendations and how skilled he is
in moving prospects to a sustainable long-
Secondly, we observe that 20 per cent of
his calls yield appointments but only two
per cent result in sales. These numbers also
paint a picture of how well he can identify
the good prospects from bad, how effectively
he converts them into customers and how
long he keeps them as loyal clients (people
who do repeat business).
His success with this effort has a lot to
do with his knowledge and training. Miguel
also has to introspect at the end of each day,
reviewing his experiences in the field, noting
prospect s responses to sales calls and meet-
ings, testing his answers to common objec-
tions, evaluating the pattern of meetings and
trying different closing techniques.
Simply put, he has to continue doing what
works, stop doing what doesn t and improve
in other weak areas.
Miguel can employ a combination of strate-
gies that include keeping expenses low, increas-
ing the volume of his activity and working
smarter not just harder.
(Cases are developed from a combination of
scenarios received from our readers)
If you have any questions or need advice
on today's subject please email me
at: email@example.com or web at:
MAY 3 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
FINANCIAL PLANNING | SBG7
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