As we work with our clients, the country’s top commercial insurance agent/brokers, to recruit new producers (sales people), we create a customized CompPlanner spreadsheet to use with candidates as an offer is prepared, extended, and accepted.
What is a CompPlanner Spreadsheet?
The CompPlanner spreadsheet provides the client with an indication of the return on investment for new producers. From a practical standpoint, we use it as an offer preview with a candidate. The spreadsheet shows the new producer the income potential of this career that comes through the compounding of renewal commissions on a growing clientele over time. We want to make sure that they understand the economics of the commercial insurance broker career: learn the profession, build your clientele, and get rich slowly but surely from the residual commissions.
How Can CompPlanner be Used for New Producers?
The CompPlanner spreadsheet illustrates the client’s compensation plan for a validated producer and the typically 3-year planned migration to validation (commission-based compensation). The constants in the spreadsheet are the client’s (1) producer splits (the % of commission on a new/renewal sale that a producer earns); (2) average commission % on a sale; (3) average $$ commission size per account sold; and (4) client renewal retention %. The big variable in the spreadsheet, of course, is how much new business a producer sells each year. We create 3 worksheets – a successful start, a rainmaker start, and a modest start – to show 3 scenarios since it’s difficult to determine how quickly a new producer will successfully build their book of business. The spreadsheet goes out 15 years and it shows the power of income generation for the new producer (and the client!).
Reviewing one client’s CompPlanner spreadsheet recently, the year 15 producer’s earning projections looked like this for the slow/successful/fast start:
- Modest start: $245,760
- Successful start: $261,054
- Rainmaker: $345,868
Four takeaways about the commercial producer career from these projected earnings:
- Producer economics — uncapped commissions, big-time residual commissions on client renewals, and a linear relationship between your clientele size and your W-2 income — make this an amazing upside sales career…IF you can produce!
- If a new producer can grind through a slow start (not quit or get fired) and become a successful producer, producer earnings smooth out and stabilize as more years are invested in the career and residual commissions kick into high gear and power the W-2.
- The two variables the producer controls to maximize their W-2 income are: sell more new business and increase the average client commission size.
- This particular client is a smaller city, community-based agency so the 15-year income projections may be relatively low in comparison to a larger, regional commercial insurance broker. This client’s successful producers are making $200K+ in a small city where the median income is a fraction of this. Agent/brokers in smaller cities and rural areas can market the producer career as an incredibly lucrative local sales career opportunity.
If you would like to discuss CompPlanner or working with The CIB Group in hiring producers for your company, contact us today.