The business process has always been interesting to me. What do we do and how do we do it? We all seem to follow a similar process with varying results. The typical new business progression is as follows:
- We obtain a potential prospect . . . referral, direct mail, telemarketer or someone we meet on a plane, etc.
- We attempt to arrange an initial meeting
- If successful, we tell our story. What is our differentiator? What are their pain points? How can we relieve the pain?
- If successful, we obtain a B of R. Some of us get into the spread sheet game.
- If not successful, we determine whether to follow up at a future time or purge them from our system.
The length of the process varies. Sometimes it comes to conclusion quickly. Perhaps they are a perfect prospect, but the timing is not right. They may be in the system for 1-2 years before they become clients.
We spend all this time and energy and finally they become a client. Is that when you get paid? One would hope so, but not necessarily. Just because they have become a client does not mean that you will be paid.
Up through 2009 we had an ad hoc commission tracking system that we felt was adequate. We did not want to incur the expense of having to input all of our commission statements into any type of official commission tracking module.
In January 2010 based on recommendations from many of our peers, we bought and installed a real commission tracking system. What did we find? Between January 2010 and September of 2011 we have recovered $193,000 of commissions. The following are examples of the types of commissions errors we have uncovered:
- We quoted level commission and received graded.
- At renewal we inexplicably stopped receiving commissions.
- New cases were input incorrectly and we received the incorrect commissions or no commission at all!.
- Bonus payments not paid at all or paid incorrectly.
We currently spend 15 hours per month managing our commission accounting. It is absolutely time well spent.
My question to you is: Are you being paid for your work? Let me know in the comments if you have similar stories.
Torelli, CLU, ChFC, MSFS is president of Los Angeles-based e3 Financial.
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