Sales Management-TIP Financial Services Corporation Managing a Field Sales Force
Case Study Workshop B
TIP Financial Services Corporation
Managing a Field Sales Force
It was Tuesday, June 1. Don Krane had just left the office of Jack Jensen, his firm’s regional vice president of sales. Jack has been the regional vice president for TIP Financial Services in Kansas City, Kansas, for over 20 years. Don manages 50 of TIP’s sales associates covering the state of Iowa. He has worked for Jack for the past three years.
During his three-hour drive back to his home in Des Moines, Iowa, Don thought about what had just transpired during his afternoon-long meeting with Jack. The meeting was scheduled by Jack, and the agenda was meant to serve as a wake-up call for Don. He was under pressure to turn things around in his district, which had experienced steadily declining sales during his tenure. Despite having prepared for the meeting and outlining reasons for why his district was failing and what he was going to do about the problem, Don was told in no uncertain terms that unless things actually turned around in Iowa, he would be let go before the end of the year. As he drove across the Iowa state line, he had pretty much convinced himself that there was no way he could fight the trends plaguing the traditional financial services industry in which he worked. Still, he kept replaying the words Jack expressed to him as he left the meeting. “In my view, potential is just wasted talent,” he had said. “I still believe in your talent. I like the ideas you presented and am anxious to see if they can work for you” Don appreciated Jack’s parting vote of confidence and felt deep down inside that he was a winner and a talented leader. However, he really needed his new plan to “right the ship” in his district.
Background
After graduating with a finance degree from Iowa State, Don had climbed up the corporate ladder while working for an independent, single-branch bank in Des Moines. He started out as a teller and worked his way through a plethora of jobs, including a chief loan officer position and a wealth counselor position. At age 40, he became the bank’s president and was featured in several Iowa business journals as a rising star in the state’s banking industry.
It looked like Don and his family were leading storybook lives until he learned that this bank was being acquired by a larger national banking institution, and his position would be eliminated. With two kids almost ready to go off to college and a sizable mortgage on a new house built the previous year, Don was determined to use the opportunity to restart his career. He was a firm believer in fate and that when one door closed, another one opened.
Although he was offered several opportunities with other banks in the area, Don wanted to get out of the banking industry because he saw too much consolidation going on. Within two months of being laid off, he accepted a position working for TIP Financial Services as a sales manager for the state of Iowa. Although he had no experience directly selling insurance and financial products, he was very knowledgeable about various financial products from his years in the banking business. He also knew the state of Iowa like the back of his hand, having spent his entire life there. Don embraced the new challenge and was determined to work hard to be an effective sales manager.
TIP Financial Services is based in Chicago, Illinios. It was founded in 1930 as an insurance company that primarily served farm families in the Midwest. Today the company does business in 17 status, although the bulk of business – 80 per cent – still comes from customers in the Midwest. The firm manages over $20 billion in assets via a network of 4,500 independent contractor agents (called financial consultants) and more than 6,000 support employees. Its financial products include home and property insurance, business insurance, 401k plans, stocks and mutual funds, long-term care insurance, annuities, and financial planning and trust services.
TIP Financial Services is also a member of the Insurance Marketplace Standards Association (IMSA). IMSA’S goal is to promote a documented set of high standards covering various aspects of the insurance industry. TIP was a founding member of IMSA. The company even helped write the association’s original policies and procedures related to treating insurance customers honestly, fairly, and with integrity.
TIP, in fact, is an acronym for Trust, Integrity, and Performance. The three words still appear in the company’s advertising campaigns and are the cornerstone of its selling strategy – providing people in small towns with financial services via qualified financial consultants that live in their communities. The company’s financial consultants are well trained, professional, and provide for TIP’s financial consultants. Every consultant is trained to learn about their customers’ needs and goals before identifying potential products to help them meet their objectives.
This was exactly what enticed Don Krane to take the position as sales manager with TIP Financial Services. He was a big believer in high ethical standards and felt the opportunity to work for the company was an excellent fit for him. In his first year, he spent a lot of time traveling to all of the small towns in Iowa meeting the consultants he managed. His group of 50 financial consultants consisted of 47 men and 3 women. Collectively they were a solid group with a few top performers. As is often the case with sales, the 80-20 principle definitely applied in his district: 80 per cent of the business was closed by just 20 per cent of his financial consultants.
Year Two
By Don’s second year, 20 members of his team had turned over. The turnover was simply due to a lack of selling success on the part of consultants. He either fired them, or they left of their own accord. Most of Don’s time was now spent recruiting and training new consultants. Very little of his time was spent in the field with his experienced consultants. Still, sales were increasing by 5 per cent yearly, and Don was only traveling two days a week as opposed to the four days a week he traveled in his first year, which made things easier for his family. More and more of his communications with his team were being done over the phone or via e-mail rather than through personal visits. Usually the communications were related to problems with existing accounts or changes in politics being dictated by headquarters.
Year Three
In Don’s third year, the sales in his district were flat, and he had to replace another 15 consultants. Of the 15 consultants Don replaced in year three, 12 were people he had hired less than 18 months earlier. He had enlisted the use of a recruiter to help him find qualified candidates, but there were fewer and fewer qualified candidates who wanted to relocate to small towns in Iowa.
Year Four
May marked Don’s four-year anniversary with TIP Financial Services. It was during this month he learned his job was in jeopardy. He was feeling a lot of stress and starting to lose sleep at night ruminating about work. When the company’s first-quarter sales results were released earlier in the month, Don’s district ranked dead last sales-wise. To make matters worse, he had just received a disturbing telephone call from his long-time customer Bruce Bowen. Bruce owned a window manufacturing company located in Davenport, Iowa. All of Bruce’s business insurance was written with TIP as was his personal life insurance and annuities. Many of his 150 employees were also TIP customers through a 401k TIP offered. Bruce had met Don on one of his many trips to Davenport, and the two hit it off immediately. Both men were golfers and huge Iowa State University Cyclone fans, having attended the college about the same time. They would often meet up to tailgate at Cyclone football games and to play golf.
Bruce was very blunt with Don on the phone. He expressed his displeasure about the young, uninformed TIP representative now servicing his company. He went on to say that the an was his third sales representative in three years, and he questioned why Don couldn’t find someone more seasoned who would take the time to learn his business and try to understand his needs. He felt like he was in constant transition when working with TIP Financial Services and needed stability from the firm. Finally, he lowered the boom and told Don he was moving his business to another financial services provider. He just wanted to make sure there were no hard feelings. It was just business, after all.
Shortly after the phone call from Bruce, Don received an e-mail from Jack Jensen requesting a meeting at his office to discuss the status of the Iowa district. In the two weeks leading up to the meeting with Jack, Don did a lot of soul searching as to why his last two years with TIP Financial Services had spiraled downward. After some thought, he came up with three major reasons:
First, it was the financial industry itself. The Internet had spawned many newly formed financial companies offering cut-rate fees. Don felt his company was clinging to a dying business model. Using the Internet, clients could gather information and make transactions anywhere in just seconds. They didn’t have to wait for a TIPS consultant to pay them a visit. Indeed, customers were becoming increasingly savvy, and transaction fees within the industry were shrinking. By contrast, TIP Financial Services’ overhead remained high as were the commissions its consultants earned.
Second, his younger subordinates weren’t willing to work as hard and put in long hours to achieve success. Although Don regularly put in 50 to 60-hour workweeks, many of the consultants working for him reached a certain pay level, became complacent, and would not push for new business. He believed most of his reps probably worked, on average, 30 to 35 hours a week. He called these consultants “silos” because they did just enough to get by and didn’t want to be bothered by management. They drove Don crazy.
Financial consultants were expected to make 100 phone calls a day and conduct 15 to 20 personal visits to existing customers or new prospects each week. Many of these visits had to take place from 4 p.m. to 9 p.m. after clients had arrived home from work. Despite the high income a rep could potentially earn-some of the top-performing financial consultants in the Iowa district made $250,000 a year, which nearly equaled Don’s compensation—the job simply required more dedication than most people were willing to give.
The third and final reason was turnover. It was easy to figure out why the turnover rate was so high. It was hard for a new consultant to come into a territory. They were first required to go through rigorous training, then learned about their existing customers, and, finally, were expected to grow their client bases by winning new accounts.
Many of Don’s new hires burned out on the long hours and the rejection that often came with prospecting for new business. Very few had the thick skin necessary for a career in financial services sales.
The turnover was also a problem because it occupied so much of Don’s time. He estimated he spent 60 per cent of his time recruiting and training new financial consultants. Don spent the other 40 per cent of his time conducting performance appraisals, filling out travel expense forms, corresponding with TIP’s corporate office, and helping his consultants with their field problems. He was surprised by how little time he spent working with his experienced consultants and spending “face time” with their customers, who represented the bulk of his business.
Don believed his experienced, successful consultants held the key to his hiring the right people, so he began to create a “profile” of them. He asked himself two questions: Who would I want calling on me? And who would I want to be my mentor if I were just starting out in this business? With these two questions in mind, Don put together his “perfect financial consultant” list of traits, which were as follows:
• Self-motivated and able to work with little supervision
• Knowledgeable about financial products
• Possess an undergraduate degree in finance
• Mature and able to establish relationships with older, wealthy clients
• Has local ties to the community in which he or she works (is a member of the Chamber of Commerce, Kiwanis, Masons, school board, and so forth)
• Service-focused and willing to go the extra mile at all times
• Ethical and trustworthy
• Financially motivated
Don was ready for his June 1 meeting with Jack Jenson, which was scheduled to last most of the afternoon. He planned to present the three reasons why he believed his district was failing and to lay out a new plan to turn his district around. The plan included having his experienced, successful financial consultants mentor and partner with new consultants to help them close new business. He believed his plan was simple and straightforward. The veteran financial consultants would split commissions with their less experienced co-workers on any new business they jointly closed. The new financial consultants would be responsible for “bird-dogging,” or uncovering, new business leads and setting up meeting with potential clients.
Another part of Don’s plan was to wait a while to assign new hires to TIP’s existing customers. They could be assigned existing accounts, but only if they successfully generated new business during their first year. In the interim, the veteran consultants would handle the business until the time was right to turn it over to the new hires. This would help prevent the situation that cost Don his friend Bruce Bowen’s business.
The third part of Dons plan was to hire two different recruiters to bring in new talent. Don would only conduct final interviews. He intended to spend more time in the field (back to the four days a week he spent during his first year with TIP). One recruiter would focus on college-aged graduates. The idea was to hire more mature individuals and women for Don’s team.
Don had done a careful analysis of the demographics of customers buying financial services from local institutions like TIP Financial Services. He discovered that most of the customers were Baby Boomers (ages 40 to 70). In addition, he discovered that just under 40 per cent of the clients were women. Don realised he needed consultants that could relate better to this generation (and gender). He had learned over the past four years that young men and women just out of college with little experience had trouble convincing seasoned buyers to purchase products from them. Although the young men and women college graduates were very aggressive on the phone, they often had difficulty gaining credibility with clients in person. This is why Don thought his mentoring and team selling idea would pay big dividends.
1. Don could have been a better leader over the past three years. (a) List and describe the FIVE major groups of leadership theory, (b) choose ONE of those theories and use it to explain why he was not a successful leader, and (c) use the same theory to explain how he could improve his leadership. (Chapter 3 & 4)
2. You believe that a CRM system could help solve a number of the problems facing Don Krane. (a) Explain what a CRM system is, (b) explain how it could solve specific problems outlined in the case. (Chapter 5 & 6)
3. You feel that a change in hiring practice will improve employee turnover. (a) Using the information from the case, perform a salesperson job analysis, and (b) write a formal job description for potential TIP salespeople. (Chapter 8, You may need to read ahead to this chapter if we haven’t covered it yet in lectures)
Whether I am marking the case study assignments, a tutor/marker does it, or you mark your own and others in the new Workshop format, it is important that we are all following the same guidelines. Unlike a statistics assignment, where there is one right answer and everything else is wrong, issues in applied social sciences like Management and Marketing often have multiple “right” answers. There are often many ways to describe a problem and also many ways to solve it.
For these case studies (assignments and final exam), how you describe and interpret the problem, the process you go through to solve it, and your justification of your choices are as important as your choices and recommendations. For each of the case study questions, 50% of the mark will be allocated to how well you answer the question. The next 25% will assess the way you used the textbook/lecture and any outside information to describe, interpret, and approach the problem, and justify your choices and recommendations. The last 25% will assess the way you used facts from the case to support your answer and recommendations. In this way, we are assessing how you have taken concepts from the text/lectures, applied them to the facts of the case, and provided an integrated answer, choice, and/or recommendation.
This content mark will then be multipled by a referencing score, which will be 100% if the Faculty of Commerce guidelines are followed. The calculation I will use is (Answer Content average) X (Referencing) = Mark. If you follow the FoC guidelines, your content mark will be multiplied by 100% (so same mark) and if you provide no referencing, it will be multipled by 0% and you will receive a 0% for the assignment.
Here is the marking rubric that we will all be using for the case studies. Instead of giving number marks, I have put letter grades.
1 Does it answer the question? (50% weighting)
2 Does it refer to concepts (theories) from text/lecture (or outside sources if appropriate)?
3 Does it refer to the relevant issues (facts) of the case (or outside sources if appropriate)?
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