Chris Nordyke runs an insurance agency in Corvallis, Oregon. But it’s a different kind of agency — with a unique approach to sales, service, and motivation. Just look at the sign in its lobby.

24 Responses to “Are you as bold as this Oregon insurance agency?”

  1. Terry Erskin says:

    It says his employees arent but is he? I’m guessing in the insurance business he still is.

  2. Peter J. Postorino says:

    Their reviews, raises and continued employment will most likely still be based on the amount of revenue they generate and maintain, so in theory they are still working on “commission.” The more you bring in, the more you make, either way.

  3. paul howard says:

    The owners are likely compensated for more sales. These guys get paid somehow. They are likely to be still motivated to sell, even if just to please the boss.

    I don’t really understand why this changes much.

    A car dealer near me tried this. It didn’t change much. Salesmen still sold with the same integrity as before.

  4. Greg Blencoe says:

    Dan,

    I love the approach that Chris Nordyke is taking. Thanks for sharing this.

    Ironically, I think the approach of taking the focus off of sales could potentially result in a lot more sales. The reason is that most customers will likely really appreciate having the focus be on their needs and not on the needs of the salesperson.

    And if the customer’s needs are being met, then they are more likely to continue to be a customer and tell others about their positive experiences.

  5. I agree with some of the respondents this message while appearing to be forward thinking may be a little misleading. I say this because if products are being recommended and placed at this agency, someone is getting a commission, period! No one does this work as a volunteer and I suspect this business is no different. Bank employees don’t get paid commissions but are often rewarded financially and otherwise based on product placement, pressured to place products even.
    I suspect Daniel, you shared this to show a different sort of motivation but I’m not sure that is exactly what is going on here. This may be more about marketing than staff motivation. I don’t know this company and wouldn’t dream of assuming they were doing anything other than what is best for the client until proven otherwise.
    As someone who worked in the commission financial services world for 11 years and now operates a fee-for-advice business (which doesn’t include product sale of any kind) where I charge for time or plans, if products are being placed there is a financial reward to someone.
    I do agree with Greg when the focus is taken off sales and re-directed to the purpose, helping the client, more sales are often the result. Love the discussion!

  6. Andrew Meyer says:

    Dan,

    you work and live on the east coast, so you’re probably not familiar with Les Schwab. Les Schwab founded a tire store, which is incredibly successful and noted for their tremendous customer service. Similar to what your insurance guy presents, Schwab Tires pays no commissions, but they have an extraordinary business approach. They share half the profits that any store earns with the people working at the store. That philosophy drives their whole approach.

    Now, I know nothing about this insurance guy, but given that he’s from Corvallis OR, there is no doubt that he knows about and is heavily influenced by Les Schwab.

    As someone who cares about motivation and business, if you haven’t read his book (http://amzn.to/Ppxz7o), it is a classic. Or for an abbreviated description, check him out on Wikipedia. (http://en.wikipedia.org/wiki/Les_Schwab)

  7. Avatar photo Dan Pink says:

    All — Great comments. Very insightful.

    Andrew — Thanks for the Les Schwab recommendation. I’m off to check it out.

  8. Mark says:

    A friend of mine from years ago who still lives and sells cars in the Philly ( Steve Videon) His Father Frank set this up years ago and I think they still work it this way. They payed the salesmen a salary
    . One of the only Car Dealers I know of that does this. http://www.frankcvideon.com/index.htm

  9. Dan, I can speak from direct experience with Chris as a customer. I have held my home, car and business insurance with him for a few years. His customer service is up there with Zappos! And that is not just from Chris but his whole staff. His office is friendly and his staff is efficient, caring and always helpful.

    I have recently moved from his location but have decided to stay with him just because I know I will not find the same service anywhere. It was a rare find.
    -John

  10. All fair questions/comments. The reality is that the agency got paid different percentages on every policy or product we placed. That’s just the nature of the industry. There is no way for me to remove my agency’s “commission” from the equation, but I can at least pay the team differently, hopefully creating a different experience for my clients in the process.

  11. It’s also worth noting, that you’ll never fully remove a business’s profit motive/incentive. Most business owner’s can’t insulate themselves from this even if they wanted to. If a car dealer pays a salary versus commission, the owner of the dealership is still theoretically incentivized to push their sales people, as they make more money every time a car is sold.
    Despite an imperfect system, setting up a commission-free model certainly gets your employees more aligned with the customer’s interest though, no?

    As to whether this was just done for marketing- Yes and no. There’s no doubt I was counting on this to be a differentiator from other agents and companies. I was betting that it would resonate with clients and would set a different tone for our interactions with them. Everything a company does is marketing. Strategically, my prediction was that it would create more confidence in my team, and create more trust with our clients, thus selling more policies. Definitely a marketing equation.

  12. Paul says:

    As a former Verizon dealer, no, I couldn’t determine how Verizon ‘comped’ me, but I could determine how I ‘comped’ my employees and since they were the front line to customers, yes, it changed their sales methods. In the end, though, it was tough to compete with dealers (and a company) that placed their high margin products and services over customer needs.
    In the insurance game, I see ads, that if I took them seriously I’d be going from company to company saving so much money that at one point they’d be paying ME to have insurance. If you don’t have a staff that will take the time to truly evaluate needs, not ‘savings’ or best sales margins, the customer is not being served. As John has mentioned, I not only know that Chris has done this as a customer, but also as one that had his wife working there. We both learned a lot about correctly evaluating insurance needs. And although she’s moved on to a different job, our insurance needs are still be handled there.

  13. Drew Tewell says:

    Relationships built on trust are foundational to selling. This has always been true, but probably more so now. Thanks Dan!

  14. Harry says:

    As a Dutch reader I am very suprised by the scepticism in earlier replies.

    I have worked at an insurrance company that has never in it’s decades of existance paid any sales commission or bonus to their employees. Nor did they give bonusses to their managers that are worth mentioning.

    Considering the fact that they’ve survived all (recent) tough times from 9/11 up to the financial crisis, I’d say the approach works fine enough.
    Just give the employee an honest monthly wage and your customer some good advice. They’ll figure out they’ve been screwed sooner or later anyway.

  15. john naddaf says:

    i like it on face value,,,but i also feel it raises more issues than it solves,,,firstly,long term relationships with people are built over time,,not with a sign over a wall…the danger here is telling the clients that each one is special,their frienship is valued,,,however the way they are told,is very impersonal,just leaving a note that is directed at anyone and everyone who reads it.when really that same message can be conveyed with a smile,and a courteous approach…other issues with that sign,is that it discredits the employees,as their own personal success is restricted,,therefore the truly successful work elsewhere because they because they can earn more…and lets face it at the risk of being cynical really are the premiums made cheaper through not paying commissions,all that does is leave the staff feeling slighted,give me a sales agent on the highest commission any day of the week,,then instead of an employee that will get paid a salary regardless of the clients decision,,,true that is removing an incentive for misconduct,,but its also removing the need to go above and beyond what is expected…word of mouth affects future commissions,but a fixed salary,will remain unaffected,whether the effort is 50,or 100%…

  16. john naddaf says:

    also,,had to mention that the policy also implies a lack of faith by the employer in the integrity of his own staff

  17. This is a really interesting post. Oftentimes staffing companies pretend that they can service all industries, but I recommend going with an insurance employment agency as they understand the laws and regulations.

  18. Russ Helms says:

    I am the CEO and co-owner of a company (Rho) that provides clinical research services to the pharmaceutical and biotechnology industries as well as the federal government. Not quite two years ago, we eliminated commissions for our sales reps. At the time, there were plenty of people with doubts about this strategy. Could we motivate our sales people without it? Would sales drop? Could we recruit new sales reps?
     
    I am happy to say, that almost two years later, we have had a record year in sales (we’ve been in business for 28 years) accompanied by record profitability. Intangibly, we have seen an increase in collaboration among sales people and greater cooperation between operations personnel and sales people.
     
    Several other people commented here about whether they still receive financial incentives of some kind. In our case that is definitely true. We are a profit sharing company, so our sales reps, along with all of our employees, receive a profit sharing bonus at the end of the year. However, in this case, they are receiving an incentive for making the company as a whole more successful and over a longer period of time, which benefits all of us.
     
    In terms of hiring, this hasn’t been a significant hurdle. Interestingly, not only have we been able to find qualified candidates in our job searches, we have found that candidates open to non-commissioned positions are a better fit for our company culture.

    Thanks for the conversation about this, and I look forward to the book.

  19. Linda says:

    Well its great to see there are some companies like this who are working without commission.But to convince people its really a difficult job for the agent.May be there will be some ways by which one can convince the client to change the policy which will be beneficial for him in future.

  20. Dan, Thank you for this posting. The comments by Russ, Andrew and Mark make it clear that this isn’t only happening at Chris Nordyke’s agency, but elsewhere. That it ties so well into Chapter 9 of TSIH is an additional bonus.

  21. Mike Wise says:

    This is a great topic and I thoroughly enjoyed all comments thus far. Thank you Dan for starting the feed and thank you to all have commented. Coming from a former business owner who now works as an employee for the organization in which purchased my business and within the last month finished Drive book, I consider myself to be a type “I” and really like the idea of no commission. I think the largest factor at play here may be company culture and how an organization has developed its principals. To me a company that hires sales people on salary vs commission says that we have a tried and true product/service that we fully believe in and have helped many clients succeed. Commission tends to take focus away from clients after the sale unless there is a process in place to ensure proper attention. Not impossible but not always implemented. We’ve all heard the saying “There’s no I in team”; commission sometimes causes tunnel vision for individuals and working for greater good of the entire team becomes non-existant. Again, great topic and I know there’s valid points both ways.

  22. Interesting idea. I’m a bit confused over something the owner of the agency says in one of his comments:

    “Despite an imperfect system, setting up a commission-free model certainly gets your employees more aligned with the customer’s interest though, no?”

    Imperfect system? Commission is the only source of revenue for an insurance agency. Not only the only source of profit, but also the sole source of revenue, period. Very simply, without commissions to the agency, there would be no insurance agencies.

    There is a profound and fundamental misunderstanding among the majority of society as to what “profit” is. Profit to most businesses is not an extra and unnecessary amount of money a business “takes” from a customer over and above what is “necessary”. Profit is the only means for a business to expand, hire more employees, purchase better equipment, develop new products or services, offer newer or better products or services to the public, maintain existing staff by rewarding work or creating a better workplace.

    Simplifying the concept helps sometimes. Imagine you start a home based business and make organic soaps to sell at your local farmers market. You enjoy this. Now imagine selling your soap for the exact amount of your materials (don’t even factor in your time) and not a penny more. How long would you be able to continue making your soaps?

    • Chris,
      Profit is important, and I think most successful business owners understand that. My “imperfect” comment was in reference to the complex and product-specific commission structure that insurance companies use to drive sales.

      Ideally insurance carriers would devise a commission matrix that rewards agencies for selling whatever is in the customer’s best interest, versus giving tropical vacations, cash bonuses and spifs to the agencies that write the most life insurance, or long term care insurance, etc.

      It’s unlikely this will ever change at the carrier level, which leaves agents and brokers to filter the commission/bonus noise and structure their employees pay in a way that is most motivating and customer-focused.

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