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Discover the Business Hiding Inside Your Business

Uncategorized Apr 18, 2019

FIND THE GOLDMINE IN YOUR EXISTING RESOURCES

The best agency owners and producers are always looking for new opportunities to grow their business. Those that aren’t certainly should be.

But when asked why they haven’t become their best version possible, they usually start with “if only” statements: If only we had that market; if only we had that technology; if only we had that tool; if only we had more service people; if only we had a new office; if only we expanded to another location.

Here’s my challenge: Stop “if only-ing” yourself! Those are just excuses.

I believe that every agency has a great opportunity that’s been hidden inside its shop for years, if not decades. That hidden opportunity—which is really hidden business—is to maximize all of its existing assets and resources. We refer to that as “redeployment management.” That’s when an agency takes its existing assets/resources and allocate them differently for a better result.

Before I go any further, let’s agree on some basics.

  1. Client acquisition is always more expensive than client retention (i.e., it costs more to sell new business than to retain existing business).
  2. The most profitable clients are your full-time, long-term clients (the ones who buy all their insurance and risk management services from your agency). This is an excellent exit barrier because if no one else is in, no one can get in!
  3. Most of your producers are part-time producers. If they are not investing (vs. spending) at least 20 hours each week with clients, future ideal clients and centers of influence, they are simply not in the game.
  4. You only score points (make sales) when you’re in the game!
  5. The average agency loses money on at least 50% of its clients, so its profitable accounts are subsidizing unprofitable ones!
  6. The average producer suffers from the 2-2 Syndrome—too many accounts paying too little each.

Recently I facilitated a private meeting with an elite group of high-performing agency principals whose average revenue was just over $20 million. Before the meeting I surveyed the group about metrics related to their sales performance. We discovered that, on average, only 43% of their producers had met or exceeded their sales goals. This identified a tremendous hidden opportunity: producer productivity!

If you’re going to redeploy assets, you want to redeploy them in a way that dramatically improves your overall results. This starts with producer productivity, which means getting producers who meet or exceed their goals. Sure, you need to keep adding new producers. However, shouldn’t you fix those underachieving producers first, or fire them? Otherwise, if you bring a new producer into a broken system, it’s likely he or she will fail.

Identifying hidden opportunities

So, where’s your hidden business, and what are you doing to capitalize on it? Here’s a short list of what every agency should be doing to seize hidden revenue-enhancing opportunities.

Improve sales. Your number-one goal should be to improve producer productivity (a.k.a. sales) by at least 25%. How many of your producers met or exceeded their sales goals last year? If it’s fewer than 50%, what does that tell you? It tells me that one or both of the following is responsible for their lackluster performance:

  • A poor goal-setting process. For way too many agencies, their “process” is about as random as picking a number out of a hat. “Okay, everyone will do $100,000 of new business this coming year.” The poor performers don’t believe it. They don’t buy in because they weren’t part of the design, so that’s not “their” number.
  • Lack of accountability. You can’t dump a random sales goal on a producer and wait until the end of the year to evaluate his or her progress.

Trade down. Book of business trade downs are a key to producer productivity. We know that the bottom 50% of the average producer’s customers generate less than 10% of revenue. How much are these accounts costing you in terms of time, energy and resources?

Several years ago, I received a great letter from a young producer who had just graduated from our producer training program (FYI, the best never graduate—they keep learning). It read: “Coach, thanks for a great experience. I wanted to share what I did after our first session. I told my wife how excited I was and that I was going to trade down the bottom 80% of my clients. Her response: ‘Are you crazy?!’ Being a typical guy, I told her to trust me and assured her that I knew what I was doing. Well, here I am 12 months later, and I have 70% fewer clients than when I started, but I have 21% more revenue! Thank you!” Today this producer has over $3 million of commission income and fewer clients than when he started with us.

Write 100% of all your clients’ business. This means personal lines, commercial lines, benefits, life insurance and for some of you, their financial services, as well. The crazy part is that typically, you’re not asking them to buy anything new! Yes, I know you’ve heard this a hundred times, so why haven’t you taken advantage of this hidden opportunity? Experience tells me that for every $1,000 of commission income you’re getting today from your clients, there’s at least another $1,000 sitting out there in the hands of one of your competitors.

Increase client retention. Do you know your numbers, or are you guessing? As I’ve discussed in the past, improving client retention by 3% could improve profits by 6% to 10%. It’s that simple! It really boils down to installing exit barriers, which is relatively easy to do and yet most producers don’t do it.

Improve your client experience. We know that having a great client experience is one of the factors that leads to 99% effective retention and 50% referrals. If you’re not consistently wowing your customers, that’s a hidden opportunity to make dramatic improvements to your client experience. What does your new client onboarding process look like? How does it feel to them?

During a recent stay at my “home away from home” in Georgia, I was referred to a local dentist after I chipped a tooth. Although I’d sent them all of my information electronically ahead of time, they asked me to be there 15 minutes before my scheduled time. When I arrived, I was greeted warmly and given a walking tour of the facility, including the treatment rooms, meeting rooms and offices. It was quite impressive.

As we toured, they told their story and discussed their community involvement and the projects they support. They also explained that any patient who referred a new patient could win a Yeti cup, golf umbrella or any number of really nice prizes by spinning the office’s gaming wheel (think Wheel of Fortune). After I was seated in the dental chair, the ceiling-mounted flat-screened TV kept me entertained and distracted. I could also request comfort items from a laminated list that included a warm blanket, a cup of hot tea, aromatherapy, or a bottle of water served with a complimentary custom koozie. It was such a positive and memorable experience that I’m looking forward to my next dentist visit.

When possible, do you have new clients come to your office, which gives you the home-field advantage? Do you provide a walk-through tour or orientation?

Have you ever wondered why only 5% of your clients are giving you referrals? It has a lot to do with their experience and of course, whether you even ask them.

Specialize. It’s widely known that specialists in any profession almost always make more money than general practitioners. If you have not identified the specialties in your business, do a book of business survey. You may be surprised to see that you already have some specialties. For example, if you write eight restaurants or six property managers, you probably have a specialty. When you have a handful of similar accounts, you have referral sources, you have the markets and you can speak their language. Now go immerse yourself in that niche.

Rather than always worrying about the “if onlys,” why don’t we just take these hidden and ignored opportunities and allow them to grow?

Isn’t that what your best version possible would do?

As always, it’s your choice.

The author

Roger Sitkins, CEO of Sitkins Group, Inc., developed The Sitkins Network and The Better Way Agency program. Insurance professionals with diverse levels of experience have benefitted tremendously from his training and leadership.

Roger was inducted into the Michigan Insurance Hall of Fame in 2017 and in that same year also received the Dr. Henry C. Martin Award from Rough Notes magazine. He is known throughout the industry as the nation’s top insurance agency results coach. To learn more, visit www.sitkins.com.

 

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