Best Practices for Insurance Agencies

Brent Kelly:

Welcome to the Agent Leader podcast, the podcast to help you, the agency leader, gain clarity, build consistency, and to make a commitment to become your best version possible. Always want to remind the listeners that our book, the Best Version Possible, is available. You can go to sitkins.com/bvp. And I happen to have the co-author back with me as a special guest here today. Roger Sitkins, a co-author of Best Version Possible. And again, sitkins.com/bvp. You can also get the Audible version or go to Amazon if you want to do that as well. But you get a couple perks if you go to our website, so make sure you check that out. So I wanted to bring our very special guest, and we had a series just recently that Roger Sitkins and myself went through about the eight clicks. And hopefully had a chance to listen to those, a lot of breakthroughs and things that we discussed and that. But I wanted to bring Roger on to get his reaction and his thoughts on something that just came out, just was published.

Brent Kelly:

And it's an annual publication. I'm sure many of you listeners look forward to this and read this. It's the Best Practices Study that's put out by Reagan Consulting, good friends of ours, and the Big "I". And a lot of great knowledge and information in there, and what I wanted to do was bring Roger on, and I wanted to get his reaction. And by the way, I'm going to share some of my reactions too. There were some things that jumped out to me. But also, what does that mean to you as an agency leader and with your agency? How do you digest this information? What are some things that we have learned from this that I think will help you and move your agency forward to help you become that best version possible? So Roger, first and foremost, welcome back to the Agent Leader Podcast.

Roger Sitkins:

Well, it's great to be back. I'm fighting a little bit of the leftover from COVID, so if you see me, those of you either watching a video, if I'm coughing but clicked off, you won't hear it. But yeah, it's great to be back. I'm really excited about this, with the Best Practices Study, because I've really spent a lot, probably four days now of really deep dive on it, including a conversation with our longtime friend Tom Doran, one of the senior partners at Reagan, that actually heads up the practice. I just got off the phone with him about 20 minutes ago, and just I wanted to share some things that were just absolutely jumping out at me, things that can really impact agency leaders. So let's go.

Brent Kelly:

All right. We're going to get into that. I do want to just say a thank you to many of you who are listeners I know that have reached out to Roger and our team. Now, Roger's not in Fort Myers right now, he's had his home outside of Atlanta, Northern Georgia there. But we've had many of our team members impacted by Hurricane Ian, and I'm sure you've all seen the devastation there. And even my team tells me, which I can't imagine, I'm not down there, is that you see pictures but you don't really get it until you're there and what people are going through. And so do want to make a note of just thank you to those that have even reached out to me on behalf of my team, I know to you, Roger, you said.

Roger Sitkins:

Yep.

Brent Kelly:

It really is a great testament to the friends in this business. So anything that you want to share there?

Roger Sitkins:

Well, just be grateful for what you have. One of my favorite sayings in life is there but for the grace of God go I, and I know that I'm blessed and most of our team is blessed. We've got quite a bit of damage at the office, but we'll get through this, we'll be strong, but just please keep people to your prayers because there are some people there that have lost everything and it just, it's awful sad.

Brent Kelly:

Yeah, it absolutely is. So. Well, let's get to a more positive note. All right?

Roger Sitkins:

Yep. Yep.

Brent Kelly:

I know everybody's dealing with that. But going back to the Best Practices Study, and I'm going to lead this... This really is... Roger and I didn't prepare any questions. We've had some conversations around this, but I said I just want to bring you on the podcast and let's just riff. I want to get your initial feedback from what's jumping out at you. So I'm really just going to turn the ball over to your court, Roger, and say let's go. Give me some of your big impressions on what you found in reading this study.

Roger Sitkins:

Well, first of all, the data is overwhelming. There's just so much there that you can take a look at. And what's surprising to me is the small number of agencies that really will go back and compare their numbers at all to find out what's really going on. And they've got the various categories. It starts with 1.25 million and below and then goes as high as over 25 million. So it just strongly suggests that if you're a professional manager running a professional organization, you should know your numbers. There's no question. And some of the narrative that it started off and it talked about the critical issues facing agencies, some things really jumped out at me, Brent. And I've mentioned these to you, and I think it was probably one of the catalysts for us to do this.

Roger Sitkins:

In the opening few pages where it's talking about the critical issues, the term development, develop or development, was used at least eight times, was used at least eight times. And they're saying that the need to develop your people... Well, obviously that's something we talk about all the time, that great leaders, their job is not to make more revenues or more profit. Their job is to develop their people. And we've talked about this before, that will make more revenue and create more profits. But then later on after it kept talking about the need for development, then it said in all capital letters, which kind of jumps out at you, it says it's all about the people. At the end of the day they're saying agencies that want to grow, agencies that want to prosper, it's all about the people. And then it's said, and I did write this one down, it said agency owners and leaders must recognize that people are your number one strategic priority.

Roger Sitkins:

And I want to repeat that. Agency owners and leaders must recognize that people are your number one strategic priority. Now, as we've been talking to agency leaders over the last few months, and even some of our friends that are at the highest levels of the national insurance carriers, one of the things we keep hearing is staffing, staffing, staffing. We're concerned about staff. We're concerned about people recruiting our people. A term that's used quite a bit in the report is liftout, where they're going in there, they're attacking or recruiting, if you will, producers and lifting them out. In fact, the analogy they use is the NCAA, the transfer portal, where players can move from one team to another now. So they talk about the liftouts, but liftouts are also happening at the account manager level. So you look at this and you say, number one, our goal is to attract and retain great clients.

Roger Sitkins:

We talk about this all the time. Well, it's the same thing with team members. What are you doing to attract and retain the best team members? And at the end of the day, it's not just compensation. There's a lot more which we'll get into, but it's certainly about the culture, it's certainly about how people are growing and what's happening. But I look at this overall, and I say, okay, it's all about the people. People should be our number one strategic priority. And then I say, okay, what are agencies investing in training and education? Well, historically, and we've talked about this a few times in our movie, we've talked about it on a couple of the podcasts, historically, agencies spent 0.4%. Not 4%. 0.4% on the training and development. In this study, the number came in at 0.24%. Okay? Which is 0.16% less, which is really 40% less.

Roger Sitkins:

Now, let's be realistic. A big part of that is the fact that COVID... So the live training events, all of the things people would normally go to did not happen as much. But they still are investing some money in the training and education, the development of their people. Okay? The majority of that, for the average agency... And by the way, remember these are Best Practices agencies. You had to apply to get in. You had to send your numbers, and you had to get into it. Okay? The average agency where they're doing the 0.24%, again a little bit less than a quarter of 1%, what's it for? Well, it's continuing education to keep your license or it's to maintain a designation. It's not so much about developing people. And this is something I would hope would come through on this. Yes, you want the technical knowledge. You need to know insurance. You need to know insurance that applies to your job.

Roger Sitkins:

But what about the development of all of the other areas that will make you as an individual a better team member, as a leader, you will build a better team. So we look at this, and we say, well... Something we talk about all the time, another acronym, SPA, what are the skills, what are the processes, and what are the attitudes that should be in place? So when you look at it and you say, okay, people are number one, developing your people, used eight times, et cetera. And then you say, yeah, but you're spending 0.24%.

Brent Kelly:

Yeah.

Roger Sitkins:

Okay. By the way, Brent, the average agency spends more on miscellaneous than they do on education and training of their employees. Yeah.

Brent Kelly:

I didn't see that.

Roger Sitkins:

Miscellaneous. What is it? I don't know. Some crap, we'll just call it miscellaneous. They spend more on miscellaneous... I mean I should even laugh. It's sad.

Brent Kelly:

Yeah.

Roger Sitkins:

They spend more on miscellaneous than training and development and education of their team. And again, so much of what they are spending is that, well, I got to do my continuing ed credits. Got to keep that designation. But what are you doing to develop the people? And we use sports analogies all the time, but I can't imagine a team that's not developing their players. I can't imagine an orchestra, a theater group, a choir... I don't care what turns you on, but the best are always developing. And I look at this and it comes back to, tongue-in-cheek maybe, but it comes back to the fact that it's a great business. It's a great business. You don't have to do much, and you'll still do okay. But the term that jumps out on this is are you a lifestyle agency or are you a professional business that's growing? Are you a professional practice, a professional services company that's growing your people? Okay? If you're a lifestyle agent, it's okay. You'll never engage with a firm like ours. Okay? You won't. Because you don't have to.

Brent Kelly:

Yeah.

Roger Sitkins:

Longer term, you're going to have regrets. But the fact that you're sitting there and saying, well I'm doing great, I'm semi-successful, I'm happy where I am, later on in life, you'll have some regrets. Right now, enjoy the ride. And it's a great business for that. But when you start looking at it overall and saying, okay, I'm a professional company that wants to grow. If you've been a two and a half to $3 million agency for the last 10 to 15 years, you probably where you're going to wind up. But when we look at the people we work with that are so committed, and we love working with them because they're committed to getting better, our part is as coaches, as you know, is the easy part. Hey based on our research, based on all of our experience, here are some things that should work.

Roger Sitkins:

In fact, we know they work. They're simplified and proven processes that when you follow them they work. And we'll see you later. Okay. Now, they've got to execute. Now, they've got to... And we help them, obviously, but getting the whole team aligned, getting everybody in the same playbook, if you will, doing the right things. So as the coach, go do this. But now you've got to do it. Well, the ones that are out there, and you've had so many of them on the podcast already, it's so much fun to work with them because you see where they're... Some started as a lifestyle agency, maybe it's the next generation, but all of a sudden they get so serious about, wow, we're doing pretty darn good doing things halfway.

Brent Kelly:

Yeah.

Roger Sitkins:

What would it look like if we would invest in our people? How much better would we be? So those are some long opening comments. I've got a lot more, but what's jumping out at you in that?

Brent Kelly:

Well, I mean, those are all great opening comments, and I said we didn't go through and here's a bunch of questions I want to ask you. I just wanted to get some of your feedback. We've had some short phone calls on this. But what hit me, and again we'll get into the people and you hit that home pretty well, it was just, it's interesting because you talk to agencies out there and you typically say what's frustrating you? And you will get people talk about the people. But oftentimes you'll hear, and I hate to call these surface issues because they're not always that, but to hear things, well, I got to do more in technology and we've got issues here with organic growth and all that kind of stuff. And those are real issues, but it's interesting as you look at the part of that study that I looked at, that in one of the situations, technology was listed eighth.

Roger Sitkins:

Yeah.

Brent Kelly:

Right?

Roger Sitkins:

Top 10 things or elements for an agency to prosper as a privately held firm, and everybody talks about technology so much, which we support at the very highest level, but it was number eight out of 10 items that they were concerned about.

Brent Kelly:

And it's, again, this is what's going to cause to prosper you... I love that... Thanks for highlighting that. And it was eighth. And the first three were, and I don't remember the order, you probably have it in front of you, but it was people, culture, and leadership

Roger Sitkins:

That's the order. Yep.

Brent Kelly:

And you're like, okay, well, why is it that we spend, again, I'm just making some of these numbers up at this point, but the majority of the time or a big part of the time talking about these kind of surface things on technology and whatever. And what I wrote down, Roger, as you were speaking there, is it feels like we're doing something and we treat a symptom but we're not always getting to the cause. And I think that's what hit me, if I had to have one overlying thought, is that there's a lot of symptoms that are trying to be treated, band-aids, whatever analogy you want to use. But why are we bleeding? And part of that is it's because we haven't addressed the focal point. And like you said, if you want to be a lifestyle agency, again, God bless you, good for you, go for it.

Brent Kelly:

But if you're really wanting to grow and you say you want to grow and you want to expand and do more and be more and get not even out of greed, but by the fact that it's what people should do, is we should grow, we should get better, we should develop, I think it's just part of having some satisfaction in life, then we've got to start with the most important resource that we have, which are these human beings that are part of our team. And I'm going to say one more. I know you've got more to jump on on this, but we do use sports analogies a lot. I think I told you, part of our conversation this week, like unfortunately... And they're getting better, because you were commenting on my Fighting Illini hat that I wore on Saturday. And they've been, this is being kind, a really bad football program for about 20 years.

Brent Kelly:

Well, maybe 15 because they were okay in '07. But it's like a long time. And you always go, well, why would an individual, and maybe it's not the top top, but why would a quality individual want to go play for a program that's not very good or hasn't been very good? And then all of a sudden they start getting better and they get a few recruits, and you talk to the recruits, well, what made you decide to go to this program? And maybe you could have gone to a bigger, more established, well-known program. And this isn't always true, but one of the answers you'll hear is because I believed in the way that the coach and their staff was going to develop me, develop my talent, get me to the next step of where I want to go. And the other thing you hear is I felt like I was part of a family.

Roger Sitkins:

Yeah.

Brent Kelly:

Right? Or there was a culture around that. So I know we use sports analogies, but it's true. And you hear agencies that I know this is a real issue, I get it, I've spent time with agencies, we just did the leadership institute a few weeks ago that I was at, I know attracting and finding talent, keeping talent is a challenge. But a big part of that is if we don't address the root cause, you're always going to struggle with that. So there's my little soapbox, man. Anything, Roger, you want to add to that? Yeah,

Roger Sitkins:

Yeah. I mean, absolutely. Because what happens is, in the old days when it was easier to find people, okay, the answer is we'll just throw more people at the problem. We'll just throw more people at the problem, versus going to the core of the problem. What's the source? Why do we have a problem with this? Throwing more people that are not doing business the way you want it done is not the response that works. Our content partner, Angela Adams, Angela Adams Consulting, we've mentioned her more than once, and one of the things I reinforced with her in a phone call two days ago, I said, okay, what percent of the technology is the average agency using that they have? Their agency automation system and any add-ons. And her number's always the same, about 50%. And then what percent of them have really documented their processes? About 50%. What percent of the employees are following them? 25%.

Brent Kelly:

Mm-hmm.

Roger Sitkins:

But yet it's such a great business, you can have really terrible statistics from an operational standpoint and still do well. One of the things that jumped out at me, now again, Best Practices, but the revenue per employee, once you get up to that $2.5 million and $5 million agency and above, it's over $200,000. That used to be unheard of.

Brent Kelly:

Yep.

Roger Sitkins:

Okay?

Brent Kelly:

Yep.

Roger Sitkins:

Some of its rate, some of it's capacity, whatever. But when I look at the need for staff, which we hear 99.9% of the time, and again carriers telling me this is what they're hearing from their best agents, I think one of the things people need to look at is what is your staff capacity? We talk about it with producers. We somewhat say, again, tongue-in-cheek, the world's greatest producer recruiting program, get your producers out of the red zone, get them in the green zone, get them producing the vast majority of the time. Our goal is 80% of the time in the four key money-making activities we've talked about a million times. Okay? It's the same thing with the staff. Utilization of the staff. You've got great staff members, you've got people who've been part of your team for a long time. Maybe you're not developing the way you should. Maybe they're kind of just floating along because you're floating along.

Roger Sitkins:

But I look at this and I say, okay, if we have this money invested in technology... And again, both of us surprised it was number eight on the list, really should be higher, okay, if we're going to maximize our staff. So we can pick up staff capacity if we'll get technology used properly. Another part of that is, okay, are you having client-facing people doing processing work? Now, that's about as basic as we can get. And certainly ReSource Pro and all of the others that are out there, people are outsourcing. In fact, ReSource Pro now has a... I was told the other day they actually have an office in Nebraska too, not just China. And they're a great firm. A lot of our clients use them.

Brent Kelly:

Mm-hmm.

Roger Sitkins:

But I look at this and I say, okay, if we can't develop our own, we've got to make sure that what we have are doing the right thing. So again, process versus client-facing. But Angela also brought up to me, she said one of the things we're seeing in the best agencies is they are hiring staff, they're doing their process internally so that people can learn the business well. Because let's face it, the talent pool's drying up. We're not creating a lot of new insurance people. I wish we were. In fact, one of the things I've seen through the years is that the universities like University of Georgia, Mississippi, Florida State, the ones that have insurance programs, 100% of the students get hired. They get a job.

Brent Kelly:

Yeah.

Roger Sitkins:

I hope they all want one, but they get a job. Okay? So something that really jumped out at me, Brent, in this and I've talked to you a little bit about it, not as in depth maybe as we're going to go now, but it's the use of service centers.

Brent Kelly:

Mm-hmm.

Roger Sitkins:

The use of service centers. Through the years, I was not necessarily a big fan of it, especially when they were saying, well, it's going to cost you 2%. And now it's 1%. Well it's 1% of 15%, so it's really 6.7%.

Brent Kelly:

Right.

Roger Sitkins:

But the big thing that happens, and I remember talking few years ago about it with a gentleman at a carrier that was head of all their service center. And he said it was either 52 or 54% whatever, 53 we'll take the middle, 53% of the incoming inquiries they get are from agencies calling on behalf of their client as a client they had already turned over to service center. So you've given up 6.7% still doing the work versus saying, look, that goes to the service center, it goes to the service center. And looking at the numbers, if you take the six categories of the service center... And I do have some notes on this one, I'll get them accurate. Personal lines commissions, 14.8% of personal lines commissions are in a carrier service center.

Roger Sitkins:

If you take out the small category and go more to the middle three or four categories, it's 21.3% of revenue goes there. And on one hand, from an efficiency and staff capacity perspective, I say, well, that's great because now I've freed up my staff from, let's theoretically say, 20-some percent of the transactions. Now, they can do a better job on the clients we keep in-house. Okay? We can do more client-facing work. We can get it out there. Commercial lines, I was surprised by this, but it might have been a size... It's hard. It's hard to define the size that's in there, but in commercial lines it's 5.1% of revenue and over. And if you take the smaller ones out, it's 6.1%.

Brent Kelly:

Okay.

Roger Sitkins:

So something we've talked about before and I already mentioned, but get the transactions out of your office to free up your team.

Brent Kelly:

Yeah.

Roger Sitkins:

Keep the vast majority of the revenue. Yeah, it might cost you 6.7%, but I think we've talked in one of our clip conversations about that agency in the Midwest where we found that the bottom 50% of the customers were 6% of the revenue. And we helped them negotiate with their carriers. They got a big bonus and they got the accounts moved. And by the way, retention is normally higher in a service center.

Brent Kelly:

Yeah.

Roger Sitkins:

Okay? So I look at this, and I say it's not for everybody. Nothing we talk about is for everybody. But if an agency will at least make an informed decision... That's, I guess, my big frustration in a lot of areas, and I shouldn't be, but I obviously care about our clients and friends... My frustration is too many times agencies don't go deep enough on their numbers because they don't have to because they're still doing well.

Brent Kelly:

Yeah.

Roger Sitkins:

But when they start looking at their numbers and they say, well, what's really going on in the bottom 50% of my personal lines book of business, okay, what's going on in the bottom 80? And we've talked about this recently too, that pure 80/20 doesn't apply if you look at personalized, standalone, or small commercial standalone. But it does apply... Universally, what we found through our studies is that the top 20% of the customers are 50% of the revenue. The bottom 80% of the customers are the other 50%. So what would you do if you took the bottom 40 or 50% and realize it's only three or 4% of your revenue, but it's a high number of transactions. These are things you just need to be aware of. So, again, service centers aren't for everybody. In certain states like Florida, even before Hurricane Ian, it really wasn't viable, because we have so many separate coverages broken out. Nobody's going to do it all.

Roger Sitkins:

But make an informed decision. So if we can get our people, our internal people, our service team doing what they do best, which we would hope is client-facing or getting them, getting as many transactions out, whether we use ReSource Pro or whoever or develop our own, but create the capacity where your team can have much more revenue. I was somewhat surprised by what I would consider to be the low revenue per employee handled by the commercial lines and personal lines service team. Okay? And it varied quite a bit. I couldn't do a fair average on it, but it just hit me that that's a relatively low number when you divide out by the average revenue per customer in those classes of business. They don't really handle that many transactions.

Roger Sitkins:

But because they're not following... 25% of them follow the process. So theoretically, does that mean that 75% of them handle transactions ineffectively? Maybe. Okay? Maybe. And so maybe we get into a situation where we're handling, and this is couple of Sitkins 101-type rules, and you handle everything one time the first time and only handle... If you have any premium bearing endorsements, they've got to be handled one time, one and done. Because if you handle them twice, you still only get paid once.

Brent Kelly:

Right.

Roger Sitkins:

But what we see is the inefficiency because of not training, not developing, not holding people accountable, is we're handling these transactions and that hysterical activity, but at the end of the day, it's a great business, we're making money. So that's, I guess, end of sermon number two, three, or four.

Brent Kelly:

No, and I love the fact that you went into some of the... The bottom line of all of that is, I mean, the word I took out was capacity and just what does that mean? What does that look like? And whether they are using a service center or something else? It's the awareness. And I wrote something down, Roger, as you were saying this, and I think... And I've been guilty of this too in different areas of my own life, right, so I'm raising my own hand. But part of our job and our role, and I think the fortunate of being a coach and a consultant, kind of looking on the outside, but knowing the industry really well, is that I think sometimes people disguise the truth with their feelings. Right? I mean, get into 80/20 or you get into service center stuff, and the feeling is, well you don't understand and the relationships that we have and this is how we work.

Brent Kelly:

And then you get into it, and I know, Roger, you've been part of these conversations too, certainly even with producers like, oh well, you don't understand and this and this. And I say, well, let me ask you, how often are you proactively reaching out to that bottom 25, 30, 50%? Never. Well, how often you talk to him? Well, not really ever. Usually, just a renewal gets shipped out to them, but I'm still the agent. It's like... And I know there's exceptions to this, I get it, but you really dive into it, it's like that is not a truth. You're basing that on a feeling. And what I wrote down is honest awareness leads to thoughtful actions. And I think too often, we really don't have honest awareness. We're just kind of go on a hunches and feelings, and that's the way we've always done it. So you're nodding and shaking your head, so I'll let you respond to that.

Roger Sitkins:

Well, no, I mean, I agree 100%. It's a feeling, feelings, a song, whatever, but it's... By not knowing your numbers... One of the things that's always jumped out at me is the bigger the agency, the more the leaders know the numbers.

Brent Kelly:

Mm-hmm.

Roger Sitkins:

Okay? And there's hundreds of examples of this. But when we talk to agency leaders, and whether it's a current client that we're working with, one of our private clients that we know very well and we know their numbers, or someone that's inquiring, and at some point get done pretty quickly because it's one of our best litmus tests, what's your revenue per employee? And the minute I hear, well, it's about, then I know they don't know.

Brent Kelly:

Yeah.

Roger Sitkins:

It's about, okay? Versus saying no, I absolutely know what it is. And some of them, I won't mention this one, I won't mention the name of the agency, but they were well over 50 million of commission income, and this was a long time ago. And I said, what's your revenue per employee? And it was like, it's $172,118. I mean that's how well this CEO knew and still knows his numbers. Excuse me. The other big thing, just looking at this and getting staff capacity is if we can get staff capacity, because we're getting transactions out of the door or the wrong transactions, maybe the right transactions out, if we get more staff capacity service staff capacity, now we can support the producers more. Okay? And I'm not talking about the producers that have mastered the art of hiding behind activities. I'm saying the ones that really want to get out there and produce, but they feel stuck. They're trapped.

Brent Kelly:

Yeah.

Roger Sitkins:

Okay? Let's develop our team. Well, that service person, he couldn't handle something like that or she couldn't handle... Why not? Well, you've never developed them. And it's, again, not just the insurance and not just the technology. It's the skills, it's the processes, the attitude, the mindset of the individuals. I would jump all over that. Couple other things that really jumped out at me in looking at the analysis. We've already talked a little bit about 80/20, and in the best practices, they don't measure 80/20 exactly like we do, but they have two categories. One is the largest single account, what percent of your revenue is it? And then the other one is the largest 10 accounts, your top 10 accounts. And for most agencies that's way less than 5%. We always talk about the 5% or 15%. But in the study averaging it out, it came to the top 10 accounts in the average agency are 14.3% of their revenue.

Roger Sitkins:

What's the average profit? Okay?

Brent Kelly:

Top 10 accounts, 14.3%.

Roger Sitkins:

14.3. Yep. And the single largest account? 4%. Okay? Now something we talk about all the time, do not allow profitable accounts to subsidize unprofitable accounts, nor profitable producers to subsidize unprofitable. Producers in training, that's different. But just having these producers sitting there kind of aggressively waiting for the click, ping, ring, and ding, okay, they're not going to make it. But I look at this and I say, if 10 accounts are 14%, what are 20? What are 30? What are your top 50 customers doing for you? This is something that every time we talk to agency leaders and we get them to look at their own 80/20, as you know, they're always shocked to realize they're vulnerable. They're vulnerable. You lose the top 10... In fact, when we look at agencies overall, Brent, as you know, the top 2% of accounts in an average agency we work with, and they're larger size obviously, but the top 2% of the accounts are about a third of the revenue.

Brent Kelly:

Mm-hmm. Mm-hmm.

Roger Sitkins:

And if you don't know that and you don't have all the exit barriers in place around that account so you could never lose it, then you're vulnerable. Now, will you lose them all? No, but I mean if you're in the risk management business, you better manage in your own business risks. And that's a huge one. I saw you nod, and go ahead.

Brent Kelly:

Well, it hit me because... And you were on with this week. We're running our producer camp. And again this is just a slightly different perspective of some of the producers. And there's a mix of experience and age and so to speak on the camp. But I think one of the questions that came out that is a legitimate question, especially for someone just first hearing this and considering this is, gosh, you talk about 80/20 and I get it and it makes sense, but that top 5% or that top 20%, you put a lot of weight on that. I mean, that make me vulnerable? And the answer's, well, yeah, well you're always going to be vulnerable.

Roger Sitkins:

You're already vulnerable.

Brent Kelly:

Yeah, you're already vulnerable, so that's already there. The question is are you even more vulnerable because you're so distracted by five or 10%, right, of the total revenue you have somewhere out of all these accounts that you're missing opportunities to proactively and intentionally build deeper, better relationships, deeper better networks, deeper, better continuation processes, add value in better different ways than you are now. Not because you don't want to, it's because you go back to what we said earlier, you don't have the capacity to. And so to me, you are really vulnerable, right? You're always going to be vulnerable, but if you lose sight and focus of those key clients, somebody else is looking out for them.

Roger Sitkins:

Yeah. And one of the things we'll always talk about is your best customers are your best competitor's best prospects.

Brent Kelly:

Right.

Roger Sitkins:

Okay? And here's the other thing, if you're distracted by having too many accounts as an individual producer, your client experience is not that great that you're providing, you don't have a deep and wide relationship, and by the way, you don't get any referrals.

Brent Kelly:

Mm-hmm.

Roger Sitkins:

You're not getting any referrals.

Brent Kelly:

Yeah.

Brent Kelly:

The idea, Roger... And I don't need to take too much on this, but I mean, yes, you're vulnerable, but the flip of it, and you were getting to it, is like I look at it two sides. Yeah, there's vulnerability, what are you going to do about it? But here's the other side, there's extreme opportunity. What are you going to do about it?

Roger Sitkins:

Yeah.

Brent Kelly:

So it's just right there, but to me it comes back to a lack of focus. So sorry for cutting you off there.

Roger Sitkins:

No, no. I mean you're exactly right. And we're preaching the choir at each other here, and I hope to many people listening, but it just goes back to, okay, here's a litmus test for you. Top 20% of your customers, probably 80% of your revenue. If you don't know, look. Let's assume it is because it is a 99.999% of the time. What percent of the top 20% gave you a referral? What percent of the top 20% did you even ask for a referral? What percent of the top 20% did you give a list of people that you already know you know, that they know, that you've identified as a future ideal client, and you'll get a referral. And by the way, when you get a referral, what's your closing ratio? Oh, 80 or 90%. Yeah, you wouldn't want to do that all the time.

Brent Kelly:

No.

Roger Sitkins:

Let's just keep busy. So. Another big part of this, and I keep coming back, is that when it talks about the elements to prospering in a privately held agency, that's what it says in the report. When I talked to Tom, I said, I think it's actually the elements for whether you're privately held or not. If you're really going to prosper, what do you have to do? And again, people, culture and leadership. So we look at leadership, and you and I have had this discussion 10,000 times now, five years, but it's not just the overall leadership of the organization. And I don't mean to demean that at all, because we want the one-page business plan that everybody can rally around. We want the mission, the values, everything tied together, critical success factors, the KPIs. But in all of the leadership issues, the one that we see that misses the most is sales leadership.

Brent Kelly:

Mm-hmm.

Roger Sitkins:

And I think we talked about this before, it's worth repeating and I'm sure all of your listeners remember everything we talk about, but I'll still repeat it, okay? It's a study that we did, it's about four years ago now, large group of agencies, 19 agencies, average agency 21 million in revenue. And one of the survey questions ahead of time was what percent of your producers met or exceeded their goals last year? So you would think, wow, 21 million in revenue is going to be a high number. 43%.

Brent Kelly:

Yeah.

Roger Sitkins:

43 per... What if 60% hit their number? What if 70 or 80% hit their number? Sales leadership is missing so much. We talk about developing people. Developing producers, getting producers in the green zone, getting producers to specialize, making sure that every event deserves our very best. We have relentless preparation. Making sure that any time that a producer's going out on an A or B type account that they have to rehearse it. It's not optional.

Brent Kelly:

Yeah.

Roger Sitkins:

I mean, the fact that that producers can go out, never rehearse, and still make some sales, blows me away. But how many are lost because they weren't prepared because there wasn't a sales leader saying, okay, I know next week you're doing your final presentation to ABC Industries, let's sit down and talk about it. Let's sit down and talk about it. So sales leadership just drives me crazy, or lack thereof.

Brent Kelly:

Yeah. And I know I'm going to go into my fourth or fifth, I don't know if I'm that much, of sports analogies, but I mean it's so relevant because I just keep thinking about it. And the challenge of it... I know there's a lot of player coaches, we know that.

Roger Sitkins:

Absolutely.

Brent Kelly:

Which has huge challenges. But I do think, in many cases, and I'll be very transparent in this, is that too many agencies are putting people and sales leaders in positions that, A, they're not very equipped to do, and they don't really want to. And that's just the truth. And I see it quite a bit. And it's like, well, how did you become the sales leader? Do you desire to be that? Not really. I was just told, right? Or I just suddenly be by default became one because I've sold some stuff. And I'm just thinking, going back to the sports analogies, it's like the head coach of any team or whatever thinking about themselves of how they've got a coach well that week when their entire focus that week should be how do I get my players ready? That's what the best players do.

Brent Kelly:

And I think there's not enough sales leaders, and part of that's by their own capacity spending every week and every month going, how do I get my players, how do I get my team ready? How can I equip them? What do they need? How can I help them develop? What can they learn? How do I help them get better? How do I challenge their mindset? You start having sales leaders that ask those questions, guess what happens? Their performers get better. But quite frankly, Roger, and you know this, there are not many agencies and sales leaders out there doing a lot of that.

Roger Sitkins:

No. Well, they don't have to. I mean, that's the big frustration, is that you don't have to do much of anything we talk about, and in this business, for the 97th time, you're going to do okay. But the millions and millions and millions of dollars of value being left on the table... A lot of the lack of investments we've talked about a little bit already is, well, I don't want to impact my EBITDA because I'm getting ready to sell. And so they've got this short game mentality about perpetuation, versus saying, yeah, but what if I spent 2%? What if I spent just 1% and everybody got that much better?

Brent Kelly:

Yeah.

Roger Sitkins:

How great does that become as the agency overall? So when you look at the multiples that are being paid, I mean, we've seen 13, 14 times guaranteed-

Brent Kelly:

Yeah.

Roger Sitkins:

... with three to four times on top of that.

Brent Kelly:

Right.

Roger Sitkins:

I mean...

Brent Kelly:

Yeah.

Roger Sitkins:

Comes back to everybody eventually leaves their business whether they want to or not. Whether they're going to do internal perpetuation or external perpetuation, you're going to leave your business. So even on an internal perpetuation now, $100,000 is worth a million bucks of value. But an agency won't invest. They'll spend more in miscellaneous than developing their people that could easily create another a 100,000 in profit. Okay?

Brent Kelly:

Yeah.

Roger Sitkins:

And then on the larger agencies, the more aggressive ones, when you're going $100,000, which is a piece of cake, when you do the right stuff, $100,000 is worth $1.4 million, and then with [inaudible 00:38:24] maybe 1.5, 1.6 million. Huh. I wonder if that's a good investment.

Brent Kelly:

Yeah, I mean, yeah, that's exactly right.

Roger Sitkins:

Yeah.

Brent Kelly:

I'll give you a dime and then you give me a $1.70 back. Do you want to do that?

Roger Sitkins:

Yeah. Okay.

Brent Kelly:

I'll give you as many dimes as I can give you, right?

Roger Sitkins:

Absolutely.

Brent Kelly:

And that should be the mentality behind it. I'm going to leave with a final thought, and I know I want to be... We could sit and probably go for another hour or two.

Roger Sitkins:

Easily. Yeah.

Brent Kelly:

But maybe we'll come back and we'll have Best Practices Study part two with more thoughts that we come up with as we look at this. But I want to leave my thought on this and, Roger, whatever additional thoughts that you have or want to share with the audience. And I said this to you earlier, I don't know if this is cliche or not, but I do think there's substance behind it. We talk all the time about your best version possible, designing your best version possible agency. And we mean that. I've said many times, I mean, that started off as a question I asked you. It's now a book. We created a movie around it, and now it's going to be a process, the Best Version Possible Experience, which we're going to be talking more and more about, for agencies to help them walk through this.

Brent Kelly:

But here's what I said to you earlier, and what hits me, is if you want to design your best version possible agency, you need to create and develop your best version possible people. And I think a lot of this is you'd ask an agency leader of, hey, tell me what the best version possible of your agency looks like. And I think you get some great answers. But I would challenge agency leaders to ask yourself this question or ask team this question, what would the best version possible of every player, every team member of my team look like? And are we asking them that question? Because the best leaders transfer influence, the best leaders transfer, not just knowledge, but influence. They transfer confidence they'd be able to transfer and help empower skill.

Brent Kelly:

So it just hits me going back to the people, the culture, the leadership. I know it's a challenging thing to think about, because when I talk to leaders, what in essence what comes across is, so you're telling me I'm not a very good leader? No, I'm saying that we all could be better leaders. And if you become a better leader, what does that mean, certainly for your bottom line, if you want to look at that way in valuation, but what does it mean for your clients and that experience? What does it mean for the opportunities for people on your team, that because you were a more equipped, thoughtful leader, you've created opportunities that could never be possible because you see more and before others? So that's what I wanted to share. I just think it's something that's so important. If anybody can't tell, I'm a bit passionate on leadership because I know what it means and what it does. So, Roger, some final thoughts from you on today's session.

Roger Sitkins:

Well, first of all, I want to thank the Big "I" and Reagan Consulting, my friend Bobby Reagan, Tom Doran, and the whole team there, Kevin and everyone, for a phenomenal report. It comes out, as Brent said, it's updated every year. The actual main report is every three years. Take a look at the numbers because you can't make informed decisions if you don't know the numbers. That's reiteration number 27, but to know your numbers. And then more importantly, always keep this in mind, the numbers are nothing more than the end result of the behaviors and strategies that are normal in your agency. People, culture, and leadership. Okay? Culture, language and behaviors that are normal. So whatever languages and behaviors we talk about, whatever processes we have in place, those drive the numbers. The numbers, again, are the end result of having the right structure, having an aligned agency, having everybody on the same page. There goes the voice again with the COVID. But getting to the point where you say, okay, thank you Big "I" for doing this.

Brent Kelly:

Yeah.

Roger Sitkins:

This has been going for, I think it's 30 years now, maybe 25, 30 years, whatever. But the fact that the numbers are there. Success leaves clues. Compare yourself against the best. Find out what numbers are missing. Take a look at, okay, behaviors, strategies. What are the things we need to do to become our best version possible? And I always say your best version possible's sitting out there waiting for you to arrive as a leader. It's time.

Brent Kelly:

Yeah. Thank you. Thank you again. I agree, echo thank you to Big "I" and Reagan for putting that together. It really is great information for us to digest and compare and allow us to have some conversations like this. These are really important conversations. Thank you to you, Roger, for coming on. Battling... Not only... Well, you come back from your trip and we have a hurricane that's damaged our office and impacted against so many people and people on our team. And then you're dealing with COVID and kind of the outset of that, I guess, so to speak. So thank you for coming on and providing some great information. As always, I mention, if you really want to dive into some of the vital few strategies and behaviors, go check out our book. I mean, it's a book written to give you an action plan to help your agency. So go to sitkins.com/bvp to get your copy. And Roger, again, thanks again. Thank you for the audience for listening. And I wish you and all your agencies all the best in your success. Thanks.