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Beware the Top 7 Agency Myths: Part One

If you hear the same things often enough, repetition becomes reality. And through the years in our industry, certain ideas have been repeated so often that they’ve become widely accepted as the truth when, in fact, they’re nothing more than myths. As a result, many people in the agency business have made some very serious mistakes caused by believing in these myths. Here’s my list of the top seven myths to avoid.

Myth #1: Every Account is a Great Account

Most think that every account is a great account, which simply is not true. This is especially true with newer producers, who tend to confuse activity with results. In their minds, anyone who can fog a mirror and pay in U.S. dollars is a great account. These are normally order-taking accounts. Typically, the prospect will call for an insurance quote after seeing an ad or will click to receive a “Free Quote” through the agency’s website.

So the producer follows up and provides a quotation and winds up taking an order on about 2 out of 10 opportunities. They sell just one policy that the prospect had requested, with the plan to round them out someday. The problem is, that day never comes. If it did, we’d certainly have a smaller percentage of single-policy accounts. But the reality is that more than 50% of personal lines and small commercial lines are single-policy accounts. You wind up with low revenue per customer and lower retention. No wonder the average agency loses money on 80% of its customers.

I’m a firm believer that you have to know your numbers. You may recall my comments in past articles about “Knowing versus Guessing.” It’s important to complete a profit-center analysis on your various types of clients. For example, if all you had were personal lines, what would be your income and expenses? Most agencies—not all, but most—will lose money on the vast majority of their customers because they don’t even take a look at it; they don’t “know.”

Myth #2: Hire People with Insurance Experience

When most agencies have an opening, because they say they don’t have time to train or any New Employee On-Boarding process, they look to hire people from inside our industry. Typically, they want service people who are already licensed and producers with experience at another agency. But when you go that route, in most cases, all you’re really doing is hiring a bunch of baggage.

If someone is going to move to your agency, you should be questioning why. Assuming they’re not working for a terrible agency, you have to wonder why they’re leaving their current employer if they’re really that good.

I remember one of the early interviews I conducted as an agency owner in Michigan. The prospective employee was working for a reputable competitor in town and had applied for a personal lines CSR position with us. Naturally, I asked her why she wanted to change jobs. Her reply: “If I can make a few bucks more per hour, that would be great. I’ll move.” Wrong answer! What happens next year when someone else offers her a few dollars an hour more?

I mentioned above the importance of knowing versus guessing your numbers. It’s equally important to know your people, both existing and future employees.

Hire Attitude and Aptitude.

I believe in hiring attitude and aptitude first. I also believe in hiring to match your overall agency culture. If we can hire great people and train them, we’re better off. Okay, I realize that it’s not that easy, but you can always teach insurance.

With producers, look for sales talent first. Again, you can always teach them insurance. In fact, at one point, everyone reading this article knew nothing about insurance. You’re not born with innate knowledge of the insurance business—you have to learn it! My two grandsons will attest to that—once they learn how to talk (right now they’re only two weeks old). And right now they know nothing about insurance. And at some point in their life, even the most successful producers in the industry didn’t either.

Similarly, seek out service people with the qualities that can’t be taught. Look for customer service people with empathy, those who truly enjoy helping people and have a “customer-first” attitude. Don’t hire someone who’s rude just because he or she knows insurance.

Get Profiling Assistance.

Work with a profiling firm such as Omnia. Profiles can help you take a closer look at people so that you’ll know what you’re getting. What’s interesting about this service is that they ask nothing about insurance, yet they can tell you very clearly what it takes to be successful in this business. Their profiles tell you how the candidates’ characteristics match up against the traits needed to be successful at a specific job. It’s really remarkable how accurate profiles can be, so if you are working with a reputable profiler, listen to them. If they advise you not to hire a certain candidate, believe them. No matter how much you like a prospective employee, it’s never a good idea to hire against the profiler’s recommendation.