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Insuring Your Agency's Future

agency leadership Oct 20, 2021
Insurance Agency Leaders Looking Forward to a better future

WILL DOING WHAT YOU’RE DOING TAKE YOU WHERE YOU WANT TO GO?

How do you respond when someone asks you, “What business are you in?” I’m hoping that you and your team have a terrific 30-second commercial that’s far more compelling than, “I’m in the insurance business.” You do, don’t you?

It’s true that you are in the insurance business, and you help individuals and businesses manage their risks and prepare for the future. So, perhaps a better question, one you really need to ask yourself is, "What am I doing to ensure my agency’s bigger, better future?”

Accepting good as good enough and being semi-successful—which sadly, is easy to achieve in our industry—will not ensure a bigger, better future. In fact, it puts you and your agency at a greater risk than most owners realize.

Much like any gaps in your prospects’ insurance coverage, there may be gaps in your business model. Unfortunately, most agencies are not aware of these gaps. Keep in mind that your current business model is perfectly designed for you to achieve your current results. But are they the results that you want?

In a recent article, I asked, “Does your current direction match your desired destination?” In other words, if you keep doing what you’re currently doing, will it take you where you want to go? There’s a simple way to find out.

Chart your agency’s growth over the last five years and continue that trend for the next five years. If your agency is currently at $3 million of revenue and you have an organic growth rate of 5%, which you maintain for the next five years, you will become a $3.8 million agency. However, if your desired destination or goal is to become a $5 million agency, you’ve got a significant gap. Just like insurance, there’s a gap in your coverage!

Think of GAP as a double acronym: Goals And Plans for Growth And Profit. If there’s a GAP, then what are some of the GAP-filling coverages you need?

Coverage One: Time Spent Selling (TSS). As simple as it is, this aspect of coverage cannot be overstated: Producers (those who actually produce) need to dramatically increase the amount of time they spend in sales-related activities.

As I discussed earlier this year, we refer to the allotment of time as Red Zone vs. Green Zone. Producers should be investing 80% of their time—their only diminishing asset—in the four key Green Zone activities: Sales, Relationship Management, Continuations, and Pipeline Development. Red Zone time is consumed in the service trap and non-sales-related activities. If yours is like most agencies, your producers are spending less than 33% of their time in the Green Zone.

Do you have a GAP in this area?

Coverage Two: High Performance Teams (HPT). HPTs are composed of sales and service team members who are totally aligned with one common goal: Retaining and Obtaining Ideal clients (ROI). Although the team members have different roles, the overall team operates with the same objective. All service-related activities are the responsibility of the account managers. To clarify the word “service,” it’s everything that happens between renewal dates (excluding what I call an “emergency in-flight”).

Are you ensuring that your teams are high-performance? Or are they simply high-maintenance?

Coverage Three: Embracing 20/80. Yes, I realize I preach 80/20 non-stop, yet so many either ignore it or tell me, “That’s not me or my agency.” Don’t be so sure! How could you know if you don’t run this simple analysis at least once a year?

I hope you noticed that I changed the focus from 80/20 to 20/80. These are the 20% of accounts that generate 80% of revenues, the 20% of activities that generate 80% of your results, the 20% of carriers that write 80% of your premiums, or even the 20% of things that bring you the greatest joy in life! As you can see, 20/80 is applicable to just about anything.

Are you covered for 20/80?

Coverage Four: Unique Sales Process (USP). You’re either in the commodity game selling on price only or you’re in the relationship game. If it’s the former, you probably hear, “You insurance agents are all the same; sure, you can give me a quote.” Or maybe your suspects (not even prospects) see your digital ads and cool website, and click for a free, no-obligation quote.

If you’re still conducting business that way, you will get replaced in the future unless you differentiate.

Conversely, the USP is the unique and appealing ideas and things that separate you from all other competitors. As my friend and author Joe Calloway says in his book Becoming a Category of One, you’ve got to transcend commodity and defy comparison. In fact, you must become the point of comparison in your marketplace.

Does your coverage include a USP or can you easily be replaced?

Coverage Five: Future Ideal Client (FIC) pipelines. FIC pipelines should be overflowing with more opportunities than time. Sadly, that’s not the case for the vast majority of producers. Although many have pipelines they believe are “full enough,” they lack a true laser focus and are surprised when their sales start to lag. If your pipelines are not overflowing with FIC, you’re not ensuring a better future.

To keep their FIC pipelines overflowing, the most successful producers have a specific targeted account strategy for obtaining future A and B clients. They understand account-based marketing. They’re not just throwing a wide net and hoping they get something.

At some of our member agencies, producers participate in a quarterly phone blitz, reaching out to their future A and B clients to set appointments. (Yes, I said phone!) They’ve written an incredible amount of new business just by being proactive. It’s amazing what can happen when you pick up your phone and call someone.

Further, producers must be held accountable to create constant movement in their pipelines. It’s one thing to have an overflowing pipeline; it’s another to actually do something with it. I find it annoying and disingenuous to get email from salespeople who write, “I’d really like to have a conversation with you about this.” Then why don’t they call me? You can’t aggressively wait for prospects to contact you! It’s up to you to pursue appointments with your FICs and then replenish your pipeline once you’ve gotten in the door.

Is your FIC pipeline overflowing or are there GAPs?

Coverage Six: Continuations vs. Renewals. Your future agency no longer renews accounts; it continues relationships. There is clarity on the client’s specific expectations, and you are held accountable to them. This would include a promise to report to all A and B clients at the six-month anniversary, as well as an annual review.

Are you renewing accounts or continuing relationships?

Coverage Seven: Maximizing Technology. It’s pretty amazing that the average agency uses less than 50% of their agency management system and various apps. This has a negative impact on an agency’s productivity, profitability, and future.

Typically, these agencies think the problem lies with being understaffed when the real problem stems from underutilized technology. They have more than enough people, but they aren’t doing what they’re supposed to be doing. If they would just get to 80% usage on their system, they would be able to handle a lot more work, probably with fewer people. Their productivity would soar.

Your future ensured agency is the epitome of efficiency. It maximizes technology in every way possible and provides continual training for its team members. Here’s a quick litmus test: If your revenue per employee is less than $190,000, you have a productivity problem. Part of that problem is the underutilization of technology.

Is there a GAP in your agency’s use of technology?

The bottom line

Assuming you truly want your future bigger, better agency to continually get bigger and better, what’s the cost—the premium you pay?

First of all, it’s not a cost, it’s an investment! And we all know that investing in ourselves and our businesses is the best investment we can make. At the same time, you must consider the cost of doing nothing. As you are well aware, the valuations and multiples on independent insurance agencies are sky high. Every $100,000 of unrealized profit is a loss of $1.3 million-plus of agency value. That seems like an unreasonably high self-insured “deductible” to me!

If you were an underwriter looking at your current business model, what risks would you accept? Or would you reject your agency’s submission?

Remember, your current business model is perfectly designed to get you the results you’re getting right now. Are you going to change that model, and if so, how? What behaviors and strategies will you make normal?

Finally, what are you going to do to ensure your agency’s bigger, better future? The choice is yours.

The author

Roger Sitkins is the CEO of Sitkins Group, Inc., and developer of The Sitkins Network and The Better Way Agency program. Roger began his career by working in his parents’ insurance agency in Wyandotte, Michigan, and after nearly 40 years has truly become an icon in the industry. He has trained and mentored thousands of insurance professionals. Producers, CEOs, and sales managers with diverse levels of experience have benefited 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. Roger is among only six people to have the honor of receiving this prestigious award.

Recognized as the nation’s top insurance agency results coach and renowned leader for improvement, he believes that if you improve the life of one person, you improve the world. To learn more, visit www.sitkins.com.

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