It's Time to Stop Drifting

agency growth Mar 03, 2017

How to chart a new course and stay focused on it

After all these years of coaching independent agency leadership teams and producers, I’m not surprised by very much. For example, it doesn’t surprise me that the vast majority of agencies are simply drifting along. However, it frustrates me that this is a recurring theme at most agencies. They’re doing fine, but they’re just drifting.

I know this because whenever I ask prospective consulting clients specific questions about their business—their annual business plans, budgets, sales goals, financial models, training, etc.—most of them have nothing to say, because they don’t have any of the aforementioned items. (Maybe that’s why they’re calling me!) The reality is that you can be semi-successful in this great business without any of those things.

As you may recall, “semi-successful” means you’re doing really well financially (making more money than you’d make if you had a “real” job), but you haven’t quite achieved total financial freedom. Sure, there may be occasions when you wake up at night worried about a particular person or wondering where you’ll find your next producer but, overall, you’re still doing okay. For now.

As Bob Dylan famously observed, however, “The times they are a-changin’.” Certainly that’s true of our industry. The buyers, the technology, and the employees themselves are all changing, and additional changes in agency compensation are on the way. All of these changes make it clear that it’s time to stop drifting!

You may have drifted to wherever you are today, but the current and the tides are changing quickly. Are you prepared to stop and change course? Have you even charted a course in the first place? If not,
you’ll continue to drift without direction or purpose (assuming you remain afloat).

How to know if you’re drifting

Is your firm drifting? How can you tell? Here are some of the key characteristics of a drifting agency:

A lot of “Someday I’lls”. If you hear yourself saying,  “Someday I’ll do this,” and “Someday I’ll do that,” it’s an indication that you’re drifting. After all, everyone knows that “someday” isn’t a day of the week!

Hope as a Strategy. As we’ve discussed before, hope is not a strategy. Unfortunately, leaders and producers at many agencies seem to think it is, based on what they say:

  • “I sure do hope the carriers don’t reduce my commission rates!”
  • “I hope my producers hit their sales goals.”
  • “I hope my team embraces our new automation system.”
  • “I hope I can find some new producers and service employees.”

Guess what? Hope doesn’t work anymore! If you think it does, you’re drifting.

Scheduled (But Not Held) Internal Meetings. You’re drifting if you constantly schedule meetings that never materialize. For example, your sales meetings get cancelled because everyone is “too busy,” even though most of your producers don’t even come close to hitting their sales goals. Or maybe you’ve scheduled monthly state of the agency meetings, but they keep getting postponed and moved. Ultimately, they’re never held. And then there are the automation training events or webinars and online training videos provided by your vendors that never get watched. “We really should participate in/watch them, but we’re just too busy.”

Sales Strategies with Initial Commitments But No Follow-up. “This is the year we’re going to develop and implement a unique selling process that differentiates our agency in the marketplace.” That sounds great, but most producers are doing just fine drifting along with a yellow legal pad and a copy machine. The reality is that you’re trying to save people money on their insurance, but you never help identify their total cost of risk. And yet by drifting along, you do fine.

Litmus Test: At your next sales meeting—if you hold them—ask your producers to define total cost of risk.

“This is the year we’re going to maximize social media.” Most agencies will gladly devote resources to a website that will generate inbound marketing leads, which is probably a good idea. In reality, digital-based marketing campaigns often produce some suspects at best, but no prospects. Why? Because agencies need to follow up with these online leads, and they don’t. You can’t maximize your use of social media unless you’re willing to invest the time to make it work for you.

“This is the year we’re going to get referrals and introductions.” Yes, I know. You’ve heard it a thousand times before and read it hundreds of times in my articles (I hope): Referrals and introductions are the best way to connect with your next ideal client. But what percentage of your new customers came from a referral or introduction last year? If you’re like most independent agencies, it’s well below 10%.

Why isn’t it at least 80% or more?

First of all, most agents don’t know how to ask for a referral because they’ve never practiced. Second, without practice, they simply don’t do it. If they do happen to get a referral, they don’t follow up on it. And yet most agents manage to do quite well!

If you’ve been in this business for a while, you may be so comfortable that you don’t think you need referrals and introductions. Maybe you don’t, as long as you’re content to drift along. But what if you changed your strategy? What if you practiced asking for referrals, went out and actually got referrals, and then followed up with them? Your commissions would jump!

Here’s a Blinding Flash of the Obvious: What’s the cost of generating referrals and introductions? Zero! It’s what you should be doing in the natural course of business—talking with people, which costs nothing. But if you do business the traditional way (a lot of look, copy, quote and pray), what’s your client acquisition cost? Often the acquisition cost of new business can be as high as 75% of the revenue it generates.

STOP drifting!

If your agency is just drifting along, I’d like to offer you some outstanding advice, which (surprise!) is in the form of an acronym: STOP drifting! Solve The One Problem. Don’t try to solve all of your problems simultaneously, because you probably won’t solve any. Instead, solve one problem at a time.

It’s not that simple to get to “The One Thing” (which, by the way, is the name of a book by Gary Keller—one of the best I’ve ever read). But rather than trying to implement 25 things or 10 things or even three things, identify the ONE thing that’s stopping you from moving forward and solve it! After that, solve the next one and then the one after that. It’s a systematic approach to eliminating problems.

Do you know the number one problem of most independent agencies? Well, like it or not, it’s the owners! If you suffer from “ARS” (Already Rich Syndrome), you probably won’t change anything, even though you’re drifting. Nothing is going to happen until the agency owner says, “Enough! Life doesn’t have to be this way!”

You’re going to put in the time anyway, so you might as well be great at it!

Remember, life is not a dress rehearsal. We need to get it right the first time. This starts with being aware that you are drifting along and that you have no strategies, no plans, and no accountability. I understand that you’re doing just fine today, but it’s critical that you decide exactly what you want your “Future Great Agency” to look like.

You can’t just drift to it. You must decide what you want it to look like and put it in writing. This document should clearly define the perfect agency you envision at specific intervals during the next three years or more. It should start with: “Three years from today, my agency looks like this …” and then provide specifics about each of the following:

  • Total revenue
  • Number of employees
  • Selling system
  • Differentiation in the marketplace
  • Financial model
  • Number of internal and external producers
  • Relationships with insurance carriers
  • Use of service centers
  • Digital marketing strategy
  • Future ideal clients

Once you start answering those questions, you then must decide how to bring your vision into focus. What has to happen for you to actually become this future great agency? As you formulate your plan, you may want to consider these questions:

  • What behaviors and strategies have to become normal, part of our DNA?
  • What will our system of personal accountability look like?
  • How will we develop producers who are self-managed but accountable?
  • What ongoing training will we provide for our automation system?
  • How will our selling system differentiate us?
  • How will we position our brand in the marketplace?
  • What will we do to attract and retain the best employees
  • How will we achieve 100% effective client retention?
  • What outside training and consulting resources will we use?

When you can answer those questions, you’ll be charting a new course. You’ll stop drifting! Better yet, if you look at this document on a regular basis, you’ll stay on course. As I always say, you’re going to put in the time anyway, so you might as well be great at it!

That’s The Better Way!

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