What's the Value of an Appointment

Listen to the podcast now:

Brent Kelly:

Welcome to the Agent Leader Podcast. My name is Brent Kelly, your host. Thanks so much for joining me on another episode of the podcast and the mission, the purpose, always of the Agent Leader Podcast, to help you, the agency leader, gain better clarity to build your consistency and to make a commitment to become your best version possible. We have a very special return, I guess we'll just call you a regular guest, Roger, at this point, with us here.

Roger Sitkins:

Okay.

Brent Kelly:

If you are watching via video, and again, we've been doing this for several episodes now. We're going to be doing this in the future. We'll be on video on our website and YouTube, as well as all your podcast platforms. Roger Sitkins, welcome back to the Agent Leader Podcast.

Roger Sitkins:

Brent, it's really great to be back with you again. I love sharing the information we have and hopefully some people will take some things from this. I know there'll be stuff they can take, but actually do something with to impact their agency and their life. Other than that, it's a great day.

Brent Kelly:

I agree. As always, but this is with any guest or any podcast, hopefully you're taking some notes, but definitely today, make sure you've got pen and paper handy. Take some notes. Roger is going to be sharing today a breakthrough that he had. Some of these things, these breakthroughs, it's something that maybe we've talked in different ways about it before, but there's a new light on this. I think it's really going to be impactful. I shouldn't even say I think it's going to be impactful, I know it's impactful. I also know that Roger's got more insight on this that I haven't even heard yet, so I'm excited to hear more about what Roger's coming up with and this breakthrough.

Brent Kelly:

Before we get to that, I do want to mention that Roger, we do have something that's coming out this fall of 2021 that we're pretty excited about and it's called a book. Roger, we have a book coming out. Do you want to tell the audience just a little snippet about this book?

Roger Sitkins:

Yeah. For years and years, people say, why don't you write a book? Why don't you write a book? Ah, I don't really want to write a book. But Brent and I have collaborated now and we have a book coming out. It's called Best Version Possible. How do you as an agency become your best version possible? It's a short book. It's what a lot of people call an airplane book. On a leg of an airplane ride, you could certainly read it. We're sharing our key strategies that we know that will truly impact an agency. We're excited about Best Version Possible to be coming out soon. It'll be a New York times bestseller or whatever, but no. We're very excited because we're getting the basics. As you know, and I hope your podcast listeners know all the time, that it's about doing the basics at a really, really deep level. We're excited about it.

Brent Kelly:

Yeah. It's been a fun process. I think like anything, and if you've ever written a book, probably most of you haven't, but if you have, and you talk to people that have written books, you learn a lot about yourself and what you're out there doing. This really comes back to our mission just to have an impact to as many independent insurance agencies as we can. To echo what Roger said, we are so excited about this coming out, and you'll hear more about it in coming episodes and certainly in our materials.

Brent Kelly:

With that, I want to get into the content for today. I love spending time with Roger Sitkins for many reasons. He's been doing this for a while, to say the least, and has had a lot of impact on agencies and just so many different experiences. When Roger ever texts me or calls me, or in this case, we were being part of an event, or doing something together, and he says, "Brent, I got a breakthrough. I got to share with you." I'm always like, oh, okay, what's the breakthrough? This was really all about the value of an appointment. Roger, I don't want to steal any of your thunder. Maybe if you could talk about kind of how you came about this topic of what is the true value of an appointment and the impact it has for producers and agencies?

Roger Sitkins:

Sure. I have some notes here so I get the exact thing. In a project that Brent and I are working on, which is coming out soon, it's even bigger than the book, but I was looking at the best practices numbers. I said, okay, what's really going on in an agency today? What are some things that maybe people aren't looking at and something that we talk about all the time. Now, of course, it's TSS, Time Spent Selling, and how do we get our producers in the green zone versus the red zone? Of course, green zone are doing the four key money making activities the producers should do: sales, the continuation process, relationship management, and pipeline building. That's green zone stuff. But then I said, how can I even take it deeper?

Roger Sitkins:

I started looking at producers within an agency and I looked at 2.5 to 5 million, and 5 to 10, and 10 to 25. I just want to say, what's really going on? Looking primarily at the first couple of categories, I said, all right, what is the average producer's book of business? Now, again, these are best practices so they're going to be better than maybe quote unquote the average, but a best practices producer at that level has a book of business of 634,000 and change. I just said, let's just round it up to 650,000. All right? The producer makes on an average compensation blended between new and renewal, producer makes right at 30%. An average producer's making a little over $190,000 a year. Okay. Then I said, all right, that's interesting. That's pretty good money. But when they're in the green zone and when they're on an appointment, what is it worth to them?

Roger Sitkins:

I said, all right, let's just take the average producer and let's say they work 45 weeks, a year, seven weeks off. Some that's way less than what they work and some that's way more. I said let's just be kind and say 45 weeks, four appointments each. So, the producer has 180 appointments, basically, in a year. All right. I said, wow, let's divide that out. Rounding things off to make it easy, we can basically say that a producer personally makes a thousand dollars for every appointment that they're on. A thousand dollars for every appointment they're on at a 30% commission rate. Then I said, well, what about the agency itself? What does the agency make? Well, an average agency in best practices, their EBITDA is right at about 25%. Now, the larger agencies is a little bit less, but let's just, again, rounding off here. We don't have to be specific. It's at 25%.

Roger Sitkins:

Well in our business model that we work with our clients on, our goal is to get it a 30% profit. 30% profit. At a 30% profit, the agency's going to make a thousand dollars profit on the producer's appointment. All right? The producer makes 30% personally, but the agency, because their operating at a 30% profit, would also make a thousand dollars. But again, it's profit to the agency.

Roger Sitkins:

Then I said, holy smokes, what is that worth? Well, today's multiples, that's worth 14 times. So, a thousand dollar appointment increases, or certainly has a value in the agency evaluation, of $14,000. I said, okay, wait a minute. This is pretty cool.

Roger Sitkins:

Something you and I talked about on the unnamed project is that agencies, your agency is not a penny a stock. This is a big deal. For the vast majority of agencies that we work with, their agency is their largest, or certainly close to being largest, personal asset.

Roger Sitkins:

Then I start think, going back to the basics. TSS, Time Spent Selling, every appointment currently in their current business model gets them about a thousand dollars to the producer, a thousand dollars of profit to the agency, $14,000 of value. Well, something that's become very, very sticking. We've talked about it on the podcast several times now, is your current business model is perfectly designed for you to achieve the results you're currently achieving. Well, what can we do to increase the number of appointments and still have that same rates?

Roger Sitkins:

Say, hey producer, why wouldn't you go on more appointments? Now these are quality. Why don't we spend more time in the green zone? Why don't you understand that every appointment you go on is worth a thousand bucks doing what you're doing. So, if you will increase the number of appointments and their appointments with clients, future ideal clients and centers of influence, and you're getting even better results, because you're working on better accounts, you have a higher retention, you have a higher closing ratio. What can that wind up being worth to you? The blinding flash of the obvious is rounding off, I've got exact numbers, but let's just round it off. A thousand bucks to me as a producer, a thousand bucks to you profit as an agency, and $14,000 of value. Wow. Where could we take it?

Roger Sitkins:

It's really been impactful. We've shared this now with a few of the agency leaders. In fact, when we're done recording this, we're having a session, our CRO, chief revenue officer, session with a bunch of our clients today. we're going to be going in depth with them on this, too. To me, it's just one of those blinding flashes of the obvious, Brent.

Brent Kelly:

Yeah. My question behind that, Roger, obviously, you've been doing this for a while, as we've talked about. We've talked and even in different podcasts of time spent selling, and the green zone and the red zone, but why do you think that more agencies don't understand, or maybe producers, it could be both/and. Why do agencies and producers not really understand the value? I mean, because as you say that, I'm sitting here writing numbers down, I'm like, well, I think we know where we need to focus. It's just like, oh, well yeah, appointments are important, whatever. Why is this so missed? I mean, that's my question to you for doing this so long.

Roger Sitkins:

Well, good point. I've been doing this for so long and this is the first time I thought about it.

Brent Kelly:

Yeah.

Roger Sitkins:

My life is about how can I impact agencies and their results, but it's the first time I took it this deep. One of our favorite acronyms now, Delivering Excellence in Every Process, is are we going deep enough in our thought? It's just never been necessary. Plus the other thing is that it's simply a great business that you don't have to do much of what we say and you're going to do okay. You'll have regrets later on. You remember the thing we've talked about that if your goal is regrets, stay the course.

Roger Sitkins:

When we look at this and take this even deeper, let's say the agencies that are 25% profit, not 30, not our model. By the way, that's where the average best practice agency is today, their profit. Again, 25%. Larger agencies, 21. Well, at a 25% profit, the appointment has a value to the agency of $880. That's still a little over $12,000 of value. But then, let's back up to the basics. I'm only seeing four appointments a week and that's what's shocking to me. What are you doing as a producer? I mean, if you're saying clients, future ideal clients and centers of influence, and four appointments a week, and we've been challenging people on this recently to take a hard look at this.

Roger Sitkins:

Everybody listening now or watching now, if you're a producer, pull out your calendar and just see what you've got booked for the next two weeks. Okay? Agency principal, sales leaders, challenge your producers at your next sales meeting. I certainly hope you're having those every week and as we kid around saying it's not spelled like weakly with an "A," it's a weekly sales meeting. Are you challenging people saying how many appointments did you have? What percent of the time were you in the green zone doing green zone activities versus in the red zone, hiding behind activities, or caught in the service trap because you're not using your high performance team well?

Roger Sitkins:

Again, it just comes back to whether you're a 25% profit or 30% profit, which you should be. What is the value of the appointment? What this also points out, Brent, that we've talked about so much now, every hole in your calendar as a producer is a lost opportunity. Every hole in your calendar. If your goal, in our case with our producers is perfect schedule, it's to have Monday as the prep day, Tuesday, Wednesday, Thursday, we have a morning, a noon, and an afternoon appointment. We've also got a floating appointment out there that we use for a major relationship event. Those are 10 appointments right there.

Roger Sitkins:

The other one that's crucial and producers are still missing this one, is if you believe that relationships are what it's all about. You know that when you pick up my phone and just call someone, it's amazing. What our best producers, the highest performers are doing now, is they also have an appointment with themself on Tuesday morning and Thursday morning for reach outs. As part of their Sunday review, which I certainly hope they're doing, the producers are saying on Tuesday and Thursday, I'm going to identify, in my Sunday review, I'm going to identify who are the people I'm going to call on Tuesday and Thursday just to pick up my phone and talk to them. Okay. In that case, now we're from 10, we're up to 12 appointments per week we should be doing. Then we say, but an average producer's four, let's say five. Okay. How many opportunities are they missing?

Roger Sitkins:

Again, every hole in the calendar is a lost opportunity. We know that that nature abhors a hole. If there's a void, it's going to get filled with crap. Can't resist attracting paper, and processes, and junk, versus saying doggone it, when I go out there, I'm earning money. The analogy I've heard you use, and I love it when you share it with our clients or friends, is you say, look, it's like having a basketball game, basketball team, or a football team, where the players are only playing two of the four quarters. You only score points when you're in the game. Let's get them in the game.

Roger Sitkins:

When we talk to producers and say, where would you rather spend your time, in the office or on appointments? Whether they're virtual or in person. I love doing that. By the way, the service staff loves it when the producers aren't there, also. When we get them working as a high performance team, and our ultimate litmus test for the third or fourth time is the producers are in the green zone 80% of the time. Brent, what if we just got them to 50 or 60% of the time? It's amazing. It's amazing.

Brent Kelly:

Well, as you were saying that, it goes back. There's the numbers that you added to the kind of the common sense of, yeah, we need to get out in the game. Right? We've talked about that. You see that in producer planning, and most of them go, oh yeah, I get it. It would make sense. You start to add value to it, it's like ... I'm sitting here. I wrote down every hour, like you said, every missed opportunity in your calendar. I said, I really hope you enjoy those emails. I really hope you enjoy that social media post. I really hope you enjoy that busy work, that service work that you're doing at 1:00 PM on a Wednesday, because it just cost you X amount of dollars.

Brent Kelly:

I wrote down too, and this is something we stressed before, Roger, on these podcasts, is what's more important as a producer? I guess that's what I'm getting at it. I'm sitting here going well, as you said, look at your calendar. If I look at my calendar next week, or I'm not filling up my calendar for next week with these appointments, as you said with clients, future ideal clients, and centers of influence, what do I have in there that's more important? I would actually be curious to know. Well, I don't know. I've got stuff. Well, that stuff is not paying you. It's not paying the agency. It's not providing you opportunities to do the things that you want to do, to serve your clients at the highest level, to serve your community, to give back to your family, your church, all those kind of things when you get into what is it really about? Because you determine that next Tuesday, I'll just see what happens. It just doesn't work.

Brent Kelly:

I've got to add one more sports analogy. I don't know if this is good, but man, I do love sports analogies, especially during football season, Roger. But it kind of hit me. It's like, I see producers, thinking about a football team, you've got your offense and your defense. Right? Certainly get to higher levels. Usually you've got people that play one side or the other, but I sense the producers are always playing defense. They're just kind of getting pushed back and pushed back and pushed back. You think about teams where it's like, boy, it's really hard to score points when you're always on defense. I think that's what happens with a lot of producers. They're playing defense all day. It's like they're never out there trying to score points. So, a different frame on that analogy of sports. Anything to add to that, Roger? I know there's a couple things that hit you.

Roger Sitkins:

Yeah. I mean, are they playing defense or are they just sitting around, standing in the middle of the field, waiting to see what happens?

Brent Kelly:

Maybe they're just roaming.

Roger Sitkins:

Yeah. If you start the week wondering what's going to happen, you're going to have chaos all week. You're going to be in that hysterical activity on the way to the grave. You'll hide behind activities. Look, it's not a perfect world. In my analogy here, I'm just saying just 45 weeks and just four appointments a week is what's going on now. Get it to 5, 6, 7, 8, get it to 10, get it to 12. Because if you can buy in that you only score points when you're in the game, or I use the analogy, too, I like to fish. Don't do it enough, but I like to fish. You only catch fish when your bait is in the water. You leave it out of the water, it gets pretty stinky. When we look at this and just say, wait a minute, if I'm getting pretty darn good results now not really playing the game full time, what would happen if I just got in three of the four quarters? What if I got in all four quarters? It's really amazing what happens.

Roger Sitkins:

Producers ... I'll back up. There's certain things you do that you earn pay and there are certain things you do you don't earn pay. We talk about this all the time. If we can say, when we identify those 10 or 12 blocks a week that are paid time, we just can't violate pay time because stuff happens. There's the emergency in flight and there's all the stuff you have to do to get ready. The key is just don't do no-pay activities during prime pay time. If you can just get that as a mindset, we talk about mindset so much with our last podcast, a long one on mindset. If the mindset is "I've got to be in the game during pay time," if they just bought into that and started challenging themselves, and in their Sunday review, look at it and say, okay, how much pay time did I have versus no pay? Was I full time in the game? Most aren't.

Brent Kelly:

It's such an important question. Again, the thought process, too, when you're given the value of an hour, the value of an appointment, or however you want to look at it, just think about it in reverse. I think one of the problems is there's not enough pain, right? You don't see it as much right away. Then you look back at the end of the year or whatever, and you go, gosh, what happened? Could you imagine if a producer started with X amount of dollars, whatever their income goal is, and every hour that they were doing something other than what they were designed to do, which is produce, you took a thousand dollars and burn it. Right? I took it out of their account. You go, wait a second. Don't do that. In essence, that's what's happening. It's just we're looking at a little bit differently.

Brent Kelly:

Roger, again, to me, this is one of those breakthroughs again. You said you've been doing this a long time. Obviously we know that. Even for you, you're like, gosh, I haven't thought about it in this way. For an agent, it's my last question, so to speak, or you can add on to some things, if I'm an agency leader, right. Obviously this is the Agent Leader Podcast, and I'm sitting here and going, okay, this is insane. Hopefully some of you are thinking, this is crazy. I haven't really ever even thought about in this level of how important this value is of appointments. I mean, again, I subjectively know it, but I haven't really put an emphasis on like I should, and they go, okay, I need to start doing something. What would you tell them? [crosstalk 00:19:31]

Roger Sitkins:

Number one, it starts with awareness, and to have an open discussion with the producers, get every producer to say, okay, what's your personal compensation? What are you earning per appointment now? Because what'll happen is some of the producers are certainly going to be having much less than a $600, $650,000 book of business. They're going to say, well look, guess what? I don't have many appointments and I'm making this much money. I'm making $3,000 per appointment. Doesn't work that way. Get, get down to the basics of understanding it.

Roger Sitkins:

Brent, there's one other big breakthrough I haven't even told you yet.

Brent Kelly:

Oh.

Roger Sitkins:

Because it was additional research this morning.

Brent Kelly:

All right. Lay it on me.

Roger Sitkins:

Looking at the best practices and said, okay, is an agency vulnerable if the producers are not producing? Yes. We talk about producer recruitment starting at home. Yes. Get them in the game. But here's another big vulnerable one. Best practices studied, one of the metrics they look at is the 10 largest accounts in an agency. Okay. In the 10 largest accounts, if you look at that $2.5 to $10 million range, the 10 largest accounts in the agency are 15% of their revenue. In the $10 to $25 million range, it's 14% of their revenue. Okay. That's a pretty big number. That means that if an average agency lost a very small number of accounts, what happens to their profitability and their value?

Roger Sitkins:

Then you also take, all right, what about contingency income, profit sharing income? How much of their revenue comes from that? Well, in the $2.5 To $10 million, it's 9% of their revenue, and the $10 to $25, it's 7% of their revenue. If you combine their 10 largest accounts and their contingency in the $2.5 to $10 million income agency, it's 24% of their revenue. If you lose 10 accounts and have no contingency income, you've lost 24% of your revenue. You're out of business. On the larger agencies, the 14% and 7%, it's still 21% of revenue.

Roger Sitkins:

When I look at this and I say, oh my gosh, what's going on here in the agencies? This is also interesting if you say, okay, it's 24% for that first category, but their EBITDA is 25%. These numbers blow you away.

Roger Sitkins:

One of the things we see with small growth agencies is they just don't know their numbers. They don't know their numbers. We talk about this all the time, especially in our leadership program. When we talk to an agency and ask them some of their key performance indicators, basic one, what's your revenue per employee? What's your spread per employee? The minute I hear, "well, it's about ..." They don't know their numbers. They don't know their numbers. All right.

Roger Sitkins:

I was talking to a gentleman this morning who's just recently retiring from a big agency, about 18, 19 million of revenue. I was just asking him about some things. Tell me about your agency a little bit more. He knew his numbers, Brent. That's why I was a little late getting to the podcast to start recording. He knew his numbers. He was telling me his profitability, their growth rate, their retention rate. They know their numbers. What I would do as an agency leader, I would challenge our agency leaders listening. Number one, are you vulnerable? If you lost your 10 largest accounts, are you in trouble? We know from 80/20, you lose your top 5% of your customers, you've lost 50% of your revenue. Why aren't people aware of this? Just some more thoughts here to say know your numbers, know the value of an appointment, know how many appointments per week your producers are having. You'll be shocked.

Brent Kelly:

Yeah. Thank you for the final breakthrough. Again, there's a lot of things I could comment on, but it really all does come back to these. We talk about relationships, and value, and deposits, and you know this, Roger. We do our camps. Oftentimes we'll ask producers, well, what would you do if you only had a few or one of your top clients? Oh, I would do all this kind of stuff. Well, why don't you? I don't know. I'm busy. Okay. Well, what are you busy doing? Right. It just comes back to the central theme of this.

Brent Kelly:

I do love the aspect. It's something I share all the time that, and you just hit it right on. Is that when we have greater awareness, in this case, our numbers, we take better actions. I think one of the biggest problems we see is that if I don't know, or I've got blinders on or I don't want to see, cause I'm afraid or scared or busy, whatever it is, then I won't react in the right way. In many cases, we don't even know the pains there. We haven't fully felt it. That's where growth comes is, hey, I'm going to be honest and real with what it is. As you said, those top clients, the fact that the dollar per appointment, I mean, they're all real. We just oftentimes don't even know them. Because of that, it costs us a lot of money and a lot of frustration.

Brent Kelly:

Well, Roger, thanks so much for joining me today. If you have any final thoughts that you want to share, feel free to do so, but I do want to mention to the audience here, we have just started and we've mentioned several of the training programs. We've just started our next round of training programs with a number of different agencies across the country. I know, Roger, for you, certainly for me, it's my favorite things to do. We get to see smiling, learning faces every single day, whether it's in our leadership or sales development, sales leadership, our producer, our account manager for service reps, monthly sales meetings that we run. We're consistently in front of agencies and trying to share some of these ideas and have round tables and have peer discussion. This is all part of our all inclusive model.

Brent Kelly:

I mentioned this before, but if you're an agency and you go, you know, I've got maybe one producer here or a person here that could use this, or maybe I could have this. That's great. But what if you could get your entire agency to understand some of these key principles and strategies that simply work? That's why we believe in a holistic process. We believe in a consistent process that we can continue to walk down the line. We believe in building a community so it's not just you alone. It's your team, it's us as coaches. It's other peers that are dealing with some of the same things that you're dealing with.

Brent Kelly:

Our all inclusive model right now is closed, but you can get on the waiting list. It's a great idea to do that as our next round of programs will start at the beginning of 2022. Now's a great time to get ready, get prepared to go. If you go to sitkins.com/aim for all inclusive model, you, again, can learn about the program and get yourself on the waiting list so you're ready to go to make 2022 truly an incredible year. Your best version possible. Right, Roger? With that, any final thoughts to the agency leaders out there?

Roger Sitkins:

Yeah. One big one. Name of the book, Best Version Possible. You just mentioned it again. This is something that hit me about three or four weeks ago, and I've been sharing it with agency leaders now and individuals. Stop negotiating with your best version possible when you know what the best version possible looks like. Certainly, hopefully some people have had some breakthroughs here today listening. When you know what your best version possible is, why are you negotiating with it? Make the commitment to be the best version possible so you have no regrets later in life. It's your choice.

Brent Kelly:

Thanks, Roger, so much for your insight, for taking this principle, this idea of the green zone and putting some real numbers around it that people can grasp and do something with. Again, we would love to have future conversations with you to help your agency truly be that best version possible. All the best in your success. Thanks for listening.