Creating a Legendary Agency

A “Legendary” agency is one who rarely loses customers unless the customer dies, moves or sells his/her business. It also has a regular, measurable, flow of referrals generated both by customers and by the agency requesting them. A “Legendary” agency is easily identified by the positive and proud attitude of both employees and owners. Each commends the other as the source of the agency’s strength.

Does this sound like your agency?

Most agents tell me that they rarely lose clients. In their opinion, the revenue slippage that they experience is undoubtedly due to the continuing soft market conditions. However, when I ask them to prove it – they can’t! It is much more comforting to blame revenue loss on the market than on the mind-set and attitude of the agency.

The first element of a Legendary Agency is the information trail. These agencies know how well they are performing and where any gaps in service occur. Two important pieces of this information trail is the Retention Report and the Lost Business Report.

Retention Report

The retention formula (below) is performed in four separate areas, Premium, Commission, Customers, and Policies. Retention is the measure of the amount (or number) retained from one year to the next in each of the four key categories, each pair of which is important, in themselves, to an agency. The common Retention Formula is:

(Total Year-to-date less New Business) divided by (Prior Year-to-date Total)

The relationship between Premium and Commission retention can send up “red flags”, as can the relationship between Customer and Policy retention. For instance, if Premium Retention is 90% and Commission Retention is 80%, the agency should be alert to the reasons for the variance. Is the agency routinely negotiating away commission to keep accounts at a lower premium level?-or are the commission rates decreasing? If Customer Retention is 95% but policy retention is 85%, are you converting mono-line policies to packages – or are you losing the profitable side of your customer accounts to competition while maintaining lower premium (or profit) policies?

In the creation of a Legendary Agency, the key measure of retention is Customer Retention. How many 1998 customers will you have left at the end of 1999 in Personal Lines and in Commercial Lines? Any percentage above 95% is excellent. Any percentage below 90% should alarm you.

Lost Business Report

The most important piece of information that you need as an owner is WHY a line or customer was lost. The Lost Business Report is a weekly or monthly report from the operating departments to management identifying each line of business (and each customer) lost with a section for “new” losses and a consolidation for Year-To-Date lost business. This detail report should tell you what and who was lost, how much revenue the lost business represented, and WHY they were lost. Be wary of “price” or “no reason” as answers in the Why category.

Legendary Agencies rarely lose customers or lines of business to price competition. They realize that most customers who value the association with their agents will not move for a small percentage change. And, if the percentage change is large either the agency has not done its marketing job properly or the competitor has accessed markets that the incumbent has missed. If price is listed as a reason for the move, your staff should be prepared to identify what the price differential was and why it caused the client to move. Clients who consider their agent a part of their organization would rarely leave for a few dollars. If business is lost for “Price” or “No Reason”, the staff has not done the Post Mortem that is common in Legendary Agencies.

The Post Mortem

Beside an information system that keeps the employees and owners aware of retained and lost business, Legendary Agencies are not shy of conducting detailed Post-Mortems on lost business (either prospects or existing clients). The Post-Mortem is gut-wrenching experience in which the agency analyzes what happened in order to learn from the experience of loss and to avoid any similar situation in the future. The Legendary Agency NEVER uses the Post-Mortem to assign blame. Blame never matters after the fact. The key to the Legendary Agency is to learn from one’s mistakes and to avoid them in the future. After all, insurance is not brain surgery. While not a simple process, it is repetitive with only limited types of clients and problems repeated every year. If we understand what was done wrong and are vigilant to avoid its recurrence, the agency and the staff will be ever more successful as they learn from their mistakes.


Do you want to know how close you are to the “Legendary” category? Measure the number of unsolicited referrals that are provided to you by your own customers. Legendary Agencies maintain a Hall of Fame list of customers who refer others to the agency. It is appropriate to send a “Thank You” gift or note for each referral provided (regardless of whether or not you write the insurance) because those are the truly loyal clients in your agency. Wouldn’t it be nice to both know who they are and to treat them accordingly? Every agency gets some internal referrals. Many get many referrals from the same, few loyal customers. These customers are worth their weight in gold. The difference between referrals in most agencies and those in Legendary Agencies is that Legendary Agencies get referrals (either single or multiple) from many more clients than the typical agency. Their Hall of Fame list is immense because many more of their clients “boast” about them to friends.

The other significant difference between the normal agency and Legendary Agencies is the ability of Legendary Agencies to ASK clients for referrals. When we suggest a pro-active referral program in most agencies, the owners refuse indicating that they feel they are pressuring clients by asking for referrals. Legendary Agencies are so proud and aware of the services that they provide their clients that they freely ask for the names of clients’ friends in order to provide them similar services.

Legendary Attitudes

I’ve accused many agents and their staffs of “Stinkin’ Thinkin'”. Clients are problems and interruptions. They have too much to do to provide competitive quotes to customers and prospects. Carriers are “purposely” undermining the agencies. Agency principals feel that, while the employees may be capable, they do not live up to their potential and must be closely managed. The owners sometimes accept mediocre performance because “all employees are the same”.

Compare that to the Legendary Agency, whose attitudes are diametrically opposed to those above. The customer is the reason for being – never an interruption. The agency’s primary purpose and value to customers is its ability to provide competitive quotes (as opposed to the direct writers who can only quote one (their own) product). Carriers lose as much as agencies when the flow of business is interrupted. When this occurs, the Legendary Agency knows that there is a people problem in the pipeline (either in the agency or at the company). The agency owner will always work on identifying and fixing the people problems to regain the partnership relationship between agency and company that profits both.

Legendary Agencies’ principals work as hard as the employees to build and cement client and carrier relationships. They hire the best employees available and treat them as equals, giving the employees both responsibility and authority levels commensurate with their experience and skills. Understanding that mistakes are made (by owners as well as by employees), the owners will support employees who put forth the maximum efforts on behalf of the clients and openly and frequently praise the performance of the employees. Pride is reflected on the agency and on the employees by the owners and that pride is returned to them by their staffs. The general attitudes in Legendary Agencies is so much different from the normal insurance agency attitude that it has become the first indicator of the Legendary Agency status.

If you are in a Legendary Agency, you know it already. If you aren’t and would like to create a Legendary Agency, be prepared to change your own and employees attitudes (or change employees). Attitude precedes reality. If you believe that you are the best and the most customer-oriented agency possible – and if you act that way on every phone call and customer contact every day – you will become the agency that you visualize. Follow the guidelines, above, that identify Legendary Agencies and you will become one, as well. The final indicator of Legendary Agencies is that they follow the Ten Commandments of Customer Service (see below and call us (800-779-2430 for the full article, published January, 1999 or access the article in the Agency Consulting Group, Inc. PIPELINE Archive located at our website,


1. Do things right – every time

2. Customer problems are our opportunities to provide the highest grade of service possible and to create “Customers For Life”

3. Create Service Legends

4. No one ever complained about being treated too nicely

5. Continuous Improvement is more a function of the questions we ask than the answers we provide

6. The Customer’s perception IS reality. If he thinks we blew it, we blew it!

7. Guarantee your service – UNCONDITIONALLY.

8. Work should be fun.

9. Be proud of your agency — but never satisfied.

10. To your customers – YOU are the agency and the agency IS the company