We still encounter agents who define their success or failure based on whether they generate enough revenue each month to pay their bills. These folks are good insurance professionals, but they don’t run a business, they earn a living. They just happen to have a few or many employees who help them earn that living.

Agents who have become business owners understand that their business is more than the monthly contest of bringing in more dollars than we spend. Business owners are concerned with long-term profitability, asset value creation and trending.

Once the business owners begin to plan for their business success through marketing plans, growth and acquisition plans and personnel development, they find the checkbook a very poor way of measuring their success.

With the advent of Agency Management Systems, agents are getting measurement devices that at least compare revenues and expenses against prior periods. Many look at those devices as an indicator of success or failure and, unfortunately, if something isn’t reading a positive change, they try to alter their plans based on single month results.

The very worst way to measure yourself is looking at a single month compared to a goal or even against the same month in the prior year. In the insurance agency business too much can happen simply because of revenue timing (late renewals, early renewals, late billing, pre-billing, etc.) that makes one-month views only important to cash-flow for that month. Agents who change their objectives based on a single month’s results are shooting themselves in the foot.

Many agents have progressed to viewing Year-To-Date statistics and counting on them. They are dead-on accurate after 12 months, but are only progressively reliable as a gauge of your progress and success of any goals, objectives or action plans. They mean very little after January, February or March and only gain credibility after several months of trending in or out of the direction you desire for your business.

Rolling 12 Month data, on the other hand, looks at full year data every month and becomes a much more reliable measure of trending of revenues, growth, expense or any other item you desire to measure for positive or negative changes.

To create Rolling 12’s, you add the sum of the total for that category for the year-to-date AND the sum of the past eleven months. For example, a Rolling 12 month calculation after March of the current year would add January thru March results in the measure you are trending to LAST YEAR’s April through December totals for that category. Every month you lose a month from the previous year and add the current month to the current-year-to-date total.

EXAMPLE: In this agency totaling April through December of 2013 with January through March, 2014 yields a rolling 12 month total of $5,429,630, the total commissions generated by this agency over that 12 month period.

This trend analysis will tell you whether the long-term effects of your and your team’s efforts are improving your status or not.

The next step is to extend your trend analysis over multiple years. This is done by comparing this year’s Rolling 12 results at any point in time with the same Rolling 12 results from the prior period. So if you look at January through March of this year and April through December of last year, you would compare them to January through March of LAST YEAR vs. April through December of the year before last.