Adding Customers
Retaining Customers
Providing ALL insurance products for the customers
Nurturing satisfied and happy employees
Generating Profits
Keeping the carriers happy (growing and good loss ratios)
Many have looked at this list and said that more than one or all of these subjects are important to an agency. A few agents probably consider a few of these options LESS important than others.
The greatest mistake made by most agencies is picking ONE from the list above. Most of the time, the priorities of the above list depends on the ‘crisis of the moment’ that causes an agency owner to categorically state the one which is the most important thing that the agency is focused upon.
In reality the most successful agencies focus on each of these subjects as if they were the openings in a revolving door – if one breaks down, the door simply stops and no one gets into or out of the business. So the only answer is ALL OF THE ABOVE!
But the most frustrating thing for agency owners is the dilemma of how to keep ALL of these critical subjects attended to at all times.
Ladies and Gentlemen, this is MANAGEMENT 101, something that very few agents are trained to do, but are forced into the role the same way we learn parenting for better or worse. Most parents go through the same learning curve, the same frustrations and make the same mistakes. This is because no one teaches young people HOW to parent before they become parents, themselves. The same thing happens with agency owners, even if they are second or third generation agents. Mom and Dad don’t teach their kids or their next generation owners the lessons they learned the hard way, leaving the new owners to also learn through trial and error.
There ARE a few lucky exceptions. They are trained and enter management a little cocky, but much better prepared to run agencies. Once they shake their ‘youthful exuberance’, you know, the part about knowing everything as soon as they become owners, and gain the maturity to learn from and take advice from their elders they usually become much better managers and owners than their predecessors.
I got a wonderful lesson in this through first-hand experience with one of my children. A much, much better parent than I ever was, my son and daughter-in-law had the benefit of training in psychology and special education for their careers as special education teachers. The side benefit to this training was their understanding of children and, when they had their first baby, they were much more patient and understanding and devoted much more time to the development of my granddaughter than I ever did with them. Similarly when agents mature and train their next generation of owners into the roles that the agents have held and share and teach them how to properly manage those roles, the next generation becomes stronger than the last in the position of agency owner and manager.
But there is little need for management for small agents with only the responsibility of a single insurance agent to his customers. However, once you own an agency that has producers, employees, multiple carrier relationships and a growing book of business, you are no longer just an insurance agent.
An insurance agent is someone that keeps customers satisfied by attending to their insurance needs on a regular basis. Actually, this is the definition of an insurance broker – one who works for the client’s best interest at all times. The successful broker makes sure that ALL OF THE CLIENTS ASSETS ARE PROPERLY PROTECTED, which Agency Consulting Group defines as our Relationship Selling Model, the Asset Protection Model. So if you think you’re a broker or agent by selling a few or a lot of people one policy each, you’re fooling yourself. That is the definition of an Insurance Salesperson whom mostly on the phone at direct writers. They sell customers what the customer asks for regardless of what the customer needs.
Once you establish contracts with insurance companies, you become an agent of the companies, required to perform in the best interest of the carrier while still serving the customers insurance needs. So now you are concerned with providing quality products to your customers, insuring ALL of their asset needs AND generating a growing premium base of low loss ratio business for your carriers.
Once you hire or inherit employees, you extend your role from an insurance agent to an employer. Now you are responsible for someone else’s career, as well as your own. To perform this role successfully, you must assure that the employee is properly trained, given the tools to do their jobs and are treated with the respect, authority and responsibility they deserve to earn their compensation and be satisfied with their roles and positions in your agency. Too many agents still treat their employees like clerks and personal assistants, telling them what to do and when to do it, not giving them the latitude and responsibility for which most of the employees are trained. These are people who own homes and property, make investments, raise children and educate them. We ask them to ‘check their brains at the door’ – they won’t need them until they leave at 5:00 PM. The happiest employees are those who are treated with respect for the knowledge that they have accumulated. They are responsible for their jobs, certainly are managed to the expectations of the agency and the customer, and are honored for their roles.
If you get to the point of hiring producers, your role expands further into that of a sales manager. No, you don’t hire a producer and tell him to ‘go ye out and sell insurance’. You don’t give him the Yellow Pages or tell him to sell insurance to his friends and relatives. Most agents know that is a recipe for disaster – failed producers and a terrific expense to the agency for as long as the agency can support the producer. Successful producers are giving training, as needed, specific expectations of the job and the marketing and advertising support to provide them all the prospects they need. Their role is to develop relationships with the prospects that cause the prospect to trust the agency to do a better job protecting the clients’ assets for them. They get the prospect to TRUST the producer and the agency’s capabilities to protect them. Their function is NOT to troll for prospects and face the rejection normal to that role.
All of these subjects are critically important to an agency owner’s primary goal of supporting him/herself and their families. In order to accomplish that we must balance revenue with expenses in order to create a profit that allows us to earn a comfortable lifestyle AND to create value in the business asset that will eventually become our retirement vehicle (or add to our estate value).
The lesson to be learned in this ‘Management 101’ class is that smaller agents must balance GROWTH OF CLIENTS, RETENTION OF CLIENTS, and PROVIDING FOR ALL OF EVERY CLIENT’S INSURANCE NEEDS, the customer oriented priorities of the agency with nurturing the employees (including producers) and establishing and paying attention to the carrier needs – all while learning how to budget for profits.
Larger agencies, whose owners are smart enough to develop the agency, will hire managers to handle these priorities and the owners will dedicate themselves to their favorite role in the agency. Sales managers are hired to manage growth and the producers into ever-growing books of business. Operations Managers are hired to manage customer service, employee development and retention of business. Financial Managers are hired to evolve the budget into an Agency Strategic and Tactical Plan including the budget that assures profitable operations every year.
Most agencies still stay small. They may talk about growth, but the owners aren’t really comfortable doing the things necessary to accomplish that growth, many blaming everyone and everything but themselves for their lack of success. Even most agencies that grow do so very painfully, not hiring support staff until customer crises arise and not hiring management until frustration with dealing with employees overcome the owners.
That’s why only a relatively small percentage of agencies ever evolve into professionally managed businesses generating millions of dollars of revenues, double-digit growth every year, expansion of geographic and business scope beyond the expectations of even the owners and profits that result in extraordinary business value on behalf of the agency owners.
It doesn’t have to be that way. It begins by paying attention to the Revolving Door of agency priorities in equal proportion.
First, make sure that every customer is satisfied and likes you.
Second, while still maintaining customer relationships that grow and retain your revenues, evolve competent, responsible staffs that are trusted to do their jobs, but are managed so they know that you know everything that is being done.
Third, create relationships with your carriers with the same intensity and honesty as you do with your clients. Never lie or exaggerate what you can do for a carrier. Under-promise and Over-deliver so the carrier sees you as a profitable growth, oriented agency.
Fourth, bring in and mentor producers as if they were your children. Nurture them and give them every opportunity to succeed by establishing agency marketing programs that bring a constant flow of prospects to the door.
Finally, love and respect them all customers, employees, carriers, producers but remember your first obligation is to yourself and to your family. Operate at a profit EVERY YEAR. Pay yourself for what you do as fairly as you pay your staff for what they do. Profit is not a part of your paycheck. Your paycheck is compensation for your productivity. Profit is the additional money that you are to use to support your business growth and value.
Remember the Agency Consulting Group, Inc. Revolving Door of Agency Priorities. We can help you develop and evolve any or all of the doors so that no jams occur to stop your progress. Call us to discuss your particular situation (800-779-2430).