How To Maximize Your Agency Management System – 6 Critical Reports You Need

Rather than addressing the topic of whether you need an agency management system or not, let’s talk about what you should be doing with one.  Other than storing and retrieving client/prospect data the biggest benefit of a management system is the ability to run reports that help manage your agency more efficiently.  Here’s a list that are critical to marketing and management success.

1.  Customer count:  This might sound simple but I have worked with many agents over the years who could not give an accurate estimate on this one.  This one is basic and can help with retention and account rounding.  It also can help determine staff capacity and whether your staff is overwhelmed or there is more room to grow.

2.  Policies per customer.  The more policies that each customer has with you, the greater the revenue and the greater the retention.  This is a great metric to set goals around, because it has such a huge payoff in other parts of the business.

3.  Account Rounding percentage.  In personal lines, this is basically how much monoline business do you have or how many of your customers have both their home and auto with you.  In agency discussions, it is not uncommon for managers to dramatically overestimate this percentage.  By knowing this number, you can generate a lot of new revenue within your shop that will not cost a lot of marketing money.  In commercial, there are more ways to slice this one.  You could see how many accounts have a BOP/CPP along with workers comp, auto, inland marine, etc.  Another way to run this report is to look at cross-sells across departments.  How many commercial customers have their personal lines in the agency?  How many PL customers have life and health?  How many benefit customers have commercial or personal?  Running this on a regular basis could help find revenue.

4.  Retention/Lost Business reports.  This is important because it finds potential holes in the agency where customers could be drifting away.  Run this report off of policy or customer count.  Once this is determined, you could further analyze the profile of customers who are leaving and stop future run-off.   If you could improve this metric by a point or two through the data you collect, you would be able to write less new and still see growth.

6.  Source to Sale.  Where is your business coming from?  This one is a little harder to run, because it is determined on the data that personnel enters when setting up accounts.  The best advice is to set up various codes for your sources such as int (internet), ref (referral), radio, etc.  This would help decide where to spend marketing money.  You could also use it in connection with other reports and may find that certain sources tend  to retain less or be less profitable.  Then it would be easy to cut off those sources if need be.

If you do not know how to run these today, make sure you contact your vendors or even company partners, and get some training or templates.

Are there other agency management system reports that you like to use and find beneficial?


Theron Mathis

Do You Recognize It When Your Staff Has Staged a Coup d’etat In Your Agency?

Years ago I worked for Progressive Insurance as a marketing rep, and I will fill you in on a dirty little secret.  We knew most agency owners and managers did not like us.  We impacted their wallet in many negative ways.  The owners had good reason for their disdain.  Our commission was less than their other companies, we rarely paid bonuses, and we competed against them directly with cheaper rates than they could access.  To combat this animosity, we practiced a little guerrilla marketing.  We avoided most owners and managers like the plague.  We went straight to the CSRs and account managers during our visits.  For we knew a secret, CSRs did not care about revenue and maximizing contingencies.  The CSRs were motivated by ease of use.

At the time, we were easy.  In fact, Progressive still is incredibly easy to use.  You really need no insurance experience to be able to rate and issue their policies in five minutes flat. Not only were we easy, but at the time we were the cheapest option on average.  This gave us another advantage.  Most CSRs were not sales people and had no sales training.  When sales ability is low, then price becomes more and more important.  Cheap rates made sales easy.  So we were easy on two fronts, ease of use and low rates.  As a result, CSRs loved us and used us more than their owners would ever know.

Eventually we would get cornered by an owner, two to three years into the relationship.  They would ask to see production, and we would quiver just thinking about where this conversation might take us.  Invariably, these owners were shocked.  They assumed their staff was only using us sparingly for non-standard risks, and that they might only have 50,000 in written premium with us.  Usually the truth was 5 to 10 times greater.  It was not uncommon to see eyes bug out in shock at how much business they had with a low revenue carrier.  Fortunately for us, there was rarely any change at the ground level as a result of these meetings.

Years later, I still find this to be true in many agencies.  Owners allow the staff to control their revenue, their flow of business, and even company relationships.  This is dangerous as the example above demonstrates.  Because most staff has no financial incentive or understanding  of agency revenue, they place business based on rates and ease of use.  They could easily be undermining your decades old company relationship for the new kid on the block,Do You Recognize When Your Staff Has Staged a Coup d’etat In Your Business? because you never give any direction for how and where to place business.  In the example above, had that written premium gone to carriers that paid 15 rather than 10 the agency would have generated an extra 25K which could have easily paid for more staff.  Also some of that premium may have put the agency into new written tiers that would generate higher levels of contingencies.

Bottom Line:  Be mindful of where and why your staff is placing business.  If they need more sales training, find it.  The extra revenue generated from smart business placement could easily pay the training costs.

How To Create a Marketing Plan That Changes Your Sales Culture

Have you ever wondered how sales savvy your staff is?  You believe they cross-sell accounts and look for ways to offer more products and services to your customers, but do you know how good they really are.

Put in place a short-term, cheap (or free) marketing plan without their knowledge and see what happens.

Let me give you a good example.  Recently, several agencies that I work with committed to do a short term mailer to generate customer calls that would hopefully lead to cross-sells.  The mailers were designed to get the customer to call.  Once they called, it was up to the staff to handle.  The mailer had multiple responses:

1.  This was the best marketing program I have ever done.  It made my phone ring more than anything we have ever developed.

2.  The calls started happening before I could prep my staff, and they were confused and did not know what to do.  It took some coaching but we started handling the calls and seeing some results.

3.  Please stop the mailer.  We can’t handle the calls.  We are too busy, and customers are upset.

The interesting fact is that we only did the program with agents that we thought would be sales focused more than service focused.  Granted a couple were unprepared and scripting could have helped dealing with customer calls.  To one agency, we thoroughly explained the results and how to deal with the customers, but they were still overwhelmed and asked the marketing efforts to be stopped.

It provided an interesting window into the heart of each agency’s sales culture.  The true sales agencies could turn a surprised or concerned customer in a positive.  They turned it into a policy review and used it to sell other lines.  Others threw their hands in the air and sympathized with the customer and apologized for getting them upset, without offering them any new services.  I think for the agencies where it was not successful, it made a light bulb go on in many owner’s and manager’s heads.  Where they thought they had sales people, they realized they might not.

This particular mailing was small and short, but something would make an incredible experiment to determine the sales temperature of your staff.  You would quickly learn who your sales people are, and where room for training may exist.

It taught us another important fact about marketing.  No matter how many customers are driven to your doors, it will not matter if your staff can not handle it.  Unfortunately you may not know this until you do something.  In the future, we plan on spending some time on setting expectations, generating scripting, and even doing some dreaded roll-playing.

I dare you to take your agency’s sales temperature.

How To Use a Comparative Rater without Destroying Your Revenue

For years Independent Agents have longed for the holy grail of quoting–the comparative rater.  It is here!  Prior to comparatives, it could take an agency hours to quote one small personal lines account because the data had to be reentered into each company’s rating software.  If the account manager really did this, the hit to revenue becomes truly apparent.  You pay the CSR $15/hour and it takes him 2 hours to quote one policy.  He only sells 1 out 3.  So for three quotes it would cost you $90, and on average you make $80 to $100 per auto policy.  This is depressing.  Thankfully most CSRs did not follow this path.  Due to experience, many learned what companies were better on what types of risks.  Also, they gravitated to whatever ever systems were easier.  So instead of quoting your 7 – 10 companies per risk they might be only quoting 3 -5.

Today comparative raters have changed this.  Insurance Scoring has made it very difficult to determine company niche and get a bead on what company appetites were.  As a result, there could be a lot of competitive opportunity lost if all companies were not quoted. Because of internet based quoting systems, comparative raters can pull from multiple sites and aggregate the data in one place ensuring accuracy.   One company rep told me that in his state, nearly 80% of all their quotes are now coming through comparative rates.  This has helped tremendously agency workload.

This trend toward comparative rater use has caused agents to be less hesitant about picking up multiple markets.  At one time an agency might limit himself to 3-5 carriers, now he is willing to pick up 7-10 because he can quote them all and hopefully create a competitive advantage in the marketplace.  However, this is where a hit to revenue can begin to occur.  If an agency does not train their staff well, the presence of the rater can further ingrain their staff that price is king, and the cheapest always wins.  What can begin to happen is that profit sharing is diluted, and staff may slowly move business to lower commission carriers.  Staff do not think of these concerns.  Ease of doing business is their master.  If the price is low it is easier to sell.

Now your 5 million dollar personal lines book that was split between three carriers is now split between 7 carriers, and you no longer qualify for profit sharing thresholds.  Your revenue has dropped by a third because previously most of your business sold at 15% commission and now a majority is being sold at 10%.  This is dangerous especially in this market.

Bottom Line:  Comparative Raters are good, but keep your eye on where they are taking your business.  They could create more revenue problems than they solve.


Is Personal Lines Growing?

How do you evaluate growth?

Do you pull your commission statements each month, total all your companies, compare against last year, and rejoice if flat or positive?  Are you more financially savvy and throw in expenses into the mix and look at net revenue and compare?

These are not bad strategies and do provide a barometer for how your agency is performing, but do they give you the full story and lull you into a fall sense of security?There are really three measures that should be considered when measuring agency growth:

1.  Revenue (gross & net),

2.  Written premium,

3.  Customer count.

Revenue:  For the vast majority of agent’s this is the factor that trumps all others.  This is what pays the staff, keeps the lights on, and helps pay your mortgage.  But why could revenue be a deceptive indicator?  Currently in many personal lines markets, the industry is seeing a hardening of rate in property lines.  As a result premiums are much higher and thus commission dollars are usually up (if you maintain significant retention).  In a soft market, such as we are seeing in commercial, an agency could be growing customers, but continue to lose revenue because of decreasing premiums.  Perhaps one of your companies increases commissions for the short term resulting in more dollars, but not necessarily more growth.  Customers could be flowing out the back end of the agency, but by looking merely at revenue you might feel safe and happy.

Written Premium:  Similar pressures affects written premium as they do revenue, because they are so directly connected.  However, can you think of times where written premium could be increasing and customer count or revenue be down?  Currently, we are seeing carriers making moves that result in this very scenario.  In order to contain loss pressures, they are not only taking large property increases, but decreasing commission at the same time.  In this case, an agency could see premium growth but revenue decreasing by a third due to commission drop.  Rate increases can often mask retention issues, if owner’s are just looking premium growth.

Customer Count:  This is the final measure in our triumvirate.  Yet in working with agents over the years it is very rarely considered.  Revenue and Premium are king and queen, and customer count is kept outside the castle.  Yet, it can give a quick indication of what is happening in an agency.  There are times such as a soft market that customer count could increase dramatically but written premium and revenue would not keep pace unless company incentives kicked again.  More often rate pressure could drive customers away but written premium increases would indicate growth.  An agency that merely stayed flat in customers, could look like a growing agency due to rate.  Revenue could increase for much the same reason, and yet customers would be moving down the street.

The Bottom Line:  If you were forced to pick one, we think customer count is the safest, because it is able to weather the storms of market swings, and when things get hard pay increases may follow.  The safest way to manage growth is to consider all three factors and make sure that they all are positive.  The owner/manager can then develop strategies for each factor.  Perhaps this is a topic for another day.

How do you measure growth?

What is Productive Agency?

Why productive agency?  Why not growth agency or hot revenue agency?  Not all agencies want to grow.  There are important reasons for that but all agencies want to be productive.  The bottom line is extremely important, and this blog is designed to help agencies become more productive in Personal Lines Insurance.

My personal experience has been in both the captive environment and independent agency environment.  Both have unique challenges, but certain principles are applicable to both.

Thanks for visiting, and keep coming back for articles and tips on making your insurance agency more productive.

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