Mistakes Agency Owners Should Avoid

Mistakes Agency Owners Should Avoid

mistakes agency owners should avoid

running an agency has gotten very complex.  the aging workforce, increasing scarcity of talent and growing demands of carriers are just a few of the challenges owners deal with every day.  in spite of these challenges, many agencies are experiencing excellent revenue and profit growth.  to accomplish this, they are not only doing the right things, but they are avoiding common mistakes that can hold them back.  in this article we will discuss some common mistakes that owners should avoid.
 
failure to develop centers of influence
 
   to achieve strong revenue growth, agency owners need to have their people do more than wait for walk-ins, call-ins or requests for quotes from their websites.  they need to establish mechanisms that result in referrals.  one effective way to do this is through centers of influence.  some agencies constantly develop and nurture centers of influence. having several centers of influence to trade leads with can be a steady source of new accounts.  agencies can add centers of influence by identifying and building relationships with people who are very active in the community (i.e. active in houses of worship, civic organizations, country clubs, etc.) or whose occupa¬tions or professions cause them to know the kind of individuals and business owners the agency would like to have as clients. people to potentially trade leads with should be in positions of respect in the community and your companies should each value the services the other provides.  for the relationship to work well, your agency must promote their business as much as they promote yours.  letting them know every time you have recommended them and thanking them every time you have gained a customer from their referrals strengthens the arrangement.   
 
failure to promote sharing of lead pipelines
 
   it is sometimes amazing to see how many dormant leads an owner or senior producer has in his prospect pipeline.  effective utilization of lead pipelines is critically important to revenue growth.  it includes practices in which owners, who are generally the most visible and active in their communities, share excess leads with other producers.  this keeps the agency’s top line growing, builds the confidence of producers, creates momentum and builds shareholder value.  when owners (or even top senior producers) don’t share leads that they know they won’t get to in a timely manner, the leads age and lose their usefulness. this leaves the prospects with a negative opinion of the agency and hurts everyone in the long run.  owners and senior producers need to acknowledge that they really don’t intend to follow up on every lead because they would be overworked or because they actually want to slow down a little.  that’s natural and ok.  they shouldn’t be ashamed to admit that.  it should be viewed as positive and generous that they are willing to share their leads with producers whose networks haven’t fully developed yet.  if the owners and senior producers need additional income, they can team-sell those leads and split the first year commission with the receiving producers.  the receiving producers can handle the new accounts from that point forward.  everyone wins.
 
failure to increase the time producers have for selling
 
   owners need to provide staff support that enables their producers to spend optimum time selling.  based on a recent survey conducted by resourcepro analytics, 92 % of respondents felt that producers should spend more than 50% of their time selling.  the same study indicated that only 1/3 of producers actually do.  in fact, in many agencies it is normal for producers to spend the vast majority of their time performing non-sales functions.
 
   owners need to look at non-sales tasks that producers are performing and identify ways to move some of those tasks to other capable people.  in many agencies, expanding the roles of csrs can dramatically increase the percentage of selling time each of their producers has.  if producers are given more time to sell and are coached on actions to utilize that time effectively new sales can dramatically increase.  sometimes accomplishing the shift in work flow requires educating csrs and clients.
 
   in some agencies, establishing a marketing/central placing person or department can be a good way to free up more time for producers to sell.  producers can reach out to many more prospects when the agency has a dedicated person to: (a) keep track of what different markets are good at; and (b) submit the producers’ new business applications to the markets with the right risk appetite, coverage and pricing.
 
failure to coach preparation and follow up
 
   in many agencies, producers lose big sales because they don’t take time for preparation.  prospects are more demanding, and have less time, than ever before.  producers need to be coached on what good preparation consists of.  it begins with research on the prospect’s business through the internet to learn what they do, who the key people are in their company and what they stand for.  the next step is to have a brief agenda listing the key topics they plan to cover so no time will be wasted.  before going on the call they need to have a plan for how they would like the conversation to flow and for listening to what the prospect says.  they should role play and anticipate questions that might be asked.  their goal should be to find out about the decision makers’ likes and dislikes, their business needs, their relationship with their current agent, their current insurance program and what it would take to become their broker of record.  armed with that information, they will be able to come back with a solutions proposal tailored to meet the unique needs and requirements to become the prospect’s broker of record.
 
   coaching should also be given on follow-up.  as good sales people know, the “fortune is in the follow up.”   most prospects do not say yes to an appointment the first time they are asked, but with occasional follow ups, things may change and doors may eventually open.
 
failure to leverage success stories
 
   success stories create believability and relate-ability.  owners need to talk frequently about successes in sales and in following the agency’s sales practices.  discuss successes in referral and testimonial generation, cross selling, account rounding and building centers of influence that generate leads.  have team members who achieved success in these areas tell the rest of the team how they did it.  people understand that successes are possible but they don’t always believe they can achieve them.  facts “tell” but stories “sell.”  stories told by their peers create relate-ability and convince others that they can do it too.  whether they are producers, csrs, or other support staff, if they believe they can duplicate the behaviors and results of successful fellow employees, they will emulate those behaviors and improve their results.  this creates leverage.  owners and managers can leverage the effective practices of their best people by getting many other employees in the agency to follow them.
 
failure to create an “unfair” advantage
 
   too many agencies are just like the other agencies in their towns.  they offer great service for their clients and work hard to deliver quality products at competitive prices.   what they don’t have is something special that enables them to grow dramatically faster than the other agencies. they need an unfair advantage over their competitors.  an unfair advantage can be created in many ways.  common ways include developing specific industry, product, or segment expertise and utilizing target marketing to penetrate that market.  (as your iroquois regional manager about our training resources.)  other ways involve providing services that go beyond insurance.  whatever your situation, your agency should seek opportunities to gain an unfair advantage.
 
   one emerging opportunity to consider is related to growth in multi-cultural communities.  the make-up of the us population is changing.  based on the most recent us census minority group populations are growing and the non-minority population is not growing.  that creates opportunities for the right agencies to:
   • hire, train and support multi-language/multi-cultural producers and csrs;
   • increase visibility (i.e. signage, presence at high visibility events, community support) in multi-cultural communities and online;
   • acquire and grow agencies in communities that offer access to multi-cultural consumers and business owners.
 
failure to deal with non-coachable employees
 
   an employee whose performance is not where you want it may be worth keeping if they have the right attitude and are coachable.  but, a marginal performer who is not coachable and complains to others about having to follow prescribed sales or support practices can create a toxic atmosphere.  this is especially true with regard to producers.  identify producers who seem to have lots of time for complaining yet little time to learn the proven sales practices adopted by the agency’s best producers such as: (a) asking for referrals; (b) networking and making outbound calls to add prospects to their lead pipelines; (c) filling their calendars with appointments to follow up on leads; or (d) thoroughly preparing for sales calls.  they can be a bad influence on other producers, especially less experienced ones.  also beware of csrs who complain about workload yet don’t effectively utilize the technology or who complain about producers they should be encouraging.  dealing with non-coachable employees is never a pleasant process, but, correcting these situations goes a long way towards building a high performing team.
 
failure to keep the financial house in order
 
   in recent years, many agencies achieved favorable revenue growth fueled by a combination of renewal price increases, improvements in some sectors of the economy and new business.  unfortunately in that same time period, many agencies let their debt positions increase.  a 2013 survey by marsh berry indicated that “tangible net worth as a percentage of revenues” for agencies surveyed had reduced by about 3 percentage points since 2011 (“tangible net worth” is defined as equity minus intangible assets).  the same study indicated that average long term debt in agencies surveyed had grown approximately $150,000 since 2010.  don’t let your agency’s financial position lessen, especially in good times.  resist draining all the profits out of your agency in the form of excess owners’ compensation.  while that may reduce some taxes, it reduces the agency’s ability to invest in opportunities for growth that may arise.  it also may put the agency in a difficult situation in the event of an unexpected set back such as loss of a large account or a poor profit sharing year.  agencies should maintain strong cash positions sufficient to handle at least 60 days of expenses and they should consciously utilize excess agency profits to pay down long term debt.
 
   for members interested in benchmarking their expenses against those of comparable agencies, iroquois can conduct a free and confidential financial benchmarking analysis.  ask your iroquois regional manager for more details.
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