Steps for growing and increasing revenue
handled by each employee
By Mary Belka, CPCU, ARM, ARe, RPLU, CIC, and Cheryl Koch, CPCU, ARM, AAI, ACSR, AFIS
“If it ain’t broke, it don’t need fixin’.” Words to live—or die—by.
There will always be myriad obstacles agencies struggle to overcome. With fewer account managers available to hire, how do we leverage the efforts of those we are able to find, to meet our clients’ ever-changing needs, to grow profitability, and to align with our carrier partners’ increasing appetites? How do we increase profitability by making their jobs easier and their work more meaningful? How is this issue related to the real secrets of achieving and maintaining profitable growth? We want to shine a spotlight on how important it is not to waste this precious resource, and to show how it is possible to grow while increasing revenues handled per account manager.
We have observed that the best agencies are able to reshape their approach where things start—with sales—to create capacity for account managers to handle all aspects of larger books of business in better and more creative ways that resonate with clients. Best of all, this actually creates more support for increased growth, profitability and retention. Enter the magic wand!
The investment you make in increasing your staff’s knowledge and expertise means that they can handle
more clients and situations effectively, thereby increasing the revenues they can handle with ease.
Consider the critical number—revenues handled per account manager. This is where the real magic happens. You can transcend some of the hiring angst by understanding it is possible to operate effectively with fewer people, provided they are talented and trained, and your structure, processes and technology are rooted in this century. Proactivity, auditing, and attention to detail are critical in making certain that all time spent is time well spent.
Profitable growth doesn’t just happen. To paraphrase Warren Buffett, “It’s simple—but it’s not easy.” The basic ingredients still apply—yet so few agencies adhere to them. The accounts you write affect your account managers’ productivity—and your profitability—plain and simple. Improving the size and quality of the accounts you write—and not being all things to all people—are the most effective ways to operate more productively. Even the most tired book of business can be rejuvenated and reshaped by the right strategy. The steps outlined below are completely intertwined—one leads to the other. You cannot conveniently omit what is uncomfortable then claim, “It doesn’t work!” Cherry pickers need not apply!
- Metrics matter. Commit as a leader to running your agency like a business. Know your numbers and where you are headed at all times. Strategic planning includes specific sales, operational and financial management metrics, as well as processes, procedures and action plans that will support your agency’s global growth, profitability, and retention goals. Create clarity by sharing your numbers with stakeholders, including employees. If you create specific metrics and enforce them, poor performers will self-select and usually fire themselves, like magic. Performers, unshackled by the distracting drama created by incompetent staff, will thrive—and attract more performers. In the meantime, they can handle higher revenues more effectively, often delaying the need to replace incompetent players.
- Laser focus. Notice we didn’t just say “focus”. We really mean it. The agencies that can put an absolute laser focus on writing only the accounts that meet their specialized target client parameters are the agencies that outpace all other agencies in growth, profitability, and productivity. Saying it and doing it are two different things! Make it a priority to increase your revenues per relationship. Set and adhere to minimum sales goals and minimum requirements for new business revenues per account. Stop writing policies—focus on multi-policy accounts. Learning to walk away from writing accounts that do not fit specific parameters is the most important skill producers can develop.
- Write the right accounts. Stick to the laser focus! The smaller the account, the more problems they have, and the lower the retention. The larger the account, the less work it is, once written. Ask any account manager—it’s a fact! Increased account manager productivity starts with writing accounts that have a chance to be profitable, based upon size and alignment with carefully defined target client parameters. Sub-standard accounts written by default (usually call-ins and order-taking) that do not meet minimum agency standards are more work, are less profitable and decrease theoverall revenues and number of accounts your staff can manage effectively. The right accounts are retained over time and provide a return on your initial investment in writing them. Don’t waste great account managers by having them handle a large volume of unprofitable accounts!
- Onboarding clients. The organized, intentional handoff of new business accounts is crucial to both producer and account manager productivity. Producers must transition clients for handling by qualified account managers. This is critical to the producers’ ability to continue reaching established sales goals as well as to account manager productivity. An effective onboarding process integrated into the end of the sales process should be a seamless introduction to your agency’s service team. This will save countless unnecessary calls and emails to account managers and ensure that producers are shielded from service involvement. This, in turn, increases the revenues that each account manager can handle effectively. Bonus: It also increases retention! Stay tuned for future specific onboarding ideas to maximize profitability. Suffice it to say that, done right, this is a game-changer.
- Hire a receptionist. This investment pays big dividends when the receptionist handles all calls, pulls and forwards items from carrier websites to account managers for handling, and scans all incoming mail. An effective receptionist can significantly boost revenues handled per account manager at a reduced cost. Note: Receptionists should never double as assistants; they have maximum impact on account manager productivity when they stay in their lane.
- Retention matters. Increasing retention by five percentage points can increase your profits by as much as 50%. Build retention-based goals and activities into your account managers’ performance metrics, for instance cross-selling and up-selling and proactive renewal handling. Provide the time your account managers need to build client relationships. Make sure your accounts are touched at least six times annually—remember, you don’t get any credit when they call you! Use your database to identify and cover exposures to leverage every account rounding or coverage improvement opportunity.
- Proactive renewal process. The right touches mean less work and increased revenues handled per account manager. Invest in the time to develop skills and processes for relentlessly avoiding unnecessary remarketing. Stop setting system alerts for premium increases, and instead establish effective processes to review exposures well before renewal. Circumventing this wasteful practice increases the time available for identifying and covering exposures and building relationships. Agencies writing better accounts and implementing effective onboarding are rewarded by less time spent on remarketing, decreased potential for E&O (errors and omissions), and increased revenues handled per account manager. Occasional, well-placed remarketing efforts are needed, but reflexive remarketing of accounts drains the lifeblood from your servicing staff and erodes profits. You will be amazed how much this increases your account managers’ capacity to handle higher revenues.
- Eliminate billing involvement. When you remove all agency staff from any billing touches, your profits go up. Better clients pay in full or make their EFT (electronic fund transfer) or credit card payments directly to carriers on time. A full 40% to 70% of personal lines call/email volume is spent answering billing questions. Wave your magic wand, eliminate these once and for all, and watch your revenues handled per account manager—and your profits—soar.
- Addition by subtraction. Shape up your current book of business. Eliminate accounts that are no longer a match for your laser focus,for instance accounts spread between multiple agents, monoline umbrella, flood, and bonds, and uncooperative or poor pay insureds. Identify monoline E&S accounts in particular and dedicate your efforts to moving them “up or out” within 12 months. Some agents take steps to sell unprofitable segments of their book in order to increase revenues per relationship and create much-needed time for larger, more profitable accounts to be written and handled. Do what is needed to create capacity for profitable growth.
- Beyond education—create expertise. The investment you make in increasing your staff’s knowledge and expertise means they can handle more clients and situations effectively, thereby increasing the revenues they can handle with ease. It is critical to create a continuous, rigorous, and interesting educational career path for every employee. The laser focus component identified earlier makes it easier to create expertise, especially for newer account managers. Our industry is in a bit of a tailspin education-wise. Wisdom is flowing out at a faster rate than it is being created. Find and leverage all sources of insurance education and you will create true differentiation—and increased growth, profit and retention—for your agency.
There you have it—just wave that magic wand! We know it’s not that easy. Yet it is possible for a few well-placed individuals with the proper training and education in the right sales and operational environment to achieve results far beyond what has been considered achievable in the past.
Cheryl Koch is the owner of Agency Management Resource Group, a California firm providing training, education and consulting to producers, account managers and owners of independent agencies. She has a BA in Economics from UCLA and an MBA from Sacramento State University. She has also earned several insurance professional designations: CPCU, CIC, ARM, AAI, AAI-M, API, AIS, AAM, AIM, ARP, AINS, ACSR, AFIS, MLIS.
Mary M. Belka is owner and CEO of Eisenhart Consulting Group, Inc., providing management and operations consulting to the insurance industry. She also is an endorsed agency E&O auditor for Swiss Re/Westport. A graduate of the University of Nebraska, Mary holds the CPCU, ARM, ARe, RPLU, CIC, and CPIW designations.