Please set up your API key!

The Rough Notes Company Inc.



May 31
08:18 2017

Winning Strategies

The seven building blocks of a solid agency foundation

You don’t have to be an architectural engineer to know that a building is only as good as its foundation. Just try building a large structure or house on a flimsy foundation and sooner or later, it’s going to collapse! Good construction always starts with a solid foundation. The same applies to agencies. You must begin with a solid foundation if you want it to last.

Whenever I ask agency principals what frustrates them most about their agency today, most tell me it’s their agency’s inability to grow. Primarily, they can’t grow organically and they can’t figure out why. After hearing this so often, it became apparent to me that many agencies simply do not have a solid foundation to build on!

When I think of the great agencies that get great results, I attribute a large portion of their success to a solid foundation. Is your agency built on a solid foundation or shaky ground? If you’re not sure, it’s time for a thorough inspection.

People—This is always a great frustration for agency principals. It’s really a matter of getting the right people in the right seats, all facing in the same direction. “The right people in the right seats” means hiring good talent (not necessarily insurance talent) and matching them with the best job for their unique skills and abilities. “Facing in the same direction” refers to having a common goal or vision as a team. Because identifying the best
team members can be a challenge, we suggest using a professional skills assessment service. (Both Kolbe and The Omnia Group offer comprehensive and accurate assessments of individual on-the-job strengths and weaknesses.)

Once you have the right people in place, it’s critical that you provide them ongoing training. As we’ve discussed before, the average agency spends 0.4% of its revenue on training, which compares poorly with the most successful organizations. Typically, the top professional services companies invest at least 2% of their revenue in training.

Remember, a chain is only as strong as its weakest link, so if you don’t have the right people in the right seats, going in the same direction, and they’re not being trained, you have a whole bunch of weak links. Did someone in your agency just spring to mind? If you’re reading this article and the mention of a weak link made you think of a particular employee, your chain is probably pretty weak.

But let’s assume you have all of the above in place. Do you have a culture of accountability? Is there personal accountability in the agency? How do you know if people are doing what they’re supposed to be doing?

Product—I’m not just talking about the insurance products you sell, since I assume you have excellent products and terrific relationships with your carriers. At least, I hope you do.

The product I’m referring to has several components besides insurance, primarily your Unique Selling Proposition (USP). Your USP is defined as “the unique and appealing ideas and things that separate you and your agency from all other ‘me too’ competitors.” Your product is everything you do, including your client experience and your brand (the clear, powerful and positive thoughts people have when they think about you). It’s much more than a commodity.

Professionalism—It’s the look and feel of everything you do. It is part of your product and your brand.

For instance, what does your office say about your business? Does it look clean, organized and inviting? Are people favorably impressed when they walk in, or do they see a cluttered, disorganized mess? Are things put away neatly or are there files lying all over the floor? When I visit an agency for the first time, it’s amazing how much I can learn about it in just the first five minutes I’m there, simply by walking around.

What’s your dress code? Are people dressed professionally when they come to work? Several years ago, when I gave a presentation for the marketing reps of a large insurance company, I noticed that everyone there—every single person—had well-shined shoes. Later, when I shared my observation with the CEO, I was told that one of the company’s first chairmen and CEOs believed that polished shoes said a lot about a person and the company he or she worked for. To this day, shined shoes are part of the company’s culture!

Another key to professionalism is the up-front and annual risk survey. In the medical world, prescription without proper diagnosis is malpractice. I feel the same way about insurance professionals. A true professional would never sell an individual or company any sort of insurance program that wasn’t based on an up-front risk survey. How can you accept the moral and fiduciary responsibility to handle a client’s risk management program if you don’t conduct surveys?

Processes—These are the documented processes that everyone is expected to follow, which specify how the agency does things. These processes are designed to outline the agency’s approach to various aspects of its operation, including technology, new business, renewals, claims, accounts receivable and audits.

Do you have your agency’s way of doing business defined and documented? Or do they all do things their own way? You might want to ask employees—individually—how they handle new business and compare their responses. If every answer is different, your agency’s way needs work.

Pipelines—At a private ProducerFit program recently, one of the sales managers remarked, “Even if I have an average closing ratio, I’ll do really well if my pipeline is overflowing.” He’s right.

If the average agency has about a 20% to 25% closing ratio that never wavers, the only way to improve sales is to get more opportunities. And obviously, the only way to get more opportunities is to keep working on the pipeline.

We’ve always defined an overflowing pipeline as “more opportunities than time.” So when we work with producers, they must have a list of Top 20 Prospects. That’s mandatory. On top of that, they have to have an additional 20 Suspects. Even if they’re average producers, we assume they’re going to sell five a year.

Keep in mind that your Top 20 should be filled with future ideal clients. These are the prospects that you’ve studied and targeted and, in some cases, are now actually engaged with. In the perfect world, those 20 yield at least 10 new clients, which means you’ll need another 10 to replace them.

Of course, a huge part of the pipeline is having a great story of differentiation that improves the conversion rate. In fact, it’s probably the best way to increase the percentage of first appointments that move forward to a second. This story should be so compelling that (a) it convinces the prospect that what you have is unique and (b) raises doubts about the current agent.

Profit—Here’s a Blinding Flash of the Obvious: You have to make money if you want to stay in business! What’s less obvious is that profit—not revenue—should be your first goal. You must have an operating profit of at least 25%, excluding all investment or contingency income.

Another key to profitability is to make the bottom line the top line when setting goals. When most agencies do their planning, they set revenue goals for the year. Instead, they should first focus on setting goals for annual operating profit. Remember, it’s not what you make, it’s what you keep!

Perpetuation—Eventually everyone leaves their business, whether they want to or not. There are two kinds of perpetuation: financial and leadership. Where most agencies fail is on the leadership side. Few have identified their future leaders, and if they have, they aren’t adequately training them in how to lead and operate an agency.

Typically, their successor is a top producer or CFO who commits to take the agency reins at a future date. The problem is, they’re expected to continue working in their current position until then. When it comes time to perpetuate, they haven’t had any actual training on what to do or how to do it.

Just because a person is a great producer doesn’t mean he or she has the factory-installed equipment to be a great CEO. Knowing that in advance provides owners an opportunity to either identify another successor or attempt to teach the person they’ve chosen how to be a great CEO. Ideally, you’ll plan far enough in advance to have the option.

The best-case scenario is for an agency owner to schedule time each week or month (depending on how far ahead they’re working) to teach their successor everything they do. This needs to be approached systematically and strategically so the successor understands everything he or she will need to do as CEO. The more you can plan and prepare, the smoother and easier the transition will be.

Conversely, I’ve seen worst-case scenarios in which the agency owner dies unexpectedly without any sort of plan for the agency’s future—no documentation, no directives, nothing. And if he or she has made all the executive decisions over the years, it’s likely that no one else in the agency knows how to keep things running smoothly, if at all. Often that’s the end of the agency.

That’s why, if you plan to perpetuate internally, you need to start building your agency and formulating your perpetuation plan at least five years in advance—not a year before you want to retire! As my good friend and mentor Gary Holgate once said, “The main reason most agencies plateau is they outgrow their ability to manage themselves.” In other words, if you want your agency to grow for perpetuity, you need to start bringing in better people today.

Does your agency have a solid or a shaky foundation? Does it have the building blocks to support ongoing growth? The Better Way to grow requires a strong foundation and your agency’s commitment to continually improve on it.

The author

Roger Sitkins, CEO of Sitkins Group, Inc., is the nation’s number one “Agency Results Coach.” In addition to establishing The Sitkins 100™ and Sitkins International, he is the creator of The Vertical Growth Experience™. His latest offering is The Better Way Agency, a web-based training program that shows agency owners ways to make significant improvements in all areas of the agency. To learn more, go to

Warning: count(): Parameter must be an array or an object that implements Countable in C:\inetpub\wwwroot\roughnotes\wp-content\themes\legatus-theme\includes\single\post-tags.php on line 5

Related Articles






Philadelphia Let's Talk - Click Here

Spread The Word & Share This Page

Trending Tweets