When “good enough” is no longer good enough
The reality is that most agencies won’t hit their goals, but they’ll meet their standards,
which typically are too low.
- By Roger Sitkins
Do you know what a Best Version Possible (BVP) independent insurance agency looks like or what makes them so different? The BVP agency is one that upholds the highest standards and consistently creates industry-leading results.
The reality is that most agencies won’t hit their goals, but they’ll meet their standards, which typically are too low. In fact, in a study we conducted of 19 agencies, with an average revenue of $21 million, only 43% of their producers hit their goals. Although their goals were attainable, the missing piece was the culture and cadence of a simple accountability process.
Nonetheless, they are larger agencies and their results were deemed “good enough.” Similarly, the 10% to 11% organic growth rate that many have claimed in recent years is acceptable, but when adjusted for inflation, interest rates and other factors, it’s closer to 2% to 3%. In other words, the double-digit growth rate independent agencies have reported over the last two years is somewhat artificial; the actual growth rate is not acceptable.
We all know this is a great business and even a “Good Enough Version Possible” agency does very well. However, if good enough is no longer good enough for your agency, the solution is to raise the bar on your agency standards.
Simply stated, BVP agencies have higher standards. They have the highest possible revenue per employee and spread per employee. They have a minimum operating profit of 30%, excluding contingency or investment income. When they add back contingency and investment income, their profits approach 40%. Furthermore, more than 90% of their producers meet or exceed their sales goals.
BVP agencies enjoy superior results because they continually train and develop their team members for peak performance. Anything less than the best is not acceptable.
Getting in alignment
Becoming a BVP agency starts with the alignment of various functions, especially sales and service. Everyone on staff must acknowledge and agree that the goal of the organization is to retain and obtain ideal clients. Further, they must appreciate, respect, and trust the different roles they play. Leaders must reinforce this idea at every monthly agency meeting.
Keep in mind that alignment is more than a position, it’s a vision. It’s alignment on core values, beliefs, and what to expect. It’s the culture that everyone must embrace. Whether you’re part of a sports team, orchestra, or theater ensemble, you must figure out your role.
Staying in the zone
Once we have the team members aligned, we move forward to the “zones.” Peak-performance teams always have their players in the right role or zone the majority of the time. In my BVP model, we define the zones as green, red, and blue.
- The Green Zone. This is where producers need to invest 80% of their time and energy. In this zone, they’re focused on just four things: sales, relationship management, continuations (not renewals), and pipeline development. But what percent of the time does the average producer spend in the Green Zone? Only about 25%, which makes them part-time producers.
- The Red Zone. Also known as the service trap, this is what too many producers use as an excuse to not produce. Their common refrain: “I’m too busy servicing my clients to sell new business or develop my pipelines.” They’ll complain about having to respond to calls, texts, or emails from customers, when that’s exactly what they tell them to do! “If you have any questions/problems, just call or shoot me a text.” They’re asking for Red Zone activity! This is time management gone awry. Day-to-day service is the account manager’s responsibility, not the producer’s.
- The Blue Zone. This is our latest development. It’s the zone where account managers/service reps can work without being interrupted by producers. As we’ve noted before, when a person is interrupted, it can take up to 24 minutes for them to get back into their most productive zone. Our overall goal is to dramatically reduce these interruptions during their prime work time.
- Invariably, there will be “emergencies in flight.” But it’s up to us—namely the sales and service people—to define what is an emergency. Not everything is an emergency. In fact, most interruptions do not involve urgent matters.
For example, day-to-day service requests are not emergencies. However, a major claim issue or a cancellation notice or a client’s need for a certificate of insurance to close on a property is an emergency that must be addressed ASAP. Non-emergencies can be handled at the end of the day or first thing the next morning.
Once the producers and service partners agree on what constitutes an emergency and once they commit to working in their respective zones 80% of the time, prime-time interruptions decrease dramatically. At the same time, having your team members in the right jobs increases capacity. It’s like having twice as many employees because they’re doing twice as much work.
Implementing the three Rs
Another element of the BVP is using the power of the 80/20 Rule and executing the three Rs as the foundation for growth. This means rounding out your existing customers and retaining and replicating the top 20% of your clients.
- Round out. As you know, when you round out, you create full-time clients who buy all their insurance from your agency, whether it’s personal or commercial lines, benefits or life insurance. Otherwise, the amount of revenue you leave on the table is staggering.
- Retain. Next, you want to retain them at a high level. If you provide an amazing customer experience, you’ll retain 99% of the clients you want to retain. There will always be certain customers you can’t retain (they die, sell, or close the company) or don’t want to retain (they have a leadership change or are difficult to work with). For those you want to retain, be sure to have in place a continuation process that provides a superior customer experience and a rolling three-year plan outlining what you’ll be doing for them going forward. It’s part of the overall relationship.
- Replicate. Now that you’ve retained your best clients (the ones who love you because of all you do for them), ask them for a referral and you’ll most likely get one. If you’re going to replicate something, you want to replicate your best clients. That’s why referrals should come from your A and B accounts—the top 20% that generate at least 80% of your revenues.
- Recently, Kari Glennon, our senior consultant at Sitkins Group, made what I thought was an interesting observation: “Most clients are just renting their producers and agencies each year.”
When I laughed, she elaborated on her theory. “If a client’s primary interaction with a producer is to pay an annual premium payment, isn’t that like renting? Basically, they’re renting you to provide them with insurance coverages and reactive service on a year-to-year basis versus signing a longer-term lease.”
This leaves the average producer hoping that the client will renew their policy the next year, but without assurance that they will. They certainly don’t “rent” to those whom they consider trusted advisors.
Creating a unique selling system
As a BVP agency, it’s critical to have a unique and differentiated selling system that you use. However, you can’t have a differentiated system without knowing how you are different. It’s great to earn and obtain referrals, but how do you “wow” them when you’re out there? What’s your 30-second commercial? Why should people buy from you?
The unique and repeatable selling system is based upon the agency’s Points Of Differentiation (PODs). These tell your future ideal clients what makes you different from your competitors and why they should buy from you.
The overall message is that you’re a trusted advisor to your clients and you help them control their total cost of risk and total cost of benefits. It is not a commodity-based sale where everything is based on price. It’s about the long-term, positive impact you have on your clients.
So why aren’t more agencies pursuing their BVP? Mainly it’s because their unintentional business model is what we call “quoters and floaters.” Their producers respond to every ring and ding, and they offer reactive service.
At the same time, most of them earn a very good living and are pillars of the community. They volunteer with local organizations, serve their church and coach youth sports. They enjoy a comfortable life. But their agencies aren’t close to achieving BVP results. They’ll probably always be a Good Enough Version Possible agency because they’re not serious about growth.
If you want to be just good enough, you’re probably already there. But if you’re serious about being your BVP, it’s time to start envisioning what you want for your agency and your team and formulating a plan to get there. With the right mindset and a commitment to the highest standards, you’re sure to achieve enviable BVP results and growth. n
The author
Roger Sitkins is the CEO of Sitkins Group, Inc. After over 40 years he has truly become an icon in the insurance industry having trained and mentored thousands of insurance professionals.
Roger was inducted into the Michigan Insurance Hall of Fame in 2017 and in that same year also received the Dr. Henry C. Martin Award from Rough Notes magazine. Roger is among only six people to have the honor of receiving this prestigious award.
Recognized as the nation’s top insurance agency results coach and renowned leader for improvement, he believes that if you improve the life of one person, you improve the world. To learn more, visit www.sitkins.com.
