Please set up your API key!

The Rough Notes Company Inc.



January 29
09:14 2018

Winning Strategies


Deliver on your promises to clients while growing your revenue and profit

Last month I outlined some of the essential questions that agency owners need to answer in order to grow and become more profitable. I conclude that discussion this month with additional questions agency owners should be addressing as part of their overall agency plan.

[P]roviding an annual services calendar and stewardship report has to be a non-optional behavior that also becomes one of your PODs.

Why and how should we complete an annual review/risk survey on all A and B clients?

We know that your A and B clients (the top 20% of your customers) are 80% of your revenue, so you’d better do an annual review/risk survey on these clients or somebody else will! If you’re an agency owner, you must make the annual review/risk survey non-optional.

As I’ve mentioned previously, the greatest—if not the only—defense you have against commoditization and digital disruption is the risk advice you provide to your clients and future clients. There’s even a tool to help you—the Rough Notes Advantage Risk Survey. Are you using it or some other assistive tool? If not, why aren’t you?

At our last live ProFit producer camp, we asked our producers to identify their top five Points of Differentiation (PODs). Many cited the annual review/risk survey as a key POD. What are your PODs?

How do we ensure that all of our A and B clients receive an annual services calendar and a stewardship report?

Just like the annual reviews and risk surveys, providing an annual services calendar and stewardship report has to be a non-optional behavior that also becomes one of your PODs. That way, when you’re telling your story, your story really is your POD.

For example, you might say to a prospect, “Insurance is one of our solutions, but not the only one. One of the things that makes us different from other agencies is that we provide an annual calendar and a midterm stewardship report. How does that compare to what you receive from your current agent?” Of course, that’s when they’ll say they don’t get these things because their current agent doesn’t offer them. There’s your POD!

Just don’t forget that if you’re out there telling your story as part of your POD, you’d better do what you say you’ll do. As I’ve discussed before, there’s promise making and promise keeping. Only promise what you know you’ll be able to deliver.

How will we maximize our contingency income?

In the better agencies today, contingency income accounts for approximately 8% of revenue. Most of them want to do everything they can to maximize it because without that income, their financials would not be very good. Most agencies simply cannot afford to lose 8% off their top line. If they did, the only expense they could reduce would be their owner’s reward.

There are a number of things you can do to help make the most of your contingency income, starting with a thorough review of your contingency contracts. Some other ways to make the most of contingency income:

Negotiate with carriers. Assuming you’re doing the right things with your carriers and you’re worth it, you need to try to negotiate a better deal. Granted, asking for a better deal doesn’t mean you’ll get one. On the other hand, I guarantee you’ll never get a better deal if you don’t ask!

Consolidate markets. Are you trying to feed too many mouths? In a recent major study for a large agency client, we analyzed the written premiums with each of its carriers, leaning toward consolidating markets. Not surprisingly, we found that the 80/20 Rule is real within the carriers. We did so by taking the top 20% of this agency’s carriers (including wholesalers and E&S writers) and calculating the percentage of revenue that comes from them. Guess what that figure was? Exactly 80%! I rest my case that the 80/20 Rule is real. It’s a fact of nature; there’s a predictable imbalance in the universe! Deal with it and move on. Although the results may have shocked no one, they supported our belief in the need to consolidate markets. You can’t feed everybody.

Track results. Once you’ve embraced the decision to consolidate markets and have negotiated a better contract, the next step is to track your results on a monthly basis. The problem is, most agencies don’t track their production by month by carrier, so contingency income typically isn’t part of the equation when deciding on the placement of insurance. I must make it clear here that the client’s best interests come first. But when you’re at the point of deciding which carrier gets a piece of new or renewal business and they’re essentially identical in terms of coverages, services, or pricing, it makes sense to consider your own results as well.

How do we create an operating profit of at least 33%?

Remember, operating profit does not include investment or contingency income. I know that’s the thousandth time you’ve heard it, but do you really look at it that way? Here’s a Blinding Flash of the Obvious for you: The only way you can earn a 33% operating profit is to limit your expenses to 67% of operating revenue!

Another key to boosting your operating profit is to increase your:

  • Revenue per employee
  • Revenue per client
  • Revenue per producer
  • Retention

What are you doing to increase these metrics? It is critical that you focus on all of them if you want to see your profits go up.

How will we perpetuate our books of business?

I saw a statistic the other day that said the average producer today is 49.5 years old. Assuming that’s the case, they’ll be at or near retirement age within the next 10 to 15 years. What will this mean for your agency? When you examine your books of business, do you have an abundance of RIP producers (as in Retired In Place, not Rest In Peace!)? What about Coasters? (Remember, you can only coast in one direction!) Do you have any of them in your agency?

Furthermore, do you even know what your producers’ plans are? Some of them may tell you they want to spend their career there and die at their desk—others already have! Have you ever mentioned to your producers that you are formulating a three- to five-year outlook for the agency and wondered what their plans were for that period? Whether or not you’re an owner, as an agency producer you owe it to your colleagues to share with them how much longer you expect to be there. (This goes without saying if you plan to leave the agency in fewer than three years.)

In developing the agency’s future leaders, it’s extremely important to keep in mind the concept of Rainmakers and Buckets. This means identifying the young producers who will go on calls with the senior producers, get to know their accounts, and work closely with them on those accounts for two to three years. That way, when it’s time to perpetuate the junior producer will know all the key people on the account, which will help ensure a smooth transition.

This is also a prime time for the senior producers to start taking advantage of their natural pipelines. Typically, this is something they don’t do because they don’t want to do the work. However, they don’t mind making the introductions, while sharing in the new revenue generated.

The bottom line

I hope these essential questions have encouraged you to think about your agency’s profitability and its future. More important, I hope your answers result in enhanced growth and development within your organization.

As always, it’s your choice.

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