Marketing Agency of the Month Keeping Midwestern values But getting rid of some bad habits leads to strong, profitable growth By Dennis H. Pillsbury Charlton Manley, head-quartered in Lawrence, Kansas, traces its roots back to 1861 when John S. Charlton emigrated from England to set up a law practice and general agency. From the beginning, the firm had a reputation for integrity and honest dealing with customers and insurers and that reputation grew along with the agency as several generations of Charltons led it into the 20th century. By the 1930s and ’40s, the Charlton Agency and Glenn Charlton were general agents for the state of Kansas for several large insurance companies. But the times they were a changin’ and so was the agency as it morphed from a general agency to an independent agency right around the midpoint of the century, bringing some new partners to help it grow. The new independent agency was Charlton, Holmes, Peck and Brown and by 1982, it was one of the largest and oldest independent agencies in Lawrence. It was in that year that Charlton Manley was created through a merger with another well-known agency in the area, Landreth, McGrew, and Johnson. That agency traced its origin back to 1930 when Robert C. Manley, a Lawrence Police Judge and insurance agent, opened an agency in Lawrence that also grew successfully through strong sales and mergers and acquisitions. Following the merger, the name Charlton Manley was officially adopted to reflect the long history of the two organizations and, most important, “to create a name that would stick forever,” says Chief Executive Officer Gary Sollars, CPCU, AAI, CWCA. The new name was accompanied with a “public relations blitz” to let customers and potential clients know why the name was adopted and that it reflected the agency’s commitment to the Midwestern values that had characterized the agency since its founding. At that time, Charlton Manley had about $1.5 million in revenue and 25 employees. “The merger went very well and we produced good internal growth throughout the decade,” Gary remembers. (At the time of the merger, he had been with the agency five years and was one of the leading producers.) The success led Charlton Manley to step outside its Lawrence environs and merge with a friendly competitor in Topeka, Sargent Wanamaker, which employed a dozen people. “Then we acquired Merriam Ellis Benton in Kansas City where the single owner was getting ready to retire,” he continues. Correcting bad habits “Things were going great on the sales side,” Gary recalls. “We had always been good salespeople and picked up some additional sales talent with the mergers and acquisitions. But some of our bad habits were starting to show and they came to a head when our largest shareholder decided to retire and we had to buy him out. When we looked at our financial side, we realized that we were very good at selling but didn’t run the store very well. We were not good collectors and were borrowing while we waited for payments to come in. “The owners sat down in 1998 and put together a five-year plan that was designed to put our financial and operational house in order,” Gary says. “Up to that point, our principals were responsible for various aspects of management, which really meant that we had a part-time CFO and COO. That didn’t make sense, so we decided to bite the bullet and hire a full-time CFO who would be responsible for improving collections and generally improving the financial and operational functions within the agency. This was especially important now that we had three offices with each one operating at the time relatively autonomously.” The plan also included a buyout of the retiring owner that would be paid for over a 10-year period. Fortunately, the agency did not have to look too far for a qualified, talented CFO. Steve Wanamaker, CPCU, AAI, CWCA, who is president of the agency and a producer, had a cousin who was a CPA with a stellar reputation in the field. In fact, Gary Wanamaker, CPA, had more than 20 years of experience in the insurance industry, as well as another 20-plus years of experience in public accounting and corporate financial management and had served as president of Financial Executive International-Kansas City Chapter. Today, Gary Wanamaker is vice president, COO and CFO of the agency. “Within a year, Gary [Wanamaker] got the collections in line without alienating our customers,” Gary Sollars points out. “Our customers were willing to pay on a timely basis; we’d just never asked them to do so. Once they understood what was expected, they were very cooperative. It took some time at first, because some customers needed to change their procedures to match ours, but it worked.” At the same time, some true full-time managers were brought in to handle other aspects of the day-to-day operations and free up the principals to focus on what they did best. The proof is in the pudding. Today, Charlton Manley has about $9 million in revenue, with $1 million of that coming from investment income; another $6 million comes from commercial lines, $1 million from personal lines, and $1 million from benefits. The agency also managed to retire the debt from the buyout in five years rather than 10. All in all, an impressive showing. If it works in operations … The success of the initial five-year plan was impetus for the management team to do another. “We were debt free and had accomplished a great deal,” Gary Sollars notes. “So, we said, ‘Let’s do another one.’ And then it occurred to us that professional management had helped so much in improving operations—why not do the same thing in sales? “We had a team of great sales-people but that didn’t mean that we were managing the sales process and taking full advantage of their talents and of the opportunities that we might be leaving on the table. We also did not have a plan for bringing in young sales talent to eventually take over the agency and move it into the 22nd century.” Gary Abram, a local consultant, had done a lot of sales training in a number of different industries and “had an excellent reputation and history of success. We brought him in to consult with our agency for about 25 to 30 hours a week, working with both current salespeople and with helping us find and hire new sales candidates. We’ve been doing that for about 18 months and have made five new hires since he has been with us—three in large commercial and two in personal/small commercial.” In addition to putting the sales side of the house in order, the new five-year plan also calls for doubling revenues and boosting revenues from the benefits side, a relatively new area for the agency. “We brought in Don Brain, Jr., to help create our benefits operation, which was co-branded under a separate name of Corporate Benefits Consulting (CBC). We populated the new division with individuals who represented 75 years of experience in the benefits field.” CBC specializes in accounts with 100 to 500 lives, and is able to provide excellent value-added services to those middle-market clients, including automated benefits information for clients. “That’s the key in the benefits field,” Sollars points out. “All the agencies offer the same companies. You have to provide value-added enhancements to gain a competitive edge.” He points out that providing help to customers with compliance issues has been one of the keys to success in this arena. Sollars adds, “Value-added services also are critical in the property/casualty side as well. We offer a service called Work Comp Solutions that lets clients take back financial control of their workers compensation programs.” Work Comp Solutions provides injury prevention programs including help with hiring practices, providing training for safety programs and assuring compliance; financing help including premium audits, managing experience mods, credit programs, rating plan selection and, of course, carrier selection; and claims mitigation and management including return-to-work programs, independent nurse and medical clinic relationships, and 24-hour injury response. “While we continue to be generalists,” he continues, “we also are focusing on niche areas where we have sufficient penetration by building on the expertise we have already developed in those areas so we are even better able to provide value-added services that are uniquely beneficial to those individual market segments. “We’re just starting to do some cross-selling in both directions (benefits to P-C clients and P-C business to benefits clients) and we see that as a real opportunity to help us achieve our goal of doubling our revenues.” Learning from others “We’re really big on connecting with other agents and learning from them,” Gary Sollars says. “We belong to APPEX, the state and national Big ‘I’ associations, CIAB and several other informal agency groups. We’re active in every one of those associations. They all offer wonderful opportunities to brainstorm with other agents. The way we see it, it makes more sense to learn from other people rather than make mistakes and learn from those the hard way. Why not just cut that painful step out whenever we can?” He continues, “This has been a great ride and has allowed all of us in the agency to succeed and help our community and our industry. Our employees all are active in supporting those efforts. And they are rewarded not only through salaries and bonuses, but by participation in our ESOP, which has been around for more than 20 years and owns about half of Charlton Manley. In recent years, that’s been a real strong benefit, especially when employees start to compare the returns from participation in the ESOP with returns in the stock market.” Sollars concludes, “I would be remiss if I didn’t mention the tremendous support we get from our insurance companies. We represent national and regional companies on the property/casualty side and they have been instrumental in our success. The regional companies especially share our own focus on Midwestern values by providing service and products that reflect those values.” Rough Notes is proud to recognize Charlton Manley as our first Marketing Agency of the Month in 2006. * |
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