Winning Strategies
The changing role of the agency CEO
How many hats should a CEO wear?
By Roger Sitkins
Most agency CEOs start their careers selling insurance and ultimately wind up running an agency. As a result, many CEOs aren’t very well trained in terms of leadership skills or very adept at managing a fast-growth organization. Understandably, they lose sight of their role as CEO because they’re often playing so many other parts simultaneously: chief financial officer, marketing expert, sales manager, top producer and copier repairman, to name a few.
Eventually, their myriad roles lead the CEOs to question where to invest their time. Whenever you have such disparate roles competing for time in a CEO’s day, management and leadership typically get relegated to “after hours.” Unfortunately, everyone’s gone by then, leaving little reason for the CEO to take center stage and perform his or her actual role as leader and manager.
We believe that proactive leadership calls for CEOs to focus on three main roles. First, they must be the visionary of the organization. Second, it is critical that they act as an exit barrier to their agency’s most important accounts and relationships. Last but not least, they should be fully involved in the role of rainmaker—the person who makes things happen.
Visionary
As the leader of the firm’s culture, the CEO must define the expectations for the behaviors that will be normal in the organization. For example: Is it normal for producers to get referrals and run a set offense? Is it normal for them to be very knowledgeable about coverage details? Overall, when it comes to normal behavior, what are the agency’s standards and expectations?
Often, CEOs are so focused on being the visionary that they forget they’re also the key role model. And people in the agency are looking at that person and wondering, “Are you doing what you want us to do?”
To be an outstanding role model, a CEO must be a purposeful role model. In other words, if you’re a CEO who preaches the importance of having only full-time clients, you must lead by example and sell only full-time clients. Similarly, if you mandate that producers work on referrals only, then you must do the same. And if you say you’re going to have a set offense in place, you need to run that set offense.
CEOs frequently forget that being a purposeful role model requires that they live, walk and talk the message that they envision for their agency. They must not forget that they’re always on stage. Every day they show up for work, people are looking at them—and to them, as well.
What you don’t want is for your agency to end up with a vision statement or a mission statement that is essentially meaningless. Oh sure, it might read well and look nice, but do you know how many times I’ve seen a beautiful, framed mission statement, prominently displayed on a conference room wall, and yet no one in the agency even knows what it says? Basically, it has become wallpaper!
A number of years ago, I was doing a sales management audit with an agency, spending two days with the eight partners to review what they’d been doing and discuss how to turbocharge their sales organization. During our final session in their conference room, I asked them if the agency had a mission statement. They enthusiastically responded, “Absolutely!”
But when I asked them what it said, no one could give me an answer. Next, I asked them how often they met as agency partners—and where. “Every Monday,” said one of the owners. “We meet in this room.”
That was my cue to walk over to their mission statement, which had been beautifully hand-embroidered and framed, and which was proudly hanging on the wall. But it had blended into the wall. After years of exposure to it, the owners had become so immune to their own mission statement that they didn’t even know it was there.
The moral of the story: To be an effective leader, the CEO must review and promote the agency’s mission statement regularly, not just hang it on the wall and forget about it. The CEO must understand and embrace it fully, and then let everyone know about it. This involves constantly preaching it to the employees first and foremost, but also to clients. Further, it should be shared on a regular basis with insurance carriers.
Keep in mind that the mission statement is the vision for the agency—it’s what the agency is all about. For an agency to succeed, the vision should focus on retaining and obtaining ideal clients. Remember the Four Rs Focus that we’ve talked about before? That’s what the vision should be all about: Results, Relationships, Retention and Referrals.
Exit barrier
Without question, we all know that the 80/20 Rule is alive and well. However, we continue to find that the top 5% of an agency’s customers account for 50% of sales, and that the top 20% generate 80% of revenues. I believe that one of the CEO’s three main roles is to be an exit barrier with at least the top 5% of the agency’s customers (at a bare minimum); in a perfect world that number would be the top 20% clients.
To truly act as an exit barrier, CEOs must have personal relationships with their best customers. By “personal,” I mean the CEO should have good rapport and be on a first-name basis with the final decision-makers of the top revenue-generating customers. This requires making an in-person visit at least once a year, although semiannually would be preferable (and quarterly would be even better).
Why would a CEO want to get to know these top customers? To keep them! Many times, another producer has sold the top 5% or 20% customers. But what happens if that producer leaves? There’s a good chance that their top clients will go, too. That chance diminishes, however, if the CEO or someone at the senior level within the agency knows them fairly well.
One of The Sitkins 100™ members has an upper-level representative visit at least quarterly with the top 5% of customers who generate 50% of the agency’s revenue. Without fail, either the agency president or senior vice president meets with those customers informally, usually over breakfast or lunch. Their efforts make their best customers feel appreciated while affording them the opportunity to gauge customer satisfaction.
Customers are far less likely to take their business elsewhere when they feel valued and when their needs are being met. However, if the only exit barrier is the producer who sold them, the account is vulnerable.
Rainmaker
Whenever we’ve asked agency CEOs or senior partners to list their prospects, we find they have the best ones in the agency. Why? Among other things, they’re involved in their business community, they participate in service clubs and they’re active in their church. Usually they’ve been in town for quite awhile. In brief, they know a lot of people!
But it dawned on me recently that, so many times, CEOs will say they just don’t have time to contact prospects, no matter how great they may be. Why won’t they take the time to make those calls? Actually, it’s pretty obvious when you think about it: They don’t want to do the work.
With all of their other duties and responsibilities and with all of the hysterical activity going on (especially if they don’t have a very good strategic plan for their agency), they really don’t want to start new relationships because if they do, it means they’d have to do the work and they don’t have time for it!
So how do you maximize your time as a CEO and take advantage of the many years you’ve spent in the community working and building a network? If you’re a rainmaker, you do it with buckets. I’ll explain.
As a CEO, you go out and make the rain; you open the relationship with a prospect. But when it comes to making the first appointments in the selling process, gathering the data, conducting the risk surveys and developing the plan for the prospect, that is the job of a bucket, not a rainmaker.
A bucket is going to be an up-and-coming producer in the agency who has the potential to be a great producer but has not yet developed a network. The person who doesn’t have a network has time. So if one person has the network (rainmaker) and the other person has the time (bucket), why not team them up? Why not start pouring new commission dollars into your bucket?
Let’s face it: Generating new revenue is crucial for agencies. In the current soft market where revenues are declining as premiums fall, it is absolutely imperative that we generate new revenue. Right now, most agencies nationwide are working very hard to stay even. Their big commercial accounts are renewing at 20-40% less than they did last year, despite the fact that they’re doing more work just to keep the account. In order to compensate for that lost revenue, agencies must grow their new business accordingly.
So how do you cultivate that much new business? You go back to the basics and examine the strengths of the producers. If the CEO has the connections to get the agency’s foot in the prospect’s door, it makes sense to pass off the detail work to a capable producer who is short on contacts. I promise you, they’ll be eager to take that ball and run with it!
Ultimately, when you marry up the producer who has the best pipeline with the one who has the time, you’ll get the sales and they’ll get the commissions, so everyone wins. It’s really that simple.
The bottom line
If you’re a CEO juggling a number of different roles, you have to maximize your return on time (ROT). You shouldn’t be working 10 to 12 hours a day, six days a week. If you are, then you need to examine your ROT as a CEO during work hours and identify ways to better use your time to generate more revenue.
As a CEO, you have to maximize the relationships you’ve invested years to build, but that aren’t yielding an adequate return. Remember, those people are all buying insurance from someone, so it might as well be you.
Finally, agencies must generate new accounts and create new sources of revenue if they hope to compete in the current market. At the same time, if your most profitable accounts are your most established, long-time customers, you have to retain those accounts. In any case, your job as CEO is to provide the leadership and agency culture that will retain and obtain ideal clients.
As always, it’s your choice.