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Winning Strategies
Results first, not last
The most successful growth models start with the end result
By Roger Sitkins
All too often, agency results are simply a function of “what falls off the production line at the end of the day.” Typically, agency owners wait until the end of the month, quarter or year to look at their financials to see where they stand. They seem to forget that their business is not the product they deliver, but the process by which that product is delivered. Accordingly, most agency owners are reactive (what happened?) vs. proactive (what will happen?).
It is regrettable that instead of focusing on the desired results and managing through them, most owners talk about their strategies and processes and all the things they want to do, rather than the results they want. They say that they “want to increase sales” or that they “want to grow,” without having a specific result in mind.
In our Vertical Growth Planning Model, the flow is different. We always begin with the end in mind and work backwards from there. What is it you truly want to accomplish at the end of the day? It has to be much more than some vague projection about how big you want your agency to become. It really needs to be a snapshot of what your agency will look like in three, five, 10 years or more. What will it look like when it passes to the next generation?
When we’re planning, we always consider Results first, then we examine the Strategies and Behaviors that will support those results. Last, we examine what Processes are needed to support the strategies and behaviors that will guarantee the results we want.
I think we can all agree that it’s a new world out there and that now, more than ever, most agencies are encountering problems they could not have imagined just a few years ago. Here are some of the greatest challenges they face.
• Risk Shrinkage. Large commercial accounts are renewing at 20%, 30%, or 40% less than last year.
• Economy. The fact that the overall economy has been in bad shape not only leads to Risk Shrinkage, but (not surprisingly) also affects personal income. I read that last year, personal income was down 3.2% nationwide. No doubt many people in our business have seen a much greater decline in income than that.
• Aging Producer Talent. All too often we see that while the “running backs” are getting older, new blood hasn’t been “drafted” onto the team. In other words, we’re not bringing on enough new producers. Not everyone will agree with me, but eventually all producers will plateau, so you have to start planning for that now. Hopefully, they’ll plateau on top in an area that’s exceedingly profitable for your agency. But you have to know what that is.
One of the key elements of our planning process is a Five-Year Producer Plan. We look at every producer and try to project his or her results for the next five years. When you add up those numbers three to five years out, does your current production staff guarantee you’ll hit your long-term revenue goals? For the vast majority of agencies, the answer is “No.”
That’s why it’s crucial to have a five-year spreadsheet that shows where your producers stand today and where you expect them to be in five years. If the numbers don’t add up according to your plan, you’ll know how many additional producers you need in order to reach your revenue goals in three to five years.
• Perpetuation. We all know the importance of perpetuation and, as we have often discussed, there are two types of perpetuation: Financial Perpetuation and Leadership Perpetuation. In both cases, start with results. What do you want the leadership of your organization to look like three years from now? In five years? Ten years from now? What about the financial rewards? Do the financial results guarantee that you’ll have enough money to perpetuate?
• Actual Results. The average agency simply isn’t growing today. We strongly believe that growth solves problems, but in this economy, most agencies don’t know how to grow. Most never had to know how—it just happened!
Remember the Producer Prayer? “Dear God, please give me just one more year like 2002; I promise not to mess this one up!”
The Sitkins solution
The Sitkins Vertical Growth Model is designed to address these problems. It’s a straightforward, three-step process: Improve Sales, Improve Profit, Improve Value. It’s frightening to think about the millions of dollars of value that have been lost in our distribution system over the last few years simply because agencies didn’t grow their revenue (or, more important, their profit). Consequently, their value declined.
To make the model work, you have to make some very tough decisions. (I said it was straightforward, not easy!) I’m hoping that you won’t be forced to make these difficult choices but that you’ve already made them proactively vs. reactively. However, if what you’re doing now isn’t working, you have to make some changes. It all comes down to whether or not you have an absolute Results Culture.
We’re often asked, “How long will it take us to get a result?” Our answer never varies: Getting the result is instantaneous! Once you get it, you have it! But getting ready to get the result can take years and years. It could be years of indecision or years of thinking, hoping and praying. It could involve years of internal fighting. It’s fighting the days of, “But we’ve always done it this way.” Those days are long gone! The way you used to do it doesn’t work anymore!
So how should you do it? Our overall approach involves doing the following, in order.
• Establish Results. First, determine your ultimate goal. What do you want to accomplish?
• Quantify. Where are you today, and where do you want to go? For example: “Our goal is for every producer to have net new revenue growth this year. Today, our average producer is doing $65,000. We want them at $100,000.”
• Strategize. What strategies will absolutely get us to those quantifiable results? An exemplary approach: “We must have a set offense in place, we must manage our pipelines, and we must manage our closing ratios.”
• Identify Behaviors. What behaviors support the strategies and will guarantee the desired result? First, make sure you have a documented sales process that you practice on a regular basis. Also, learn how to super-qualify prospects. You must do those things behaviorally that earn and generate results (referrals and introductions).
• Track Results. How will you track all of this? What’s your accountability program going to be? We put together a performance management program where individual producers are responsible for reporting their actual numbers, the strategies they followed and the behaviors they implemented. Keep in mind that it’s got to be upward accountability, not downward accountability.
Evaluating results
We believe that results fall into three categories: Current, Next Improvements and Potential.
1. Your Current Results are coming from whatever Current Strategies and Behaviors you have in place.
2. Your Next Improvements in actual results will come from your improved Strategies and Behaviors.
3. Finally, your Potential (What’s Possible) Results will come from the best Strategies and Behaviors that you put in place.
Results can be either Numeric (critical indicators) or Other (strategies and behaviors). Examples of Numeric include Closing Ratio, Revenue per Relationship and Revenue per Producer. Examples of Other are Culture (behaviors and language that are considered normal), Brand (the clear, powerful thoughts people have about you and your agency) and Client Experience (what clients feel and tell others about you and your agency).
Although these examples have been geared toward agencies, the same results-based approach can be applied to working with clients and prospects. How are you managing culture, brand and experience? Why should someone hire your agency, and why should they be willing to pay you more than they’d pay a competitor? The answer is simple: People will pay for results! I’m referring to the visible results they cannot get from another agency or cannot generate on their own.
Ultimately, are you helping your clients control their total cost of risk or their total cost of benefits? You do put together annual plans for all of your clients and provide a stewardship report (visible results), don’t you?
The bottom line is that everything is about getting results. Results no longer can be “The Good, the Bad and the Ugly.” Everything that happens in your agency must be focused on generating Great Results. It all begins with results first, strategies and behaviors second.
Do you really have a choice?
The author
Roger Sitkins is founder and chairman of Sitkins International. He is the creator of The Vertical Growth Experience™ programs, which are offered exclusively to the Sitkins private client group. These programs focus on continual improvement of agency/brokerage operations, thus providing members with ongoing development and strategies that literally force vertical growth in the critical indicators of closing ratio, revenue per employee, revenue per relationship, and revenue per producer.
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