Growing your agency and your team in a recessive environment

By Josh Morgan

Independent insurance agency owners generally have strong sales backgrounds. They have built large books of business which made them natural candidates for agency ownership. However, mastering the human element of running a successful business can often elude them and their growth prospects can suffer as a result.

Recent macro-economic conditions have compounded this dynamic. Like many service-oriented industries in the U.S., one of the biggest challenges the insurance industry and its approximately 36,000 independent agencies face in today’s high-inflation, low-unemployment environment is attracting new employees and obtaining required productivity from existing talent.

Throughout my career, I have interviewed more than 3,000 producer candidates and have been directly involved in the hiring, development and retention of more than 500 producers. Here are some best practices from my experience for developing a data-driven approach to improve talent management, and in turn, drive organic business growth.

In a recent study, 385 leaders of independent insurance agencies with at least $150,000 in annual revenue were asked to choose the biggest challenges for the industry. Attracting and retaining talent topped the list ahead of cybersecurity, privacy issues and industry consolidation.

When asked about a strategy to grow and compete in the market, independent agency executives indicated a variety of benefits their agencies offered, but those designed to attract, support, and retain talent fell toward the bottom. Fewer than 3 in 10 agency leaders said they thought they needed more help with human resources. And only 1 in 10 (12%) said their firms would benefit from additional resources and industry information to train the next generation of workers.

These survey results paint a picture of an industry that – despite continued struggles with generational turnover and the transition to an all-digital age – is unwilling to meet today’s sales talent challenges. Part of the answer lies with changing perspective. Are you in the insurance business or the talent management and development business? In many cases, it is the latter. Insurance just happens to be the vehicle agencies bring value to their customers. Reshaping the perspective of agencies will help them solve two perpetual challenges:

How to find and develop new production talent into successful producers.

How to manage existing sales personnel to sell and retain more.

With an eye toward data measurement and analysis, agency leaders should answer the following questions:

What percentage of revenue are we going to invest in unvalidated producer compensation?

Do we have willing and able mentors with capacity to shepherd new producers?

Have we documented our new producer training plan and assigned responsible parties for the ongoing completion.

What sales performance metrics do we track (e.g., new business revenue, account retention, sales velocity)? Are they the proper metrics to enhance performance over time for our business?

Do we utilize a customer relationship management tool to manage our pipeline, maximize opportunities, and project future new business?

Do our existing producers have individual goals for cross-selling and account rounding based upon analysis of their book?

The answers to these questions set the initial path for growth and staff utility. They give a baseline from which to drive decision-making in the agency.

Next, agency leaders should review the specific areas that, when aggregated, lead to growth. Once understood, they can expose opportunities and give insights into issues before they become larger problems. Areas to consider include:

Book composition – Consider average account size by segment and number of accounts by revenue band to determine baseline performance and growth opportunities. How have these changed over time? Is there a trend?

Staff composition – Is current staff capable of hitting new business targets for next year? Do we even have individual new business targets? What are the minimum new business standards to keep the title of producer? What is our revenue per employee and how does it compare to best practices?

Unvalidated producer management – How are junior producers mentored and are the mentors engaged? Does our compensation plan for unvalidated producers set them up for success or does it set us up to be a target of talent poachers?

Many of these measures are not new to agency leaders. They are easy to ignore because they require targeted action. What is needed is a renewed vigor to review and really appreciate what the metrics mean – identify any gaps, double-down on areas of strength, plot a decisive path and take action.

As the potential of a recession looms, agencies must go beyond traditional efforts to achieve organic growth. A data-driven approach is a first necessary step. It will set agencies on the path for success regardless of economic conditions.

Josh Morgan is vice president of sales effectiveness with Keystone Agency Partners. He may be contacted at [email protected].