Insurance Agents & Brokers: 3 Critical Steps To Make 2017 Your Best Year Ever

How to Triple Your Agency Revenue in Five Years (And Here’s the Math to Prove It)

Want to triple your top line revenue? In three years?

Dumb question? Maybe.

But I’m as serious as onions. I know it can be done. By the time you finish reading this, you’ll agree. (Because I’ll show you the math, and it’s hard to argue with math.)

But, triple in five? That can’t be easy, right?

Tripling means that you’re absolutely focused. You’re committed. And you’re willing to invest in the tools that make it easy.

But DOUBLING your agency in five years? That's too easy. I will show you how to do that, too.

But, I’m still going to ask you to be focused, committed and willing to invest in your business. If you’re good with that, let’s get started.

(And at the end of this blog, I’m going to give you a free planning tool that thousands of agencies & brokerages have already used to help them plan their growth.)

First of all, aggressive growth requires planning. We ALL agree on that, right? Businesses plan. That’s what they do.

Here's why more agencies don't plan for the future they want Click to tweet

Do agents really think they’ll ‘bump’ into rapid revenue increases? Excuses dress up and pretend they are reasons. They’re not. These are the two most common ‘reasons’ agents don’t plan:

• ‘We want to, but…we just don’t seem to have the time.’ I’d be shocked if creating your growth plan consumed as much as 1% of your year. (3.6 days? No way!) But, for starters, I’m about to ask you to do ONE THING that will take about 30 minutes. I’ll wager that after you do that one thing, nothing will hold you back from creating a plan. You’ll be that excited.
• “We want to, but…we don’t really have a good planning system.” Fair enough. And common enough. Keep reading. 

The key to rapid growth for insurance agencies and brokerages

It must be obsessive attention to new customer acquisition, right?

Wrong. Dead wrong.

Customer acquisition matters. But, in a retail insurance agency, obsessive attention to acquisition can actually make you lose focus.

Massive growth comes from the COMPOUND EFFECT of three numbers, over time.

Acquisition is important. But of all of those three numbers, it’s the most expensive number to get - and requires a major investment in time, staff and resources.

The other two? Compared to acquisition, easy-peasy.

And, much, much higher leverage. Comparatively, massive ROI.

What are the three numbers that growth-oriented agents must pay attention to?

1. New customer acquisition. Can’t be ignored. But, here’s the big problem with an over-emphasis on customer acquisition. Not only is it the most expensive of the three growth strategies, it’s wildly inefficient. If you don’t take care of the next two items, you’re bringing new customers into a wasteful system that doesn’t extract nearly the customer lifetime value. (And some of your new clients will cost you money.)
2. Revenue per customer. This number should go up every year. Whether you want to segment it by class of business or aggregate it, you must be committed to getting this number up every year. (There are two reliable ways to do this: get more policies per customer - or get ‘better’ customers. The ones who pay you more.
3. Customer retention. “But our retention is really good.” If it’s not in the high 90’s, it’s not good. If it is good, having a plan to get that extra point or two is still a terrific investment. (Again, we’ll look at the math in a moment.)

Now, let’s see what happens when we begin to adjust your performance in each of these three areas.

Start planning your fast-growth year here…

First, you need to know where you are starting your plan: with your own numbers.

(If you don’t know them, you’re not alone! Far too many agents don’t, well, run their business like a business…and they don’t know their critical numbers. If you don’t, make your very best guess.)

Let’s start with an example. Let’s say you’ve got a million-dollar revenue agency. And, let’s start with a ‘bad case scenario’ - that your growth this year was flat.

We’ll assume that you’ve got a:

1. (tragically low) 86% retention rate
2. A 14% customer acquisition rate. (In other words, you lost 14 out of every hundred clients - and that you got 14 more to replace them).
3. And that your revenue per client is the same as it was a year ago.

At that rate - flat growth - you’ll be the same size in a year that you are today. And, in three years…five years…and so forth

Now let’s start planning. . .

Let’s begin to create the future you want.

We’ll bump your retention and your new client acquisition by a modest three points – to 89% and 17% respectively.

And we’ll boost your revenue per client by 5 points.

What happens? At the end of one year, you’ll add $113,000 (per million in revenue, remember?!). Maintain that pace, and, by your fifth year, you’ll add an extra $707,953

Modest bumps. Compounded over time. Big increases.

But, we’re just getting started!

We’re committed to real growth, right?

So, let’s bump you up one more time.

Another (fairly modest) three points for retention and new client acquisition. So, now, you’re up to a not-embarrassing 93% retention and 20% new client acquisition.

This is a bit more aggressive – but when you get some reliable nurturing and cross-sell campaigns, it’s within reach. Let’s push your revenue per customer up another 10 points. (In this case, you’re getting another $33 dollars per client per year.)

BOOM! Now you’ve added just a tick under a quarter-million in new revenue (in year one!) and, at the end of five years, your (little) million-dollar agency is a $2,967,260 revenue agency. ($2,740 less than triple…sorry!)

One last thing before we move on. If doubling in five years is more your style, that is, as I said, ‘easy-peasy.’ The formula: 5-4-5. Boost retention five points, new client growth by 4, and rev-per-client by 5. In this case, 91% retention, 18% new client growth and 5% growth in rev-per-client.

Before we move on, three serious suggestions:

• To start your plan, you must start with your own numbers. (My friend, Dan Sullivan, often says, ‘All progress starts with telling the truth.’ If you don’t know your precise numbers, don’t let that roadblock your planning process. Start with what you know, to the best of your knowledge.)
• Tweak. Create – as I did above – two scenarios. A realistic growth scenario and a stretch.
• After (or while) you’re playing with those numbers, share them with key members of your team. (Teams are designed to win, and they need to know what the goal is in order to win.)

By the way, you may think that calculating those numbers required a complex computation and a sophisticated spreadsheet. Nope. It took me seconds.

And that gets to the free planning tool. We’ve been frustrated for years that agents & brokers lacked an easy way to visualize and experiment with ‘bigger futures.’

The Growth Analyzer solves that problem. For agents & brokers, it is the simplest and most powerful way to start, guide and inspire your planning process.

You can get it free here.

‘Those numbers look easy! But, can I really double or triple my agency in five years or less?’

Yes, they look easy. And, yes, you can hit them – easily. Our clients report those numbers…and this is how they do it (and how you can, too):

1.   Run your numbers. And create your ‘realistic’ and ‘stretch’ goals.

2.   Start with strategy, not tactic! Don’t go helter-skelter chasing after the latest Snapchat technique until you’re very clear on the two or three most important changes you need to make to your marketing.

3.   Manage for Customer Lifetime Value. The ‘big money’ for the agent-broker channel is ‘in the customer.’ It’s in the relationship. Marketers know that the single most expensive part of the marketing process is customer acquisition. When you bring customers into your agency, bring them into a relationship with your agency. Earn their loyalty and they will reward you richly – with more policies per customer, higher retention and more referrals.

4.   Invest in your marketing. Your clients – old and new – don’t really want you calling them. (Mblox research reports that 84% do not want your calls.) But, you do need to communicate with them to earn their trust, their loyalty – and their pocketbook.

Modern agencies & brokerages are using modern tools to connect with today’s consumer. Marketing automation that integrates with your management system helps you to boost the conversion of new leads, nurture new and existing customers, generate referrals, round accounts and much more. (The Direct Marketing Association reports a 43:1 ROI with email marketing.)

Yes, you can grow. You have to start with a few simple numbers. You have to be committed to it. You have to invest in your growth. And you have to use the tools that make it easy.

If you like this article, please comment. Or give me a 'like.' It means a lot to me - and I'd love to hear your feedback.

Michael Jans is the Founder & Executive Chair of Agency Revolution, a software provider that helps agencies & brokerages automate their workflows, engage their customers and grow their revenue.