Increasing Your Sales Capacity

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Kelly here of the Agent Leader podcast. Just so you know, this is part one of a two part series that I'll be having interviewing Roger Sidkins on sales and service capacity. So part one that you'll hear today will be on sales capacity and then we'll transition into service capacity for part number two. As always, thanks for listening. Welcome to the Agent Leader Podcast. My name is Brent Kelly. I am your host and thanks so much for joining me on another episode. Very excited. Today I have a guest with me. It's been a while since I've had a guest on the podcast. He's a guest that has been with me many times before. So if you've listened to this podcast, you've heard his voice and I'm sure you've taken some great information from him. But it's, it's been a while. So I've got Roger Sitkins, the founder and CEO of the Sitkins Group with me today on the podcast. Roger, welcome to the Agent Leader podcast again.

Well, thanks, Brent. It's great to be here and I'm really excited about the topic here because it's, it's becoming very transformational with the agencies we're working with. So it's going to be exciting to share it.

Yeah, we're, we've been talking and if you've been listening to the podcast over the past few episodes, I started a series, I guess we'll call it a series on agency capacity. And I've talked about, you know, personal professional capacity, what that means. The most recent episode I talked about sales leadership capacity. And Roger's going to take this today. This is something we've been, been talking a lot internally. I know Roger has had probably many mornings and nights researching this and thinking about this. So he's got a whole list of things that we want to talk about today. Before I get to the specific conversation with Roger on capacity, make sure you've got your pen and papers ready to go. I always want to mention the mention the mission of this podcast is to help you, the agency leader, gain clarity, build consistency and make a commitment to become your best version possible. And not only is Roger my guest today, but co author of the book Best Version Possible. And as I mentioned before, if you want to get a copy of that book, just go to sitkins.com bvp so sitkins.com bvp and if you want to learn more about our experience, the process, what we do, how we partner with independent agencies that are looking for that next level of growth, and by the way, as we're going to talk today, increase their capacity. You can go to sitkins.comexperience to learn more about the experience. So, Roger, you ready to talk about this important topic of capacity today?

Yeah, I sure am.

I want to start off and give an intro to this. I mean, we've, this is a conversation that we've had internally for a long period of time that I've mentioned. But I think it was, I don't say highlighted or maybe reaffirmed in the best practice study, Roger, that recently came out and it was, I don't know if it was early this year or late last year, but recently the, the study came out and I know you went through the whole thing and reached out to me and said, wow, there's some major things here. So I want to start with that because I think it leads into what we're going to get into with capacity today. And just from the audience perspective, what jumped out at you from the best practice study that came out?

Well, first of all, I would hope that all the listeners are comparing, if they're not already a best practices agency, that they would be comparing their results against that because it is best practices. And I'm assuming you want to be best, sort of like best version possible. One of the things that jumped out at me right away, and we've talked about this a couple other times on the podcast, but taking it even deeper now, in the beginning, you know, all the verbiage of 3, 4, 5 pages of words, whatever it was, in all caps, that said it's all about the people. And that's one of the number one things we're hearing out there, is that we can't find people. People are getting lifted out. They're stealing our people, they're giving them big raises, letting them allow, allowing them to work from home. And there's all these things that it's just so disruptive. And I look at this and I say, well, if it's all about the people, what are we doing to help the people? But then there was something, Brent, that's brand new. I was reading a study over the weekend and it said that about half of the industry workforce is going to retire between now and 2036. Well, that's a long way off, 2036. But in the whole scheme of things, it's really not. And what it's basically saying is that half the workforce, just because of age, is going to retire and that's 400,000 jobs, 400,000 jobs. So that means we've got to find 400,000 more people. And, you know, keep the ones we have, the ones that aren't going to be retiring in the next decade or so. We've got to keep them and then we've got to find 400,000 more. And to me, that number accelerates the fact that we darn well better start looking at the people we have now, can we? How will we increase their capacity to generate even greater results? So the key to this is, is what are we doing with what we have? How do we create a great culture overall that will keep our people, attract more people, and the people we have get a lot greater results, are accelerating their results. And as you know, at the end of the day, everything's about results.

Yeah. You know, and something I've shared on previous episodes in different ways, but, I mean, you're so right, Roger. First of all, those numbers are staggering. And I think about 2036, oh, that's forever. And I go, well, how long ago Does 2010 really feel? Same distance. Right. Sometimes you gotta look back, realize how fast it's going to be here. And you're right. Like, is there going to be enough people for that? I don't know. So one of the things I talk about all the time and you do as well, Roger, is yes, you need to attract the best talent. I think that's something every agency should be looking at doing. But what are you doing to retain and what are you doing to develop, you know, with what you've got? And so maybe you could walk us through or some ideas you have and like, really, I guess the biggest thing is what agencies are really doing in those areas, good and bad, to retain and develop their people.

Yeah. And we talked about this a few months ago on the podcast, but it's worth repeating when you look at the Best Practices study, go across all of the ranges and take an average, you know what they're doing. Well, one of the line items is training and development. The average agency spends 0.3% of revenue on training and development.

Right. Could you say that one more time, Roger? Because I know you said it before.

But I think people overlook three, not even a third of 1%, 30% of 1%, you know, 3/10 however you want to look at it. And yet they spend point five percent on miscellaneous expenses. So what's more important, Miscellaneous expenses or the training and development of your people? And as you know, a lot of those training and development costs as a line item are either continuing education and maintain a license or continuing education to maintain a designation, which is crucial. You should have those. If you're a professional, you do it. But I look at it and I think if people are important, we should be training them all the time. I just see all too often that people fall into this trap and it's one of the traps of which we've talked about before, why training fails. And they say that after 90 days traditional training is kind of a one off training. That after 90 days, 84% of the information is gone. And people say that's a pretty good thing. But then they go back and they do the same thing they've always done, which means at best they'll maintain the same capacity that they've always done. So they've got some ideas and it goes away. But 84% of it later, oh, we went to training, we went to training. We've had this happen where people said, yeah, we've been through Sitkins. I said, really? What did you do? We went through a one hour webinar. No, no, that's, that's not it. So the challenge here becomes how much money am I willing to invest? And it is an investment. What's the best, best investment you can make as an individual is in yourself and as your agency. Overall, the best investment you can make is in your people. And at the end of the day saying, we're investing in our people to dramatically improve their ability, their capacity to handle more than they're currently handling today. So the study to me just pointed out, just jumped out at me that, holy smokes, what are we going to do to take care of that? And if we're, it's like joining a gym, not going or signing up for golf and not taking golf lessons. And yeah, I had, I had five, six lessons, but after two, I was so screwed up I couldn't go back and play anymore. Or it's somebody that, that's trying to play music and they say, well, you know, I guess I need to practice. And they practice once or twice and then they quit. You know, come on.

I was thinking about the training you said there. It's like, not only is it not showing up, but for the, you know, the event versus the process which you were talking about. Like, I went to, I went to a train. It's like, yeah, I went and worked out in February, so I'm good. Right? It doesn't quite work that way. Also hit me too, as you were talking about the numbers there. It's like, and I know obviously there's a lot of different miscellaneous expenses, but the first one that came to me is like paper. I'm like, you know, we're spending more on paper than we are on our people. And what's the return you get on the paper? You know, for example, in a quote with miscellaneous expenses versus as you said, the greatest investment you can make is to into people because not only are you, you know, it's, it's, it's an investment. It really is, because done the right way, it grows, you know, two, three, five, ten fold in the right way. So it's a great point there. I want to take this too, because one of the things that came up in the best practice study certainly was about people, but also how it impacted in many ways agency valuation, which is, you know, I, I think for any agency leader listening, I'm, I'm guessing you care a little bit about that. So Roger, talk about kind of your thoughts on the agency evaluation impact of this.

Well, first of all, it's, it's a great business. And the majority, vast majority of the people we work with are independent insurance agencies. Okay. So the owners of those agencies, their agency is probably certainly one of the largest, not the largest individual asset they have. Okay. So in this best practices study, the second main point that jumped out for bigger, for agencies that are really growing is that it's valuations top of mind. And today when you're looking at the multiples of 10 times 11 times, 12 times 13 times, plus two or three times more on earnouts, it's a lot of money. Okay? And we look at this and say what's really happening? And as you know, we did a study about a month ago, we call it the value impact study with our platinum agencies, which is our larger agencies we work with. And we said what's happened to them over the last, at the end of the last three fiscal years as far as the valuation of their agency and I took the profit they were receiving, the bottom line profit times 10. And even though the multiple is greater, but the study went back three years ago and then we looked at 2022 as the last year. But once again, I didn't use a multiple of 12 or 14 or 15, I use 10. So over that time frame, those agencies we work closely with that are really focused on, hey, this is our asset, we've got to invest in it, we've got to increase it. The average agency increased their valuation by 180%. Okay. By 180% over three years. And these are not small agencies. Okay? So think what happens when you invest. That's. Is this self serving? Yeah, I guess. But the end of the day, what it comes down to is, are you getting the best results? And that comes back to capacity, which leads to valuation, which leads to financial freedom. Yeah.

And, you know, I was, I was writing down as you're saying that, Roger is, you know, I think this is a. I'm not trying to be smart alec here, but like, you know, the 180% increase evaluation, did they bring on 180% more people to do that?

No, as a matter of fact, every one of them dramatically improved their capacity with their producers. In other words, the producers books of business. Okay. But more importantly, one of the KPIs, which we'll talk about, that we all know we should measure is revenue per employee. So the valuation went up 180%. Revenue per employee went up dramatically. Also, again, it comes back to, we're having trouble with people. They better handle more than they're currently handling. How do we do that? Well, we'll talk about that today.

Yeah, yeah, well, let's, let's get into that because there's a lot of meat I know, that we can talk about. And I think, you know, I mentioned to the audience here that, you know, the last couple of weeks has been more about, you know, personal professional capacity, leadership, sales leadership capacity. I really wanted to pick your brain, Roger, and get your thoughts. We get into sales and service capacity because that's really where leaders run into this problem. I need more people, I need more of this. I need more of that. And what they're really saying is, I just, we got to get more. We just got to find some more producers. We just got to find more service team members. And by the way, again, that could be partially true. I don't doubt that there's a need for that, but I think sometimes the question you've asked so well, Roger, and again, I want to go deep with you is, well, what could we do with the capacity that we already have? And are we truly maximizing that? So if I want to talk about both sales and service capacity with you, and if it's okay with you, we'll start with sales. Seems to be a big deal.

Yes.

But just give me, again, without a specific question here, Roger, just some of your initial thoughts on what agencies have done, can do, and should do to help improve sales capacity.

Sure. Well, there's a couple of old sayings always jump to mind here. Nothing happens until something is sold. And then the other one is, net new revenue doesn't solve all your problems, just most of them. Okay, so we look at this and we say we need to have more producers, need to add more, to add more producers. And we somewhat tongue in cheek, say the world's greatest producer recruiting program is to get your current producers producing at industry leading levels. Because just adding more producers doesn't give you more capacity, gives you more potential. I challenge agency owners, as you do all the time, say, look, if, if the majority of your profit comes from, in most cases, the top 20% of the producers are 80% of the revenue. Okay, so we're looking at the same. We want to add more people. But why would we add more producers if the producers we have now are not all successful? And it comes down to, you know, what, what percent of your producers met or exceeded their sales goals last year? And in an average agency, it's quite frankly less than 50% if they're being honest with themselves. So do I want to add a whole bu more producers that have potential or do I want to take the ones that are part of our team, part of our culture? We like. But maybe they're underperforming today because we're not doing a great enough job as sales leaders. We don't have the high performance teams, we don't have a set offense that, that's, you know, separates us from everybody else. But we don't want to just throw people at it. So we look at this and as we've talked hundred times and you've maybe talked a thousand, is that it comes down to the green zone and the red zone. And you know, as we've laughed both internally on podcasts before, of everything we've ever developed, it's maybe the stickiest. We've got to get our producers in the green zone 80% of the time. And if this is the first time you're listening to Brent's podcast, the green zone is four activities. They do sales, relationship management, a continuation process, not a renewal process, and building their pipelines, future ideal clients only. We want the producers in that green zone 80% of the time. The other zone is the red zone. What? Service trap? That's still going to happen. It's not a perfect world, but our goal is to get those producers up to 80% of their time, energy and efforts in green zone activities. So there's a red zone and a green zone, but there's actually a third zone. It's called the comfort zone. It's the comfort zone. It's when the producers all of a sudden are making more money than they thought they'd ever make and they're in a situation where, hey, they've got a few customers and they're doing pretty well and they're not really held accountable, but they're making more money than they thought they'd make and they start coasting. And you know, the law of gravity says you only coast in one direction. But we get these producers that are complacent, and we know that one of the absolute best things about our business is recurring revenue. But it also allows a producer to get complacent because they go, man, I never thought I'd make $150,000 a year. And I'm looking at the producer saying, yeah, but right now, at this point in your career, you should be making 300,000 a year if you do the right things and spend the majority of your time in the green zone. But they get complacent, they hide behind activities, they, they stay in the service trap as we kid around, they go on fake appointments, they're having a tough day, I got an appointment, I'm leaving. And they're not held accountable to it. So the number one thing we've got to do is take those what we've say, part time producers and get them to be full time producers. Taking our sales team that, that less than 50% hit their sales goals to where 80 to 90% of them hit the sales goals. It's not a perfect world. We could get 100% of the producers to hit their sales goals if we lower. Okay? That's, that's not how it works. It, it's setting the bar much higher in your organization because the bar is pretty low in our industry. It's a great industry. You can do pretty darn well even when you go complacent because you're making high six figures, okay? But you're not really getting to financial freedom. So it's, it's just frustrating to me that we have these producers who are not producing, they're coasting, okay? And so why is it that the best producers we work with are all over a million of commission? Okay? And we, we say somewhat tongue in cheek, until you get to a million dollars of commission income, you're still a producer in training. You know, you're not allowed to quit the gym when you've only lost 10 pounds, but you need to lose 20. Okay? It's kind of the same thing here. Why would you quit? Why would you, why would you say, I'm happy? Because at the end of the day, if they don't do the right things as an agency or as individual producers, end of their Career is full of regrets, and that's a terrible place to be.

Yeah, my, my brain, as you know, Roger, goes to sports analogies often. And I, I've told on this podcast before, I. Somebody heard about it. I just, I just think about the, the ide. If you're not on the court, the example is the best players. You can't just go sit in the bench. And as you're talking about this, I love the phrase you had is, you know, adding more producers. Basically, I wrote it down. Doesn't guarantee more capacity, does give you more potential, but it's what you're doing with that. And all of a sudden I just had this image of a basketball team which, by the way, usually has what, 12, 14, 15 players on the team, and they just keep adding more people on the bench. All of a sudden they have this roster of 40 people and they all play a quarter, you know.

Right.

So it's like, it's like, well, you know, all you're doing is just, you're adding a lot of times just more stuff versus you're not getting the results. So I think, again, just thinking about that, and I know there's a lot of work involved in that with agencies. There's no doubt. But you're right, the idea of green zone and red zone is one of the simplest things we've talked about. But I'd also say it's the most effective, at least one of the most effective things, because people just get it. Like, I'm only 20, 30, 40% even in the game, yet we're trying to get more people to play. We'll just get the people that are there that aren't playing to play more. And by the way, if they don't and won't, maybe that's time for another conversation. Right. Depending on. Depending on the situation that you're in. So go ahead, go ahead, Roger. You're going to.

I was just going to say maybe they're just an account exec hiding behind a producer, and that's fine. We've got, we've got to play the position we're fit to play. Okay, so that's a starting point. But, but getting to the, the point where the agency overall says, here's our business model. We, we've talked about this so many times now. It's so sticky with the producers and the agency leaders we talk to, we say, look, your current business model is perfectly designed for you to achieve the results you're currently achieving. And people will look at us when we first say that. And I'll say, well, if. If your business model.