Part Time Clients - Trap #4

Have a few questions to ask you. How many part time clients does your insurance agency currently have and how much time and money is that currently costing you? On today's Agent Leader podcast, I'm going to dive into Good Results trap number four, which is around this concept of part time clients. You don't want to miss this episode. Enjoy. Welcome in to the Agent Leader Podcast. My name is Brent Kelly. I am your host and yes, this is the place for insurance agency leaders, that's you to learn, to grow, to develop and ultimately aspire to become your best version possible. Everything that we talk about on this podcast, and certainly within my role and our team's role at the Sitkins Group, is to help agencies become that best version possible. By the way, the book Best Version Possible, co authored by Roger Sitkins, is available. You can get that in paperback or if you like to listen to books, you can do that as well. So it's on Amazon, Audible or go directly to our website. You'll get a free bonus. You go to sitkins.com bvp so this podcast episode is part of a seven part series that I've been doing. I've been going through agency traps. In fact, we've been talking about these as the good results traps that there are traps that agencies often find themselves in or they they don't even realize they're in. Why? Well, because they're getting pretty good results, which by the way, is a good thing. We love that agencies get good results, but we also know that there's the best version possible of your insurance agency waiting for you to arrive. And so what I want to do in this series and I've been doing in the series is highlighting one of these seven traps in each episode, giving it some depth, giving it some color. And by the way, you may find that one of these traps really jumps out at you more than another. That's very common. Or maybe they all hit you in different ways. By the way, huge opportunity for you as insurance agency leader. Reminder, there is no cost and there is no obligation. If you've been listening to other episodes in the series, we are offering for agencies that really aspire, that truly aspire, to become the best version possible. We're offering a best version possible assessment and a best version possible plan for your agency. Again, no charge, no obligation. The only thing that we're going to ask is that your leaders are present and you're committed to leaning into this conversation. From there, you can make any decision you want, but we want to provide as much value as humanly possible for you and your agency to take that next step in your journey. And as I go through these traps again you may find one or two of these. They go, oh, this is something I'd like to learn more about. That's exactly why that assessment is taking place. It's why we're delivering the plan to, to give you tangible solutions to move forward in your agency. It starts by going to this website. Sitkins.com bookacall can't make any more simple than that. Sitkins.com bookacall you'll have a qualification call just to get to know you at a very high level. From there we'll set up an assessment if it makes sense to do so. Most times it does. We'll then deliver a plan and then from there you can make a decision on how you want to move forward in your agency. Whether it's with Sitkins, without Sidkins or, or maybe you take the plan and go, I don't want to do anything but we want to provide you as much opportunity as possible. So go to sitkins.com bookacall alright, let's get into the content for today. And this is going to be part four or trap number four of this series. And today we're going to be talking about part time clients or the good results trap or deadly trap of having part time clients or too many part time clients in your insurance agency. Now quick review of how we got here. Trap number one, I talked about there's no strategic or financial model or at least a lack of a clear strategic or financial model. Trap two, I talk about ineffective or there's no unique selling proposition, there's no true set offense that's named and repeatable. Trap number three is that our agencies often have too many part time producers. Which leads me to today we have agencies that have too many part time clients. Now again, I don't know your agency. I, I don't know the specific scope until we have a conversation. But I will tell you overall. When we run reports and we look at agencies and have initial conversations, we typically see that agencies have a number of part time clients. Now I'm going to break this down. What does that mean? You know, because oftentimes you think of part time clients, the first thing you think about is we need to round out our clients. That's absolutely true. In fact it's one of the easiest things that agencies can do. And when I say easy, easy to understand, not always easy to execute. Why? Well, because you got to go through the data and you got to Go through your book, there's got to be a plan. Then guess what, we actually have to do something about it. But I want to talk about part time clients in different ways today. In fact, I'm going to ask you a question. Obviously this is a monologue, so you're not going to be able to answer back, but I want you to think about this for a second and then I'll give you the answer. What do you think? What do you think as an agency leader is one of the greatest indicators, if not the greatest indicator of the size of a book of business? Now this is true for the agency's book of business. This could be true for a department, whether it's commercial lines or benefits or personal lines or small commercial or financial. This could be true for an individual producer. But what do you think is the greatest indicator of the size of a book of business? Now just think about that. What's going through your mind right now? Well, here's the answer that we see time in and time out. It's the revenue per relationship. It's the size of the revenue per relationship or revenue per account, however you want to define that. You know, oftentimes people think about, well, the greatest size is probably how many clients we have, or maybe it's how many resources or tools the agency have, or maybe it's how many years have been in business. Those are all things that factor in. But it's the average revenue per relationship which is critical. And of course eliminating or moving away from part time clients to full time clients is a great way to begin to grow the revenue per client relationship. And again, many agencies, it's an example, and maybe yours, they'll say, well, I know that, I know that, I know we need to have full time clients, clients that we work with in all lines of business. And by the way, when I say full time clients, certainly I mean can we. And are we writing all lines of business within a specific department? It could be, write the general liability, why don't write the comp. Or it could certainly be. And we talk about having four seats around the table. So imagine your client at the table or you're sitting around the table with your client. And we've got our employee benefits, we have our property and casualty, our commercial lines, we have our personal lines, we have our life and financial, we have all the seats around the table. And there's so many factors to this and one of those certainly is revenue per relationship. You know, one of the issues that we see with agencies and part time clients is a Big reason why, and this happens all the time, is that agencies run into the tutu syndrome. The tutu syndrome. Oh, tutu, I'm wearing a tutu. The tutu syndrome is that we have too many clients that are paying us too little money. We have too many clients that are paying us too little money. And there's a lot of factors with that, why agencies run into the tutu syndrome. And guess what? What happens when you had the tutu syndrome is you plateau, you get stagnant, you get frustrated, people feel overworked, they're tired. You're not making as much of an impact as you'd like to because it's very transactional. All these things can happen in agencies with the tutu syndrome. But there are lots of factors. A few I wrote down in my notes here of why we see agencies struggle with this. Well, maybe it's the business model itself, that any account and every account is a good account. We'll write any piece of business for any person, any business, anywhere, anytime, anyhow, right? Doesn't matter if it's money in the door, we'll write it. Obviously that creates a two, two syndrome problem. Maybe we've never identified ideal client. Now, that may sound simple again, but I will tell you in having initial conversations with people, whether I'm out speaking or on the road or working with agencies, and we're having some initial calls and if I ask them, what is your ideal client? Now, of course, this can vary by producer or department, certainly. But if I ask a certain department or an area of the, of the agency and I say, what's the ideal client? Yeah, right. There isn't a clear answer. And we don't qualify because of that. We don't qualify for. Which again runs into this problem of tutu. What are some other factors? Well, the tutu syndrome is because we have producers that are caught or hiding in the service trap, that they're doing service work all the time and not going out and writing the right type of business. And what happens is the urgent supersedes the important. And here's another reason we have a two, two syndrome is that oftentimes agencies, and in particular producers are not willing to let go. Right? They're never willing to give up some of the lower tier accounts to maybe a service department. It could be a select business unit, could be a number of things, but they want to hold on to every single client they've ever written in their entire career. And you go, I wrote that account 18 years ago or 8 years ago or 4 years ago, even you did. But is that still right for your model today? So again, these are all factors that could potentially lead to part of this too too syndrome, too many clients paying you too little money. But I want to focus now on this idea of moving from part time clients which again this is a good results trap. Because can you have part time clients in your agency, even many part time clients in your agency and still get good results? The answer is yes, you can, you can have a number of part time clients. We haven't rounded them out. We not making sure they're across all departments in our agency. Can we still get good results? Yes. But what does this cost you? What ultimately does this cost you if we don't have full time clients? And by the way, this is a mindset that our agency, we talk about this with all of our agency members through our programs and our coaching. The mindset is full time clients only. If we're going to write a piece of business, our goal going into this account is, is that we're going to be their complete provider. Now let me just take one second because some of you go, well that's not possible in every situation. Agreed. There are certain times if there's a large account and they say, listen, we definitely want you to come in and look at the commercial lines, for example. But I want you to know right now that we've had our benefits provider for years and years. It's a great relationship. We have no interest right now in moving that relationship. We definitely want you to come in and take a look at the PNC or the commercial lines. Should you say nope, obviously that's your discretion. But here's what I want to say. What happens in this area as well as many other areas and agencies is that we allow the exception to become our rule. In fact, if you're not driving, write that down. Are we allowing the exception in our agencies to become a rule? Well, because it happened once or twice, it means that, well that should be what we always do or it just becomes part of what is normal and our agency. No, this goes back to strategic model. Now our strategic plan and model is that our goal in this case, if you're following a best version possible plan, is that we have full time clients only understanding that they're. Yes, life isn't perfect, there will be exceptions. But what is our model? What is normal in our agency? It's really important that I wanted to share that. Alright, so why does this matter? Why does full time clients matter so much? Well, I'm going to start with what I already mentioned, I got ahead of myself. But higher revenue per relationship if we have full time clients, as simple as it is. And by the way, we've had agency members, it's some really interesting numbers. One of our agency members in the west coast, that was their entire focus for a 90 day period. In fact, one of our things that we do in our programs with members is we have 90 day deep dives. We take one area, one thing and go very deep and give it laser focus in this case for 90 days is let's round out all of our clients or at least look at our round out possibilities, then begin to reach out and start to set up appointments to have these conversations. Remember, these are clients that already like you. They already do business with you. You know this. But it is that low hanging fruit that you hear about. There's gold in your book of business. We just kind of let it sit there because. Why? Well, it could be a number of reasons. I do want to take a moment and talk about this. Why don't we round out accounts? Well, I think number one, don't goes back to the good results trap. Because if we don't, we're still doing okay, so why worry about it? I already have part of the account, why do I need the rest? So that could be a reason. It could be some form of complacency, right? That could be certainly. It could be some issue maybe around capacity. We're already so busy and our team's so busy, which by the way, I hate that word, but there it is, right? It happens that we're just, we got so many things going on that we can't get to it. It's not our top priority. Or this could be a big one. Especially when we're talking about rounding out across different departments. Maybe it's a confidence issue. Maybe we lack confidence in another department of our agency. Now this is called real talk here, right? Because part of this is why doesn't the commercial lines refer over to the eb? Why doesn't the EB refer over to personal lines? Whatever. We could go in any different direction here. And in an agency, maybe it's because I'm a really good producer or my team is really good, but I'm not so sure about this other department. And if they screw it up or there's a problem, it may come back to affect me, right? That's a big deal. Now here's what I tell members in our program all the time. Although there can be truth in that. And if there is, you need to have a real discussion. Hey, I have some confidence issues here. Let's talk about it now. Whether that's resolved right away or a period of time, I don't know because every situation is different. But I will say this. The overall theme is this. If you are unwilling to refer or round out any type of cross sell business to another department in your agency, what you are saying, either indirectly or consciously or subconsciously is what you're saying is I trust my competitors, who more than I trust my own agency team. That is what is being communicated, whether you're saying it out loud or it's deep down in your subconscious. Because what you're saying is, well, if they mess it up, it's going to reflect bad on me. Right? But what you're saying is I actually trust my competition to handle it better. Oh, I'm not saying that, Brent, not directly, but there's some hidden truth behind that. So confidence is a huge issue of this. And again, my suggestion here is, if that's an issue, have real conversations. Something I share on this podcast many times is this. Don't allow a problem, right, to become a crisis. And eventually a problem will become a crisis. There's a problem here. Let's talk about. I have some issues and by the way, sometimes these issues are resolved because we simply have misunderstandings. Oh, I thought this, I thought this. By the way, I'm going on some different tangents here. If you can't give another department a 30 second commercial or something like that to explain the value you provide to your clients, then that's a bigger issue as well, right? Why should we cross sell to this department? Because we do X, Y and Z. This is the problem that we solve. This is the impact it has and this is the result that our clients get. We absolutely want to make sure we're cross selling right now. The other part of this is pretty obvious too. Not only does it increase the revenue per relationship, we write more business, it improves retention. And maybe that should go without saying, but let's face it, the more lines of business you have, the more seats that we have around the table, the harder it is for that client to leave. Right? More lines, harder to leave. In fact, when retention, we look at the Sitkins Group best version possible. We have agencies strive for a 99% effective retention. I'll say it again, 99% effective retention. Now I do want to highlight the word effective because it's important. Effective means the clients you want to keep and the clients you can keep. Some clients go out of Business. Some clients get acquired, right? Some clients that you may not want to keep, maybe they're just jerks and it's time to move on or just no longer a good fit. But of those clients you want to keep and can to keep, this is a huge part of increasing the retention. Because by the way, again, this should go without saying, but back to the earlier part of the cross sell. Do you not think that a good competitor, any good competitor of yours isn't going to do the same thing that you should be doing? Is it at some point going to say, listen, you know, we've got a great commercial lines department, we already established trust this relationship. Wouldn't it make sense for us to at least have initial conversation once that door is open? Now you got to fight, right? So you want to keep as many doors closed as we can, right? So higher retention. Also to me this is about team selling. The best agencies we work with are the pleasure. Yes, they've got great individuals, they have great teams within the department, but they look at themselves as a true team and it makes a difference. And then here's another one. By cross selling, by having these conversations, by having full time clients, we truly live out the idea that we are about relationships, not about transactions. Right? We are about relationships, not about transactions. We truly want to get to know you, to understand you and your business or your family or whatever it is at a much deeper level. Okay, so why this matters? Number one, revenue per relationship. Number two, obviously retention. Number three, this is a big one. Why does this matter? Because if we don't round out accounts, if we don't have full time clients, we have more and more of this problem that we have too many profitable accounts in our agency that are subsidizing unprofitable accounts. And let's face it, if we're writing one line or two lines of many lines, or we're not cross selling, whether you know it or not, when you look at your book of business, there's a good chance that you have a number of unprofitable accounts in your book of business and our profitable accounts will subsidize this. In fact, if you look at agencies, and I'm going to talk more about this in trap number six, because trap number six, I'm going to get around aspects of the 8020 rule. But the average agency, this is incredible. The average agency loses money on approximately 50% or more of their clients. Now again, this varies, but if you actually look at an average agency, they lose money on 50% or sometimes more of their clients. And oftentimes people will say well that's just the way it is. That's the nature of the beast. Well, or those are our bread and butter. It doesn't have to be that way. Right. You get to choose your model and a big part to solve this is to have a mindset and a process that we are going to have and write full time clients only. All right. I want to leave you with some questions to think about. Right. Because I think I've hopefully highlighted some areas that maybe you go, hmm, maybe there's maybe, maybe we do have some areas that were caught in the good results trap or this is a trap that either we know we're in a little bit or a mini trap or. Or maybe we just haven't even thought about it at the level that we should because there is an abundance of opportunity in different ways here. Okay. Of what this looks like. So here's some questions I want you to consider and think about. How many part time clients does your book consist of today? Like step one, like just go through your book by the way, at a minimum. Again I'm going to talk more about this in trap number six with the 80 20. If you took the top 20% of your clients, clients which hint, hint typically gives you about 80% of your book's revenue. Alright, so your top 20% are those 20% full time clients only? And if not, why not? This is a very powerful, simple and effective exercise. Here's the second question. When you look at that book of business and you see that you do have part time clients, you probably will. How much money and time is this costing you, your agency? How much money and time is this costing your agency? And then here's a question again that we can help you with as well. If you go through and do the assessment that I mentioned with you, we're going to talk about this and have some questions around it, provide you some solutions, ways that you can move forward. Again, go to sitkins.com bookacall to get that process started. But here's my question. What is your proactive plan for your top 20% to round out and retain these relationships? Oh, by the way, here's the best part. We're going to talk more about this to replicate those agencies, those clients, those relationships. What is your proactive and there's a key word, proactive plan. Too often we just think clients will just eventually it'll round itself out. Right? We have the client long enough, we know the relationship is going to be pretty good. We know that eventually we'll earn a referral from this client. Why wait? Be proactive again. Your best clients want to help you. Your best clients truly do want to help you. But we've got to be better leaders with our clients. We have to better educate. Because many times, and maybe this has happened to you. This happened to me back in my production career. I hate to admit it, but I know it happens to producers because we ask them this question. How often have you ever provided an opportunity with a different line or different department with a current client that you've written? Maybe for a year or multiple years, and they say something like this, oh, I didn't know you guys did that. Exactly right. It's oftentimes we just don't ask questions. We just don't lead clients proactively. So many things are right in front of you, and because of that, you're often caught in the good results trap. You don't have to do any of it and you'll get good results. But if you truly aspire and desire to become that best version possible. Not because it's just about money, although that's a big part of what's going to happen when you're a best version possible agency. But it's because you want to win at the highest level. You want to grow, you want to develop. You never want to settle. You're not willing to be complacent. You know there's a better version waiting for you. And you know that the end of your career, you're not going to look back with regrets. If that's you as an agency leader, book a call. We'd love to have a conversation, learn more about your agency because you're the top person. You're the type of agency we'd like to work with. With that, I wish you all the best in your success. Look forward to trap number five, six and seven. We're down to the final three traps in this series and look forward to talking to you again soon. I wish you all the best and your success. Thanks so much for listening. The Agent Leader Podcast is brought to you by the fine folks of the Rough Notes Company. They are publishers of the insurance industry's leading magazine and technical insurance content. Roughness Magazine Prof. File Successful agencies plus keen insights from respected experts on a host of must know topics. RoughNotes Advantage plus provides the tools to help your agency grow, providing authoritative information on complex coverage issues. Visit them and learn more at roughnotes. Com.