The #1 Metric for Insurance Agency Success

Welcome in to the Agent Leader podcast. This is the podcast for insurance agency leaders to learn to grow, to develop, and ultimately aspire to become your best version possible. My name is Brent Kelly. I am your host. Delighted to be with you on this episode. And on this episode I have one main focus today. I'm going to share with you the number one indicator of the size of your book of business. Now, whether this be the entire agency's book, maybe it's a department within the agency, or it's a producer's personal book of business, this is the number one indicator of the size, the overall size of the book of business. Now, please note, maybe I don't need to state this, but I will. This isn't the only indicator, right? This doesn't mean that the book of business is the only thing that's important. But if we are looking for a large book of business and there's one indicator, well, you probably want to know what that is, and maybe you do, maybe you don't. But I'm certainly going to share what that is on today's episode. But I'm also going to unpack this a bit deeper and talk about some of the beliefs and behaviors that need to be attributed, or at least that we see. And we find with agencies and departments and teams and, and individuals that really understand this and apply it at the highest level that it really starts with the beliefs. And of course that correlates with the behaviors as well. All right, so let's just go ahead and get this out of the way. What is the number one indicator of the size of a book of business? Well, it's this. The revenue per relationship. The size of the revenue per relationship relationship. Now, we're going to unpack this in deeper levels and it may sound pretty obvious. Well, of course, if you write larger accounts or have greater revenue per relationship, you're going to have a larger book. But of all the factors that we see that go into book growth and book development, this one really is the top of the list. The greatest indicator is the size of your book of business. Of your size of book of business is revenue per relationship. Now, I want to start off by saying this. I there is a difference between goals and standards. And that's really what I want to be getting into today around this number one indicator is the standards. Because I hope you, as an agency leader or insurance professional listening to this, I hope you have goals. I think most good, hopefully good, great, excellent, even average insurance agencies, there are goals, there are things that you want to accomplish. There are outcomes, there are results. And I think that's wonderful. But as we've stated before on this podcast in a previous episode, is that you may or may, you may or may not hit or achieve your goals, but you will always rise and you will fall to the level of your standards. Right? So the goal could be, hey, I want to, if I'm a producer, I want to have a million dollar book of business. Well, that's great. That's a great goal. Maybe you want a two million dollar book of business, but maybe you want a three million dollars book of business. Love that goal. But my question would be is okay, what are the standards? What must be the standards to attain that book of business? Because goals, as much as I love them, and hopefully you love them, goals are aspirational. They're aspirational. Here's what I want, here's the thing. I want to achieve good, good to have aspirational goals. But the standards are operational. This is how, this is how we do business. This is what it looks like. This is how we do business, is how I do business. These are our standards and sometimes we call these non optionals. We work with agencies at the Sitkins Group. See again, a goal is to be, hey, I want to be a million dollar producer. Well, if your standard is writing a thousand dollar accounts or writing any account or every account, you can't be a million dollar producer, right? In a thousand dollar accounts because you'd need a thousand of them and that's not sustainable. So I know that's a very generic starting point, but want to dive deeper and what that means because if we are going to understand the number one indicator, the size of a book of business and we want to grow the book of business and if you're listening to this, you probably do. Well, if it's revenue per relationship, what are some of the principles? What are some of the practices? Well, let's start with some of the principles. Just kind of get key principles and then we'll take the principles into practices. It's really going to help define some standards. And again, I, I don't want to tell you what your standards are. I can't tell you what your standards are, but hopefully I can inspire some thought for you as a listener going, huh? Right. If the number one indicator is the size, the book of the size of book of business is revenue per relationship, what would be some standards that I or we need to set as an agency to help us fulfill that or certainly improve upon it? Okay, so let's start with this Being that I've talked about the number one indicator, revenue per relationship, to me, it starts with the area of focus. One of the reasons we see that agencies and producers struggle with this to a degree is because it simply isn't their main focus, as Tony Robbins says so, well, where your focus goes, your energy flows. So if you're not focused on this, if you're not focused on understanding revenue per relationship and things that we're going to get into, rounding out accounts and certainly focusing on future ideal clients and having a specific strategy and tools and resources around, there's always kind of things we can put in. But if we're not focused on the fact that I need to take a step up, I need to challenge myself, I need to focus on these things, well, guess what? It's never going to happen. I know that seems super simplistic, but it's also very real. And the biggest reason we see the agencies miss the mark on several things they're trying to hit is simply a lack of focus. And that's because they have a lot of things. I'm sure you have a lot of things you're trying to accomplish. So it does start with focus. Well, where can you begin to focus? Well, one of the areas that we talk about significantly in our programs and even on this podcast, is the power of 80 20. If you want to understand revenue per relationship, it starts with understanding the key principles of of 80 20. Now, I've talked about that. I've had guests talk about this in this podcast. This is nothing that's new for probably any of you listening to this. But the bottom line is if 20% of your clients in your agency or in your book represent approximately 80% of revenue, we should probably, here's the word again, get focused on that top 20%. In fact, if you're going to replicate something in your book, it should probably be those type of accounts. This comes in alignment with a focus. So 8020 is real. And if you haven't run your report, please do let us know. Right, send us an email of what you find. But we have run thousands and thousands of these reports, whether it's an individual producer, a department, or an agency. And we continue to see that on average, 20% of your clients generates about 80% of your revenue. And there's a depth to this that I want to share numerically. Okay, so if you actually break this down further, if you were to look at your book of business and look at your top 5% of clients, then your next 15, and then your bottom 80 so we're going to look at three tiers, starting with the top 5% we typically see. And you can call these tier one, you can call these a client, you can call them platinum, whatever the name. But the top 5%, first of all typically represents about a third of the total book. So just 5% represents about a third. Again, that's going to fluctuate a little bit, but significantly, they are significantly larger than your B's. To give you an idea, the B accounts, which are typically that 6% to 20% of your clients, so you top five and then six to 20A clients are typically four to five times the size of B's. Right. So, oh, gosh, A clients, we should be focused and target those. I agree. Because B clients, although they're not the worst B clients, are good clients. But A clients alone are four to five times the size of A's to B's. Now here's even crazier stats. B's are typically around eight and sometimes ten, depending on the book that we see. But we're going to use eight, eight times the size of C's. So if A's are four to five the time size of B's, and B's are approximately eight times the size of C's, that means what? That means our A clients are typically what, 32 to 40 times the size of our C's. I'll say this again, you're going to replicate something in your book of business or in your model. Who and what do you want to replicate? So again, this all comes back to principles of focus. If revenue per relationship is the greatest indicator of the size of book of business, we know that our A accounts have the highest revenue per relationship. They do, by the way. They typically have the longest lasting relationships. You offer the most resources and tools. You typically have the best relationships, even outside, professionally, often personally, you enjoy these businesses or these people. So outside of all of that, they're just much more profitable. Right. And obviously you can grow quicker in that. All right, so again, just to give you some breakdown of that, now here's another thing I want to talk about. When it comes to principles, and this is a question I ask producers all the time. I'll ask it on this podcast. So again, whether you are a producer or you lead producers, my question to a producer would be, are you going to be a better producer one year from today than you are right now? Now, what answer do you think I get? What answer are you probably going to give me? Yeah, of course, a year from today, I Better be a better producer than what I am today, otherwise I'm not moving forward. And I would agree. Now my follow up question to that is, if you were a better producer one year from now than you are today, then shouldn't your clients be better, bigger clients as well? Now I hope the answer is yes. Now I think logically we can say, well, yeah, a year from now I should write bigger, better clients. What happens oftentimes we see in agencies and departments and individual producers is that we begin to get complacent or used to a certain type of account and we forget to push or challenge our comfort zone. What's the next step? What's the next level? What does that look like? Now, here's another concept or principle I want to get into because I don't want to go down a whole 80, 20 rabbit hole here because I do want to talk more about practical ways as far as really increasing that revenue per relationship and what that looks like. But one of the first things you have to think about is as I move forward, what I don't want to do is add more accounts to my book of business that I eventually might need to trade down or move on. They might be restricting my sales capacity. These are accounts that again, you have on your book, they're probably more transactional, they probably don't increase, have much revenue. In fact, in many cases, if there's multiple touches, we actually are losing money. I'm not going to go down that whole rabbit hole, but this idea of I've got to get focused on the right size, right type of client from where I am moving forward, otherwise I'm going to continue to have to dig out of a bigger and bigger hole. And one of the problems we see with agencies, and we could talk about this in different, different levels, in fact, maybe I'll have a separate podcast on this, but that agencies, too often, and departments, of course producers in their book, they grow horizontally, they grow, but they grow wide. They don't grow up, not vertically because they add more and more of the counts that come in and then they come out and they, they come in and you're just, you're kind of cycling through stuff. Maybe there's some gradual growth, but it's frustrating and we don't get the traction. And part of that is because they would keep adding more accounts that all they, although they seem easy to add and they probably are long term, they actually hinder your growth. Right. So we want to continue to up the ante. Now one of the ways that you can look at this and I will give something very practical here. If you are looking at your 8020 or you have looked your 8020 report, and of course, just look at your clients from top to bottom, right? List them top to bottom. You can look your top 5%, those would be your tier 1 or A clients. That 6 through 20 would be your B and then your bottom 80% Again, 80% of your clients produce 20% of the revenue on average. And we can even do further studies on this, which will probably have come out in future podcasts. But just understanding that as a concept, you can look at your average B B account, okay? So look at your average B account and say the size of that. And as a producer and as a sales leader, you should look at a producer and say, hey, listen, you've proven that model. Moving forward, you shouldn't be writing accounts less than your average B account because all that's going to do is cause you to continue to grow out and you're going to become frustrated. So let's get very focused now. Are there exceptions to that? Of course you have to use emotional intelligence. And there might be a C account or an account that you're working on that's associated or attributed to another larger opportunity. Of course. But be honest with yourself, right? Don't make the excuse the norm, right? Or the exception. I should say, maybe better the norm, right? Get focused on what you want. And by looking at your average B account, more importantly the A accounts and having that as a target, saying that's the level, that's the standard, I should be focused on moving forward. In fact, when we go very deep with our members of the Sitkins Network and we do our producer and sales leadership training and coaching conversations, we would always talk about what's your target account size, what's your minimum account size. I like to add target account and minimum account standards because I love that it's not just the size, which is one part, but it's your standard. Hey, my standard moving forward is I've achieved this level, I will move up. This is probably not an analogy that's going to work out well, but here I go. Okay, this is like, in fact, I am currently the coach of my daughter who is seven years old, her instructional baseball league. Okay, so these are like 6, 7, 8 year olds and obviously we're there to have fun and learn the game. Well, then there's the next level, right? There's 10U baseball and then there's 12U baseball. And then of course, we have getting into high school Baseball and college and single A and double A and AAA and of course, the majors. Right? You have all these levels. And what I find with producers and agencies, they start to go up the ladder, so to speak. Be like my daughter, going from instructional to 10U to 12 year, whatever it is, and she's playing, let's say, high school softball, and now she's playing high school softball, and all of a sudden she decides on the weekend she wants to go play 10U again. Well, first of all, it's not a great fit for a number of reasons. And you're not going to learn and grow at that point. And quite frankly, you're probably over delivering or over servicing or whatever term you want to use that level. Right? So that's the same thing we see with agencies, with departments, with producers, is as you attain higher levels and you increase where you're at, well, you increase your standards. And so we got to keep those standards high as you move forward. All right, so, all right, let's go a little deeper in this revenue per relationship. Again, we talk about writing larger accounts. It's about the result of increasing the revenue per relationship, but it's also about the beliefs and the behaviors. Now, I just gave an example of going up the level, but that to me is the mindset, is that as a producer, as a team, as an agency, we have got to be open, accepting. In fact, want to get uncomfortable. That's the paradigm shift. Like, we've got to want to go up. Why? Well, not just because we want bigger accounts, because we want more money, which, by the way, isn't a bad thing. I'm all for that. It's about the challenge. It's about the human existence, about growth. It's about being that best version possible, that the only thing that grows in your comfort zone is complacency. You just get more and more complacent. Well, this is good. Now, it's the way I've done it before. It's what I used to do. It's what I've always done. Down the line we go versus what's the next level for me? And I know for many of you, I'm preaching to the choir here on this podcast because as you achieve things and go up, so to speak, what you find is, oh, my gosh, there's more things I didn't even know yet. I wasn't aware of that yet. So even when you think you get to the higher level, there's always more to learn and grow. That's why I'm so Fascinated. I find it so incredibly refreshing when I have the pleasure of working with producers. For example, and these are producers that already have two and three million dollar books of business. They're already fine. If anybody wants to be complacent, they probably could. And their lifestyle is pretty darn amazing. So it's not just about the money, but when you talk to them, they're naturally curious. What else don't I know? What else can I learn? What would this look like? Right? How could I grow in this area? Then you'll see some producers that you know. Again, I'm just picking a number here. They're a few hundred thousand. Like, well, you know, I pretty much know what I need to know. Like, well, isn't that interesting? Right? Isn't that interesting? So again, it's about, it's about the beliefs which of course must align with the behavior. So I'm going to share just a few basic behaviors. I may have already hit on some of these. But of what it looks like, what are some behaviors? If you want to increase this revenue per relationship? The number one indicator. I talked about some principles, of course, talking about the mindset. What are some specific things you could look at? Well, let me go a bit deeper. To me, it does start with your level of preparation. It starts with a level of preparation. And I can best share this in the story because I learned this firsthand from a great mentor of mine several years ago. I was on a mentorship call, someone I highly respect, been very, very successful in business, in fact, multiple businesses. And he has a mentorship call which I called in on and asked a question. And I won't get to the all the nuts and bolts, but the basic premise of the question was how do I get into larger, better, bigger opportunities? Keep it that simple because that's really what the premise of the question was. And my mentor asked me a great question. He said, well, he said, well, tell me about what that looks like. And I, I painted the picture of the size and the scope and the value. And he said that sounds great and was talking about, you know, financially, what that would look like. And he said, well, let me ask you one more question. If that top level of an opportunity, this large opportunity that you just painted the picture for me, if that were to happen today, meaning they would want you to come in and deliver at that price, that value right now, Today, are you 100% prepared to go do it now? I wanted to say, well, sure. But the truth was I'm like, well, at the highest level, I would Need a little more time. There's some more work I need to do. I really haven't put myself there yet. I mean, there was, there was some nuance there. And he stopped me in the middle as I was justifying the reason why, and he said, it's too late. I said what? He said, it's too late, Brent. And here's what he said and this is why I shared this story. He said, if you are not preparing yourself for your next large opportunity, that next step up, like it's already occurring or has occurred, then it's too late. Now, when I speak specifically with producers, it's interesting because we may talk about the idea, a larger client or moving up, but they're not preparing themselves for it. The idea is great. Yeah, that makes sense mathematically. That could really help grow my business practically. I don't really feel like or want to do all that work to get ready for it now. There's always more work. You have to do the insurance business as you get to know someone. I get that. But understand the principle, what I'm trying to share here, that if you're looking to take the next step up and again in terms of revenue per relationship, quite frankly, this is true really in any dynamic. If you're looking to make the next leap and you are not preparing yourself like it's already happening, then it's too late. The best athletes do this all the time. When they make the game winning shot or the putt or whatever it was in whatever sport. Same is true in music or, or any high level performance of any organization, they have already done the work before you see the work being done at the highest level. To use Tony Robbins again, the best performers, right, they practice in private. What you see in public, that's what they do. They've already done it. They've already been there. So my first challenge to you is, are you as your team preparing for that next step up like it's already happening or is we'll worry about that when we get there? Well, if you worry about it when you get there, or wait till you get there, as my mentor told me, I'm going to tell you, it's too late. All right, second thing, and I've already indicated this to a degree, this is getting super clear on your future ideal client. Not a suspect, not a prospect. What does the future ideal client look like? Feel like, what do they want to. So both demographically, maybe there's a size, obviously this amount of employees, this much in sales. Right. This much square feet. And we could do a whole bunch of metrics. Right. Whether it's pnc, if it's eb. Right. It might just be the size of the group, different things. But I want to get some demographics, obviously, location, all that kind of stuff. Class of business, of course. So demographics, that's one thing. And then also to take that into psychographics, our great senior consultant Kerry Glennon says this really, really well. She talks about the head, the heart, and the hands. Like psychographic. What is it that your future ideal client is thinking about? What are they worried about? What are their frustrations? Their heart? What do they care about? Like, what's important to them emotionally? What do they connect to their hands? What are the things that they do? What are the things that their team does? Right. We're going to get a little more tangible, but, like, those are some psychographic questions to ask that are really important. I've already mentioned not only to know that part, future ideal client, but within it. What is our minimum account size or standard? What is the target account size or standard if we don't have a specific, you know, defined point in mind? Well, I think, and again, I'm going to probably get this wrong, but in the book I just read, it talked about, you know, an un. An unaimed arrow never misses. I think I got that right. An unaimed arrow never misses. Think about it. I don't know, hit something. So to have that focus is important. Of course, the more focused you are, people get worried, well, what if I miss something? What happens is, is that you are spreading yourself too wide and thin. And in today's world, your message is drowned out because you're not really standing for anything. You're not really speaking to anyone in particular. And as I share all the time, if you market to all, you market to none. So getting focus is really important. What else? Well, these all tie together. If you're going to take a step up with the higher levels and understand a future ideal client, you also need to understand what are my or our points of differentiation? What are the things that we truly do that make us unique and compelling and different and elevated in the marketplace? How are we positioning ourselves? Whether it's something that you or your agency does that no one else does at all. Maybe it's stuff that you do that most agencies take for granted or don't do at a high level, but what are they? And I will tell you, this seems like such an easy basic question until I ask new groups of producers in particular, and even agencies and leaders tell me the one thing that really jumps out that makes you and your agency different. We have people and we have really good service and we've been around a long time. We're really competitive in the marketplace and we represent all the markets. That's generic and I've talked about that in a podcast before, the generic five. We've got to go deeper. We've got to really be able to substantiate what makes us different. And I'm not going to go down a whole different track here, but we also need to take those differentiation, those differentiation points and be able to ask very articulate, engaging, purposeful questions. Which of course leads me back to preparation. These all go together. All right, what's one more thing you want to increase the revenue per relationship? I talked about obviously being prepared like you're already there. I talked about having a true future, ideal client. Focus. Talk about knowing and I'll even add owning your points of differentiation, which takes some work and effort. The last part is you need to have a systematic process that you walk these future clients through, through. Now could you get, and we see this all the time, a producer who kind of has their own thing and they AKA wing it and they're pretty articulate and they've got good personality and they know their stuff and they still write accounts. Of course I shouldn't say you have to have a unique selling process or proposition to win at the highest level. It just makes it much more likely, much more predictable and much more consistent. And from an agency perspective, it's really hard to train and develop in particular producers. But your entire team, if we have 15 different sales approaches now, every producer might have their unique style and their own flexibility and how they do things based on their strengths. But we've got to have something that we can replicate based on our model. That's our selling position or selling proposition. The way that we do things now at the Sitkins Group and working with our private client members, we walk them through a four step process. Now we go very deep in this and we continue to do practice work around it. Right? We've got tools and resources to support it. But the big part, it's named, right? It's effective, it's repeatable. That's super important to continue to go up. We have a name process. We can substantiate why it works. We, we can repeat it and train around it and improve upon it. I mean those are components that always hold true. And in our process we have an executive briefing which is your first, first deployment. Then you get into a discovery workshop and you go a little bit deeper if everything qualifies. Of course, these are for larger accounts, right? These are for the target account size. And then we get into a presentation of solutions and then we introduce a continuation process which includes a stewardship or promise report. And the goal of this is what? Well, first of all, to give the client an amazing experience based on their value system, based on what we agreed on as the defined expectations, and also the fact that not only are we going to keep this account for a number of years as a high level relationship, we will absolutely earn referrals from this because we have a very proactive approach in how we do things. That's how you go up the food chain, so to speak. And that when you're having conversations with a current client or a client, you've taken them through a process, you in fact can tell them this is some of your goal and long term goal in it because you're very clear and you're very articulate on how your process works. And we're also very targeted on how we ask referrals. Reactive referrals are great, I mean, in the sense of you must be doing something right, but proactive referrals are gold because you're setting the standard and the stage for the type of client you want to work with. Right. We've identified a list of future ideal clients that look just like this based on this relationship. My guess, at some point you probably gotten a referral that you're like, hey, thanks but no thanks. Meaning that this really isn't what I want to deal with. If we don't educate, if we're not purposeful, we're not intentional, well, of course we'll get reactive referrals which aren't the end of the world. But these again could be lowering our standard if we're not careful. All right, so the greatest indicator, your book of business, the revenue per relationship, is the greatest indicator. Growing your book of business. I just want to again challenge you and encourage you as an agency leader to find ways to continue to increase your standards. Why? Just because you want to be difficult and make life hard? No, because we know, as I said before, that you may or may not hit your goals, but you, you will always rise or fall to level of your standards. And some of these things I shared today are ways that you can begin to have some standards that are going to help you up level your book of business based on writing bigger, better, larger accounts. Now there's a whole lot more layers to this. I get all that. But I want to start today just from this key area because it's so, so important. And I will ask you too, if you are an insurance professional, you're an agency leader, you're a department leader. What I said today, maybe some other podcasts, whether it's guests that we've had on or current members, maybe Roger or Carrie, some of our my teammates on here. If things that we say resonate with you and you want to learn more about our process and how it may or may not fit with your agency's goals and of course your agency standards, we would love to have an initial conversation with you. I've said this before, we are very selective. In fact, we're getting even more selective on the agencies you work with because we want to get closer and deeper with the right fit agencies that want to move away from yeah, we're pretty good to what truly is our best version possible? What does that really look like? How do we truly get our entire agency engaged and aligned in certain areas? How can we maximize our producers and our account management team, team and our leadership to truly understand their roles? Or as we talk about their zones and maximize those zones, how can we improve our agency in terms of sales and service capacity? Are we working with the right clients? Are we maximizing their own way, diminishing asset or time? And of course, are we establishing a true set offense that we can be very intentional if these ideas, these concepts make sense. Again, it's one thing if I say it so certainly happy to reach out and go to our website and look at other agencies. But more importantly for you, if you feel like it's time to take the next step and be challenged, you want to be part of something that's very unique and very special, reach out to us. The first step is to book a call. You go to sitkins.com bookacall we'll just get to know you and you can get to know us a little bit better. We'll see if it makes sense for us to have future conversations with that. I want to thank you for listening. If you would like to give a rating and review, I would appreciate it. Always trying to grow this podcast. I love hopping on here and having these conversations with you. The Agent Leader. Please go on and do that. And with that I wish you, I wish your team, I wish your agency, I wish you all the best in your success. Thanks for listening. The Agent Leader podcast is brought to you by the fine folks, the Rough Notes Company. They are publishers of the insurance industry's leading magazine and technical insurance content. Roughness Magazine Profile Successful Agencies plus keen insights from respected experts on a host of must know topics. Rough Notes Advantage plus provides the tools to help your agency grow, providing authoritative information on complex coverage issues. Visit them and learn more@roughnotes.com Wait, you're still here? Hey Agent Leader Podcast listeners, Brent Kelly Again, I want to first of all thank you for listening to the Agent Leader Podcast and your continued support. If you would like to have more content come your way, please help us by sharing the podcast, subscribing to the podcast, telling people about the podcast, and if you as an Agent Leader are truly ready to take that next step in your agency, you're committed and want to be that best version possible agency. Don't wait. Go to sitkins.com bookacall sitkins.com bookacall we want to provide the blueprint for your agency to help you create more impact with less effort. And it all starts by going to sitkins.com bookacall all right, now you can actually go. Thanks.