What's the Value of an Appointment

Welcome to the Agent Leader podcast. My name is Brent Kelly, your host. Thanks so much for joining me on another episode of the podcast. And the mission, the purpose always of the Agent Leader podcast to help you, the agency leader, gain better clarity, to build your consistency, and to make a commitment to become your best version possible. And we have a very special return. I guess we'll just call you a regular guest, Roger, at this point with us. Okay. And if you are watching via video, and again, we've been doing this for several episodes now. We're going to be doing this in the future. We'll be on video on our website and YouTube as well as all your podcast platforms. But, Roger Sitkins, welcome back to the Agent Leader podcast.

Brent, it's really great to be back with you again. I love sharing the information we have, and hopefully some people will take some things from this. I know there'll be stuff they can take but actually do something with to impact their agency and their life. Other than that, it's a great day.

I agree. And as always, but this is with any guest or any podcast. Hopefully you're taking some notes. But definitely today, make sure you've got pen and paper handy. Take some notes. Roger is going to be sharing today a breakthrough that he had. And some of these things, these breakthroughs are, you know, it's something that. Maybe we've talked in different ways about it before, but there's a new light on this. I think it's really going to be impactful. And so I shouldn't. I shouldn't even say it's. I think it's going to be impactful. I know it's impactful. And I also know that Roger's got more insight on this that I haven't even heard yet. So I'm excited to hear more about what Roger's coming up with and this breakthrough. Before we get to that, I do want to mention that, Roger, we do have something that's coming out this fall of 2021 that we're pretty excited about, and it's called a book. So, Roger, we have a book coming out. Do you want to tell the audience just a little snippet?

Yeah. For years and years, people say, why don't you write a book? Why don't you write a book? And I don't really want to write a book, but Brett and I have collaborated now, and we have a book coming out. It's called Best Version Possible. It's how do you, as an agency, become your best version possible? And in the book, and it's a short book. Okay. It's what a lot of people call an airplane book. On a leg of an airplane you ride, you could certainly read it. But we're sharing our key strategies that we know that will truly impact an agency. And so we're excited about best version possible be coming out soon, and it'll be New York Times bestseller or whatever. But no, we're very excited because we're getting the basics. And as you know, and I hope your podcast listeners know all the time, that it's about doing the basics at a really, really deep level. So we're excited about it.

Yeah, you know, it's been a fun process, I think, like anything. And if you've ever written a book, probably most of you haven't. But if you have and you talk to people that have written books, you learn a lot about yourself. Right. And what you're out there doing. And this really comes back to our mission just to have an impact to as many independent insurance agencies as we can. And to echo what Roger said, we are so excited about this coming out. You'll hear more about it in coming episodes and certainly in our materials. So with that, I want to get into the content for today. And, you know, I love spending time with Roger Sitkins for many reasons. He's been doing this for a while, to say the least. And it's had a lot of impact on agencies and just so many different experiences. And so when Roger ever texts me or calls me or in this case, we were being part of an event or doing something together, and he says, brent, I got a breakthrough. I got to share with you. I'm always like, oh, okay, what's the breakthrough? And this was really all about the value of an appointment. And Roger, I don't want to steal any of your thunder and just maybe if you could talk about kind of how you came about this topic of what is the true value of an appointment and the impact it has for producers and agencies?

Sure. And I have some notes here. So I get the exact thing in a project that Brett and I are working on, which is coming out soon. It's even bigger than the book. But I was looking at the best practices numbers. I said, okay, what' really going on in an agency today? And what are some things that maybe people aren't looking at? And something that we talk about all the time now, of course, is tss time spent selling and how do we get our producers in the green zone versus the red zone. And of course, green zone are doing the four key money making Activities that producer should do, sales, the continuation process, relationship management and pipeline building. And that's green zone stuff. But then I said, how can I even take it deeper? So I started looking at, at producers within an agency. And I looked at 2.5 to 5 million, then 5 to 10, then 10 to 25. And I just want to say, what's really going on? So looking primarily at the first couple of categories, and I said, all right, what is the average producer's book of business? Now, again, these are best practices, so they're going to be better than maybe quote unquote, the average. But a best practices producer at that level has a book of business of 634,000 and change. So I just said, let's just round it up to 650,000. All right? And the producer makes on an average compensation blended between new and renewal. Producer makes rate at 30%. So an average producer is making a little over $190,000 a year. Okay. And then I said, all right, that's interesting. That's pretty good money. But when they're in the green zone and when they're on an appointment, what is it worth to them? So I said, all right, let's just take the average producer and let's say they work 45 weeks a year, seven weeks off. And some that's way less than what they work and some that's way more. But I just, let's just be kind and say 45 weeks, four appointments each. So the producer has 180 appointments basically in a year. All right? And I said, wow, let's divide that out. And rounding things off to make it easy, we can basically say that a producer personally makes $1,000 for every appointment that they're on, $1,000 for every appointment they're on at a 30% commission rate. And then I said, well, what about the agency itself? What does the agency make? Well, an average agency in best practices, their EBIT is rated at about 25%. Now, the larger agencies is a little bit less. But let's just. Again, rounding off here. We don't have to be specific. It's a 25%. Well, in our business model that we work with our clients on, our goal is to get it a 30% profit. 30% profit. So at a 30% profit, an agency has, has it in, has. The agency is going to make $1,000 profit on the producer's appointment. All right, so the producer makes 30,000, 30% personally. But the agency, because they're operating at a 30% profit, would also make $1,000. But again, it's profit to the agency. Then I said, holy smokes, what is that worth? Well, in today's multiples, that's worth 14 times. So $1,000 appointment increases or certainly has a value in the agency valuation of $14,000. I said, okay, wait a minute. This is pretty cool. And something you and I talked about on the unnamed project is that agencies, you know, your agency is not a penny stock. This is a big deal. And for the vast majority of agencies that we work with, their agency is their largest or certainly close to being their largest personal asset. So then I start thinking going back to the basics, all right? Tss. Time spent selling every appointment currently in their current business model gets them about $1,000 to the producer, $1,000 of profit to the agency, $14,000 of value. Well, something that's become very, very sticky, and we've talked about it on the podcast several times now, is your current business model is perfectly designed for you to achieve the results you're currently achieving. Well, what can we do to increase the number of appointments and still have that same rate? Say, hey, producer, why wouldn't you go on more appointments? Now, these are quality. Why don't we spend more time in the green Zone? Why don't you understand that every appointment you go on is worth a thousand bucks doing what you're doing? And so if you will increase the number of appointments and their appointments with clients, future ideal clients and centers of influence, and you're getting even better results because you're working on better accounts. You have a higher retention, you have a higher closing ratio. What can that wind up being worth to you? So the blinding flash of the obvious is rounding off. I've got exact numbers, but let's just round it off. 1,000 bucks to me as a producer, 1,000 bucks to you, profit as an agency and $14,000 of value. Wow. Where could we take it? So it's really been impactful. We've shared this now with a few of the agency leaders. In fact, when we're done recording this, we're having a session, our CRO Chief Revenue Officer session, with a bunch of our clients today, and we're going to be going in depth with them on this, too. So it's, to me, it's just one of those blinding flashes of the obvious.

Brent. Yeah, my question behind that, Roger, I mean, you obviously, you've been doing this for a while, as we talked about, and we've talked even in different podcasts of time spent selling in the green Zone and The red zone. But why do you think that more agencies don't understand or maybe producers? It could be both. And why do agencies and producers not really understand the value? I mean, because as you say that I'm sitting here writing numbers down, I'm like, well, I think we know. I think we know where we need to focus. And it's just like, oh, well, yeah, you know, appointments are important, whatever. So why is this so missed? I mean, that's my question to you for doing this so long.

Well, good point. I've been doing this for so long, this is the first time I thought of it. And I, you know, my life is about how can I impact agencies and their results. So. But it's the first time I took it this deep. And one of our favorite acronyms now, Delivering excellence in every Process. It's are we going deep enough in our thought? So it's just never been necessary. Plus, the other thing is that it's simply a great business that you don't have to do much of what we say and you're going to do. Okay. You'll have regrets later on. You remember the thing we've talked about, that if your goal is regrets, stay the course. Okay? But when we look at this and take this even deeper, let's say the agency's at a 25% profit, not 30. Not our model, by the way. That's right where the average best practice agency is today. Their profit again, 25%. Larger agencies, 21. Well, at a 25% profit, the appointment has a value to the agency of $880. So that's still a little over $12,000 of value. But then let's back up to the basics. I'm only seeing four appointments a week. And that's what's shocking to me. What are you doing as a producer? I mean, if you're saying clients, future ideal clients and centers of influence, and four appointments a week. And we've been challenging people on this recently to take a hard look at this. Everybody listening now or watching? Now, if you're a producer, pull out your calendar and just see what you've got booked for the next two weeks. Okay? Agency principals, sales leaders, challenge your producers at your next sales meeting. And I certainly hope you're having those every week. And as we get around saying, that's not spelled like weekly with an A, it's a weekly sales meeting. Okay. And are you challenging people saying, how many appointments did you have? What percent of the time were you in the Green Zone doing Green zone activities versus in the red zone, hiding behind activities or caught in the service trap because you're not using your high performance team well. And so again, it just comes back to whether you're a 25% profit or 30% profit, which you should be. Okay, what is the value of the appointment and what this also points out, Brent, that we've talked about so much now, every hole in your calendar as a producer is a lost opportunity. Every hole in your calendar, if your goal, like in our case with our producers, perfect schedule, it's to have Monday as the prep day, Tuesday, Wednesday, Thursday. We have a morning, a noon and an afternoon appointment. We've also got a floating appointment out there that we use for a major relationship event. Okay, so those are 10 appointments right there. The other one that's crucial and producers are still missing this one is if you believe that relationships are what it's all about and you know that when you pump, pick up my phone and just call someone, it's amazing. So what our best producers, the highest performers are doing now is they also have an appointment with themselves on Tuesday morning and Thursday morning for reach outs. So as part of their Sunday review, which I certainly hope they're doing, the producers are saying, Tuesday and Thursday, I'm going to identify in my Sunday review review. I'm going to review, identify who are the people I'm going to call on Tuesday and Thursday just to pick up my phone and talk to them. Okay, so in that case, now we're from 10. We're up to 12 appointments per week we should be doing. And then we say, but an average producer is four. Let's say five. Okay, so how many opportunities are they missing? So again, every hole in the calendar is a lost opportunity. And we know that nature abhors a hole. Okay, if there's a void, it's going to get filled with crap. Can't resist attracting paper and processes and junk versus saying, doggone it, when I go out there, I'm earning money. And the analogy I've heard you use, and I love it when you share it with our clients, our friends, is you say, look, it's like having a basketball game, a basketball team or a football team where the players are only playing two of the four quarters. You only score points when you're in the game. Let's get them in the game. And when we talk to producers and say, where would you rather spend your time? In the office or on appointments, whether they're virtual or in person. And I love doing that. And by the way, the service staff Loves it when the producers aren't there. Also, when we get them working as a high performance team. And our ultimate litmus test for the third or fourth time is the producers are in the green zone 80% of the time. Brett, what if we just got them to 50 or 60% of the time? It's amazing. It's amazing.

Well, as you're saying that it goes back into the numbers that you added to the kind of the common sense of, yeah, we need to get out in the game. Right. We've talked about that. You see that in producer planning. And most of them go, oh, yeah, I get it would make sense. You start to add value to it. It's like, you know, I'm sitting here, I wrote down like every hour, like every missed opportunity or calendar. I said, I really hope you enjoy those emails. I really hope you enjoy that social media post. Really hope you enjoy that, you know, busy work, that service work that you're doing at, you know, 1:00pm on a Wednesday, because it just costs you X amount of dollars. And, you know, and I wrote down too, and this is something we stressed before, Roger, on these podcasts is what's more important as a producer. I guess that's what, you know, I'm getting at, is I'm sitting there going, well, if, as you said, look at your calendar. If I look at my calendar next week or I'm not filling up my calendar for next week with these appointments, as you said, with clients, future ideal clients and centers of influence, what do.

I have in there?

It's more important because I would actually be curious to know. Well, I don't know. I've got stuff. Well, that stuff is not paying you. It's not paying the agency. It's not providing you opportunities to do the things that you want to do, to serve your clients at the highest level, to serve your community, to give back to your family, your church, all those kind of things. When you get into what is it really about? Because you determine that next Tuesday I'll just see what happens. And it just doesn't work. And I've got to add one more sports analogy. I don't know if this is good, but, man, I do love sports analogies, especially during football season. Roger. But it kind of hit me. It's like, I see producers, you think about football team, you've got your offense and your defense, right? And certainly get to higher levels. Usually you've got people that play one side or the other. But I sense the producers are like always playing defense and they're Just kind of getting pushed back and pushed back and pushed back there. And you think about teams where it's like, boy, it's really hard to score points when you're always on defense. Yeah, I think that's what happens with a lot of producers. They're playing defense all day. It's like they're never out there trying to score points. So different. A different frame on that, on that analogy of sports. But anything to add to that, Roger? I know there's some.

Yeah. I mean, are they playing defense or are they just sitting around standing in the middle of the field, waiting to see what happens?

Maybe they're just roaming. Right.

If you start the week wondering what's going to happen, you're going to have chaos all week. You're going to be in that hysterical activity on the way to the grave, and you'll hide behind activities and look, it's not a perfect world. And in my analogy here, I'm just saying just 45 weeks and just four appointments a week is what's going on. Now. Get it to 5, 6, 7, 8. Get it to 10, get it to 12. Because if you can buy in that, you only score points when you're in the game. I use the analogy to. I like to fish. All right, don't do it enough. But I like to fish. Only catch fish when your bait is in the water. All right, Leave it out of the water. It gets pretty stinky.

Okay?

And so when we look at this and just say, wait a minute, if I'm getting pretty darn good results now, not really playing the game full time, what would happen if I just got in three of the four quarters? What if I got in all four quarters? It's really amazing what happens. And producers, I mean, I'll back up. There's certain things you do that you earn pay, and there are certain things you do you don't earn pay. We've talked about this all the time. And so if we can say when we identify those 10 or 12 blocks a week that are paid time, we just can't violate pay time because stuff happens. And there's the emergency in flight and there's all the stuff you have to do to get ready, but the key is just don't do no pay activities during prime pay time. And if you can just get that as a mindset. We talk about mindset so much with our last podcast, a long one on mindset. If the mindset is I've got to be in the game during pay time, and they just bought into that and started challenging themselves. And in their Sunday review, look at and say, okay, how much pay time did I have versus no pay, and was I full time in the game? Most aren't. Yeah.

It's such an important question. And again, the thought process, too. And you're given the value of an hour, the value of an appointment or however you want to look at.

At it.

It's like, you know, just think about in reverse. I think one of the problems is there's not enough pain, right? Because we don't. They don't. You don't see it as much right away. And then it. And you look back at the end of the year or whatever, and you go, gosh, what happened? But could you imagine if a producer started with X amount of dollars, whatever their income goal is, and every hour that they were doing something other than what they were designed to do, which is produce, you took $1,000 and burn it, right? And took it out of their. Out of their account. You go, wait a second, don't do that. In essence, that's what's happening. It's just we're looking at it a little bit differently. So. Well, Roger, again, this, to me, is this is one of those, you know, breakthroughs. Again, you said you've been doing this a long time. Obviously, we know that. And even for you, you're like, gosh, I haven't thought about it in this way for an agency. It's my last little. My last question, so to speak. Or you can add on to some things. If I'm an agency leader, right, Obviously, this is the agent leader podcast. And I'm sitting here going, okay, this is insane, right? And hopefully some of you are thinking, this is crazy. And I haven't really ever even thought about this level of how important this value is of appointments. I mean, again, I subjectively know it, but I haven't really put an emphasis on it like I should. And they go, okay, I need to start doing something. What would you tell them?

Well, number one, it starts with awareness and to have an open discussion with the producers. Get every producer to say, okay, what's your personal compensation? What are you earning per appointment now? Because what will happen is some of the producers are certainly going to be having much less than a 600, $650,000 book of business. So they're going to say, well, guess what? I don't have many appointments, and I'm making this much money. I'm making $3,000 per appointment. It doesn't work that way. Get down to the basics of Understanding it. And Brent, there's one other big breakthrough I haven't even told you yet because it was additional research this morning, all right, looking at the best practices and said, okay, is an agency vulnerable if the producers are not producing? Yes. We talk about producer recruitment starting at home. Yes, get them in the game. But here's another big vulnerable one, best practices study. One of the metrics they look at is the 10 largest accounts in an agency, okay? In the 10 largest accounts, if you look at that two and a half to $10 million range, the 10 largest accounts in the agency are 15% of their revenue. In 10 to $25 million range, it's 14% of their revenue. Okay? That's a pretty big number. That means that if an average agency lost a very small number of accounts, what happens to their profitability and their value? And then you also take, all right, what about contingency income, profit sharing income? How much of their revenue comes from that? Well, in the two and a half to $10 million, it's 9% of their revenue. And the 10 to 25, it's 7% of their revenue. So if you combine their 10 largest accounts and their contingency, in the two and a half-to $10 million income agency, it's 24% of their revenue. So if YOU lose 10 accounts and have no contingency income, you've lost 24% of your revenue. You're out of business. On the larger agencies, the 14% and 7%, it's still 21% of revenue, okay? So when I look at this and I say, oh, my gosh, what, what's going on here in the agencies? And this is also interesting. If you say, okay, it's 24% for that first category, but their EBITDA is 25%. So there, it's just these numbers just blow you away. And one of the things we see with small growth agencies, okay, is they just don't know their numbers. They don't know their numbers. And we've talked about this all the time, especially in our leadership program, when we talk to an agency and ask them some of their key performance indicators. Basic one of. All right, what's your revenue per employee? What's your spread per employee? The minute I hear, well, it's about. They don't know their numbers. They don't know their numbers. All right, I was talking to a gentleman this morning who's just recently retiring from a big agency, about 18, 19 million in revenue. And I was just asking him about some things. Tell me about your Agency a little bit more. He knew his numbers, Brent. That's why I was a little late getting to the podcast to start recording. He knew his numbers. He was telling me his profitability, their growth rate, their retention rate. They know their numbers. So what I would do as an agency leader, I would challenge our agency leaders. Listening is, number one, are you vulnerable? If you lost your 10 largest accounts, are you in trouble? And we know from 80, 20, you lose your top 5% of your customers, you've lost 50% of your revenue. Why aren't people aware of this? Okay, so just some more thoughts here to say, know your numbers, know the value of an appointment, know how many appointments per week your producers are having. You'll be shocked.

Thank you for the final breakthrough. I was really. And then again, there's a lot of things I could comment on, but it really all does come back to these. You know, we talk about relationships, relationships and value and deposits and, you know, this, Roger. We do our camps oftentimes last producers. Well, what would you do if you only had a few or one of your top clients? Oh, I would do all this kind of stuff. Why don't you? I don't know. I'm busy. Okay, well, what are you busy doing? Right. It just comes back to the central theme of this, and I do love the aspect. It's something I share all the time. That you just hit it right on is that when we have greater awareness, right, in this case our numbers, we take better actions. I think one of the biggest problems we see is that, yeah, if I don't know or I've got blinders on or I don't want to see because I'm afraid or scared or busy, whatever it is, then I won't react in the right way. Or in many cases, we don't even know the pain's there. We haven't fully felt it. And that's where growth comes, is, hey, I'm going to be honest and real with what it is. And as you said, you know, those top clients, the fact that, you know, the dollar per appointment, I mean, they're all real. We just oftentimes don't even know them. And because of that, it costs us a lot of money and a lot of frustration. So, Roger, thanks so much for joining me today. And if you have any final thoughts that you want to share, feel free to do so. But I do want to mention to the audience here, you know, we have just started, and we've mentioned several of the training programs. We've just started our next Round of training programs with a number of different agencies across the country. It's. I know, Roger, for you, for me, it's one of my favorite things to do is we get to see smiling, learning faces every single day, whether it's in our leadership or sales development. Sales leadership, our producer, account manager for service reps, monthly sales meetings that we run. So we're consistently in front of agencies and trying to share some of these ideas and have roundtables and have peer discussion. And this is all part of our all inclusive model. And I mentioned this before, but if you're an agency and you, you know, I've got maybe one producer here or a person here that could use this, or maybe I could have this. That's great. But what if you could get your entire agency to understand some of these key principles and strategies that simply work? And that's why we believe in a holistic process and we believe in a consistent process that we can continue to walk down the line. We believe in building a community. So it's not just you alone, it's your team, it's us as coaches, it's other peers that are dealing with some of the same things that you're dealing with. So all inclusive model right now is closed, but you can get on the waiting list and it's a great idea to do that. As our next round of programs will start at the beginning of 2022. Now is a great time to get ready, get prepared to go. So if you go to sitkins.com aim for all inclusive model. You again can learn about the program and get yourself on the waiting list. So you're ready to go to make 2022 truly an incredible year. Your best version possible. Right, Roger? So with that, any final thoughts to you, to the agency leaders out there?

Yeah, one big one. Name of the book, Best version Possible. You just mentioned it again. This is something that hit me about three or four weeks ago and I've been sharing with agency leaders now and individuals. Stop negotiating with your best version possible when you know what the best version possible looks like. And certainly, hopefully some people have had some breakthroughs here today. Listening. When you know what your best version possible is, why are you negotiating with it? Make the commitment to be the best version possible so you have no regrets later in life. It is your choice.

Thanks, Roger, so much for your insight, for taking this principle, this idea of the green zone and putting some real numbers around it that people can grasp and do something with. And again, we would love to have future conversations with you to help your agency truly be that best version possible. So all the best. And your success. Thanks for listening.