What level is your agency?
The Zen of risk
By Roger Sitkins
As I continue to advise the members of Sitkins International and talk to potential members from all across the U.S. and Canada, it's increasingly apparent to me that there are various types or "levels" of agencies. I've assigned each type of agency a value ranging from Level I (Traditional Agency) to Level V (Risk Advisors). Here's a closer look at the five levels, all of which have a place in the evolution of a growing agency.
Level I: The traditional agency
This level perceives itself as a service organization more than a sales organization. It is much more of an order-taking entity than a seller of insurance. In fact, these types of agencies would consider themselves to be aggressive sales organization if they answered the phone by the third ring! They have a high percentage of single-policy clients. Why? Because they sell their prospects what they ask for. If they call-in or walk-in and ask for a quote for auto, homeowners or a BOP policy, that's what they quote. They have no formal method of rounding out that prospect.
Accordingly, they do tons of practice quoting. Their typical introductory line is, "We give great service and can save you money," which is a highly reactive approach to sales. They almost never proactively call a client. Instead, the client calls and the agent responds. They're very much the pass-through middleman vs. a value-added middleman. They're just passing the risk from the client to the insurance carrier, so they're simply transferring the risk without adding any value in the process.
In the traditional agency, everyone always says they're "very busy," which everyone else thinks is just great! It's an activity-based organization vs. a results-based organization. Also, when you talk to them about
their pipelines, the traditional agent tends to be clueless. One time when I asked an agent to tell me about his best prospects, he said he couldn't because they hadn't called him yet! Traditional agents truly believe that if they have great office signage or something on social media that drives traffic to their office or Web page, they'll have prospects.
Another way to spot a Level 1 agency is that the Revenue Per Employee is around $100,000 and their automation system is utilized at about 50% of its capacity. The good news is that the owners are making more money than if they had a "real job." (Of course, we all know that if we had "real" jobs, we'd all be fired! Is this a great business or what?) Don't get me wrong. A traditional agency is a good business; things work well and they do make some money. But they're not really growing; they're just plodding along.
Level II: Sales orientation
Level II agencies realize that sitting in the office "waiting for the roast duck to fly into your mouth" is not a true growth strategy. They honestly believe that the best day to lose a sale is the first day, so they begin to super qualify prospects. They also start to manage their pipelines and become proactive about building them. They know that at the end of the day, it's all about getting in front of people. They also start taking advantage of their natural pipelines (which they haven't done before) by contacting people they know through work, business organizations, church and other activities. They know a lot of people, but they've just never talked with them about insurance before.
Whenever we've had one of our training programs or private sessions with producers, we always ask them, "Who do you know that you haven't talked to yet about your business?" They always come up with a really good list. The really good, Level II sales organizations are aware of this and start to manage those lists. They also start to regularly schedule sales meetings that they actually hold! Many agencies have a lot of "scheduled but not held" meetings, but Level II agencies know that if they want to improve, they must get together and talk about sales.
Further, Level II organizations are excited about writing new business. In traditional agencies, the internal staff dreads "dealing with" new business because they equate it with a heavier workload. That's not the case with Level II agencies. They understand that new business is good, not just more work. Their renewal processes also begin to improve. They don't wait until 30 or 60 days before the renewal date to work with their clients; they start the process 120 to 150 days in advance.
Level III: Value-added services
At this level, we're all about adding value, so we begin talking about the Total Cost of Risk (TCOR). We're starting to realize that the insurance premiums alone are not the biggest cost in TCOR. We also believe that insurance is only one of the solutions we provide—not the only one. Value-added services help your prospects and clients manage their TCOR and make them more attractive to the insurance marketplace.
Level III agencies provide services and value well beyond the mere insurance/risk transfer mechanism. For example, they're focusing on loss control, implementing employee wellness programs and holding safety meetings. They're making the client much more aware of all the things they can and should do to lower their TCOR.
Level IV: Differentiation
Here's where we realize
that we don't want to be one of "those guys." We don't want to be associated with the crowd that's used to hearing, "You insurance guys are all the same." At Level IV, we're not only providing value-added services, we're also developing a Unique Selling Proposition (USP). These are the unique and appealing ideas and things that separate you from all other "me too" competitors. You have a compelling story to tell. It explains how you—and what you have to offer—are different from the traditional agency.
As we've discussed countless times before, the old method of "Look, Copy, Quote and Pray" doesn't differentiate you, it makes you just like everybody else. At Sitkins, our unique process is The Risk Reduction Approach™ consisting of four phases: Discover, Design, Implement and Continue. Because of it, our members have a unique and compelling story they can tell that says, "Here's how we're different."
After presenting your USP, do you hear "Wow!" from your prospects? Do your prospects say any of the following? "I've never seen anything like this before"; "No one else has ever asked me any of these questions"; or "You're the first person who has ever brought that to my attention." Accountability/Stewardship Reports are also a big part of differentiation. These explain to the client, "We did what we said we were going to do and here are the results."
Level V: Risk advisors
These are the big dogs. They've gone through all the first four levels to reach Level V and become risk advisors, not just insurance agents. As such, they are dealing with risk, not just insurance.When we deal with risk, we have to Identify, Prevent, Mitigate, Transfer, Finance, or Assume it.
There are also going to be emerging areas of risk that we'll be looking for, such as social media and cyber liability risk.
At this level, we simply must become trusted advisors that actually advise! That's why our process is focused on providing Risk Reduction plans, not insurance quotes or proposals. When prospects ask us for quotes, we tell them directly: "We don't provide quotes and proposals, we provide risk reduction solutions."
Clients of Level V Risk Advisors also have Annual Service Calendars. They know exactly what you're going to do to help them reduce their risk over the next 12 months.
As I said before, this is a great business! Every level is a good level. You can stay at Level I and do just fine, although every level you move up helps you eliminate the competition. There's plenty of it out there. Just Google the word "insurance" for your city and see how many agencies you're competing against. You know when I did an online search for "Insurance, Fort Myers, Florida" (where Sitkins International is based), I got 72 computer pages of listings. Just imagine how many listings there are for major metropolitan areas!
In terms of where you are today, what is your current level? What level would you like to attain? Where do you want to be as an agent? What's the vision you have for your agency? It's your choice. Just remember, "Wherever you are is based on the choices you've made and wherever you wind up is based on the choices you will make." Choose wisely.
Roger Sitkins is founder and chairman of Sitkins International, a private client group and membership program for some of the top Independent agencies.