Who is your agency's chief revenue officer?
Is it time for a new title—and combined responsibilities?
By Roger Sitkins
As you've heard from me many times now, The Vertical Growth Experience™ (our model for continual agency success and improvement) follows a specific, three-phase process:
1. Grow Top Line Revenues
2. Increase Operating Profits
3. Grow Overall Asset Value of the Agency
In terms of top-line revenue growth, one real problem that I see is that few people are really focusing on that area. They'll say that they are, but in reality, they're not. For that reason, I believe a new title needs to be created within the independent insurance agency system: Chief Revenue Officer (CRO).
Who is the person in your firm who is ultimately and fully responsible for top-line revenue growth? I'm not necessarily talking about the named sales manager (you do have one, don't you?). Rather, I'm referring to the person within the ownership group who will step up to the plate and say, "I will personally take full responsibility for growing our revenues and I want others to hold me accountable." That rarely happens, even though it's something a true leader—an agency CRO—would stand up and say.
While we all know there are countless ways agencies can increase revenue, I'd like to review a few areas that the CRO should focus on.
• Cross-Selling/Rounding Out Current Clients. What percentage of your accounts are full-time vs. part-time clients? Our studies continue to show that 66% of personal lines accounts and 49% of small to mid-sized commercial lines accounts have only one policy with the agency! I realize you've heard that before, and I know you're aware of the need to cross-sell and round out accounts in order to increase revenue as well as retention. But who is the CRO in charge of that process within your agency? Who is being held accountable to ensure that the cross-selling and rounding out occurs?
We know it's part of an agency's overall culture when we hear the CSR end client conversations with, "By the way, I see that we don't write your..." (fill in the blank for the policy types the client doesn't have with your agency). "We'd like to discuss this with you further."
• Referrals and Introductions. Perhaps you've never heard that the best prospects are referred or introduced to you (or perhaps you have, maybe a thousand times!). Let's face it. We'd all rather work with a person we meet through someone we know than with someone who calls in and ask for a phone quote. Who's in charge of that in your agency?
In a huge Blinding Flash of the Obvious, 90% to 95% of customers renew every year, yet fewer than 5% provide a referral or introduction!!! Now why might that be? Who's the CRO who drives the right behaviors—behaviors that result in referrals and introductions? This is not "New Year's Resolution" selling and marketing ("This year I'm going to…"). Who in your company is ultimately held accountable for referrals and introductions?
• Increase Revenue Per Relationship. As mentioned above, the first step is to have full-time clients only. The next step is to develop a new Future Ideal Client Profile that raises the bar on the size of the accounts you currently write. Remember, the size of your average account dictates the size of your agency and the size of your average producers' books of business. One of my favorite sayings is, "You can't become a million-dollar producer writing $1,000 accounts because you'd have to write 1,000 of them to get there." Do the math and you'll see why it's so important to boost your revenue per relationship.
• Unique Selling System. All too often, agencies and their producers stay stuck in the old way of selling (Look, Copy, Quote and Pray) and have not differentiated themselves in their respective marketplace. If you sell like everyone else does, you have a ton of competition! Do you have a compelling story that totally differentiates you from your competitors? What is your Unique Selling Proposition (you know, the unique and appealing ideas and things that set you apart from the "Me too" competitors)?
How will you know if you are unique? The marketplace will tell you! When you hear, "Wow, I've never seen anything like that before," or, "No one has ever asked me those questions before," you are unique. Conversely, if you're still hearing, "You insurance people are all the same. Go ahead and give us an apples-to-apples quote; we just want to keep our current agent honest," you are in the commodity game. You're just another vendor.
• Pipeline Management. Assuming you have a closing ratio of 75% and a conversion ratio of 75% (the percent of first appointments that move forward to the second), eventually it all comes down to the quantity and quality of at-bats. Who's in charge of ensuring that all of your producers have a monetized pipeline that is two times their annual sales goal? How often do you hold Blitz Days or Pipeline Retreats? One of our very best Sitkins members just held their 29th quarterly Pipeline Retreat. And they've been averaging a 16% annual growth rate over the last five years!
• Create Specialties. In any profession, specialists always make more money than general practitioners. Case in point: While writing this article, I received an e-mail from one of the top producers in our membership letting me know that she had closed $1.9 million of new premiums on January 1 of this year. I mention this because she works in only one class of business and is regarded as an expert. Now that's what I call a specialist!
• Network Like Crazy. We've all heard that to get ahead, "It's not what you know, it's who you know." Maybe in today's world, who knows you is equally important! Last year, one of our members adopted a laser focus on developing new centers of influence. We coached him on a process to get in the door and tell his agency's unique and compelling story. The goal was two-fold: (1) to create "rain-making introductions" to the best clients of these centers of influence and (2) to create $1 million of new revenue in one year. Well, he missed his goal. The agency did only $982,000! (Incidentally, do you think he was acting as the CRO?) This was about a 15% increase in one year.
• Top 100 Prospects. Who's in charge of your agency-wide project to identify, get in front of and tell your story to the Top 100 Prospects in your marketplace (i.e., those that match up against your Future Ideal Client Profiles)? We've had some amazing success with our members once they set their sights on their Top 100.
• Old Dog Pipelines. You may have some "old dogs" in your agency (RIP producers, Retired In Place) that simply don't want to chase the cars anymore. As we've wondered before, what if they caught one? What would they do with it? However, these old dogs probably have the best pipelines in the agency, but they never think about them any more. Shouldn't the CRO meet with every one of these producers to have them identify just five prospective accounts each?
These might be lost prospects, lost accounts or someone the producer met socially who would take their call if the producer contacted them. Once the producer makes the call and schedules an appointment, he or she could take one of your newer producers along to work on the account jointly. Often, the old dog is more than willing to relinquish the account entirely to a junior producer who is eager to do the work.
• Employee Referrals. It's been said that everyone knows at least 300 people. If that's true, then just think of the referrals your agency can generate from within! So why are your employees keeping these names a secret? Go ahead and ask your team for the names of people they know who probably should be buying their insurance from your agency.
If you have 20 employees, you're looking at 6,000 potential referrals. That fills up a pipeline pretty quickly! What if only 500 of them fit your Ideal Client Profile? That's still a pretty good start to filling the pipeline. And if your state allows it, either pay the referring employees a "finder's fee" or offer some sort of reward for each referral they provide.
The bottom line
Who is the CRO of your agency? Who is going to say, "My sole responsibility around here is net new revenue generation?" Once you've found the right person, take all other duties off his or her plate and make that the only thing for which that person will be held accountable. Have the CRO own that job. Yes, it's that important. And yes, it's your choice.
Roger Sitkins is founder and chairman of Sitkins International. Members participate in training, advising and networking opportunities focused around innovation, sales, growth, profitability and value. Sitkins International is provides intellectual property that empowers agents and brokers.