The All Aboard Newsletter

Today we’ll explore both growth and divesture, and then talk a bit about staff motivation + morale, and how we’re doing it in a (near) fully remote environment.

As a favor, if you get value out of this newsletter, please consider sharing it. Whether its an agent, an office manager, or someone in the industry, I’d very much appreciate it.

Lets take a ride!

P.S - All Issues will be delivered on Tuesdays moving forward!

Growth Update!

In September, we grew by $915,634 which to be frank, seems impossible. Last week, I delayed the newsletter partly because our numbers were showing these results.

After some prodding, my analyst and some people from corporate believe its right. Which, if true, is pretty great. Thats a lot of growth.

My goal in this newsletter is to always be transparent - hence why when I have doubts about numbers, I point them out. I don’t want the numbers to look better or worse than they are. I just want them to be right.

So assuming those numbers are correct, we can likely attribute a lot of this growth to our rate increases starting to earn in. I’ve talked about them several times, but 13% on Home and 18% on Auto is going to add up over time.

This is especially true on property lines. Given that Homeowners retention is roughly 90.5%, and hasn’t declined even after the rate, its safe to assume that most of this growth is coming from the property book.

But given the wild variations of our DASH reports this year, I’m still quite dubious that number is correct. The math just doesn’t make sense. So, if I come back later this year and revise growth - You heard it here first.

Given the current numbers that we’re seeing, we’re on pace to grow by roughly $10,000,000 in premium this year.

We hope and to an extent expect that growth to actually accelerate. We’ve had our best NB year ever. We’re pacing to write just shy of 10,000 items and $8,775,000 in new business premium.

Then, take the 18% Auto and 13% Home rate into account, and we’re looking at some pretty incredible growth numbers.

We’ve had a lot of challenges this year, and we know that 2024 will probably be tough too. But its times like these that its important to remind ourselves that rate increases are actually one of the best parts about being in insurance.

In most cases, the rates go up, and while retention decreases, we have more premium than we did before. The larger our agency, the larger the impact the rate increase has on the entire book of business.

When we come out the other side of the hard market that we’re facing, we’re going to be so grateful for all the growth we incurred through these rates. So we just need to continue weathering the storm. Its all going to be worth it.

Take for example a $5,000,000 agency that takes a 15% rate increase. Here are a few assumptions:

• 15% Rate Increase Taken across the board.

• 2/3 of that rate is “captured” after defections.

• Growth of $500,000 is incurred by the book making the agency $5,500,000 in size.

• The gain in value is $50,000 per year in cashflow PLUS an increase in equity.

• At a .27 multiple of revenue, that $500,000 represents an increase in agency value of $135,000.

What other business is like this?

Not many, thats for sure.

At the beginning of 2023, we set a goal to write 10,000 items. We’re going to come close, but believe we’ll ultimately fall short. While we had been writing 750-850 items per month from March - August, our production has slowed down quite a bit.

Given the rate environment, our lack of expected bonus, and the fact that growth is expensive, we’re slowing down. We’ve talked about this before, and will work to get our core team’s close ratio back to the 20% (Items/Serious Quotes) we expect.

Admitting we might not hit that goal is a crappy feeling. We could decide “f that, go for it” but there is something to be said about losing the battle to win the war. We’re playing for the long term.

To compound the challenge, in November, our close rate is now down to 14%, and had dipped as low as 12% at one point. With our quote volume, and all else equal, if we were closing at our August levels of 21% we’d have an additional:

• An additional 297 Items

• $291,357 in Written Premium

• $455,245 in Annual Premium

• $78,666 in revenue (At 27% Avg NB commission)

So, with these types of numbers, it just doesn’t make sense to keep pouring gasoline on the fire. With tightened guidelines, the niche that we can write gets smaller.

That leads to more competition for leads, which drives up the price. Last year, I decided to spend more money to keep the pace. This year, we’re not going to do that.

You can see how spending 30% to 40% more on leads ($10,000 or so) and missing out on $78,666 of revenue is a losing proposition.

So we’ll wait for the market to turn. It will. In the meantime, we’ll be looking for strategic ways to keep writing business, at a profitable rate, without pounding our head against the wall.

Seeing incredible growth numbers is always fun. In any game, strategy, or business - Its feels good to advance. To make progress.

But as we all know, sometimes we need to “lose the battle to win the war.” In other words, it can make sense to make a strategic retreat rather than put the overall objective at risk.

Some people call this “Taking one step back, to take 2-3 steps forward.”

For us, that might mean its time to take some money off the table. I’ve not been secretive about our acquisition strategy when it comes to buying agencies.

We don’t want the premier, large, elite and growing agencies. We buy what Brian Klemstein from Wintrust Bank (the BEST banking partners by the way - This is not financial advice) calls “Scratch and dent specials.”

In other words, we buy small, distressed books that aren’t growing. We buy them at lower multiples, and never merge them in.

Why don’t we merge?

Because we have a goal of buying low, improving the book, and then selling high. Call us Flip or Flop for insurance.

We are great at acquiring new clients, doing it at a low price, and doing it at scale. We feel confident that through our growth strategies AND retention strategies, we can not only grow a $2million book to $5million+ in less than a year, but also keep or even improve the retention to the high 80s.

And we’ve executed on that goal. As of today, we have 5 different book numbers at the following size:

Our goal has been to keep the agencies in the $4million to $5million range. Its what many people believe is the “Sweet spot” for people looking to acquire agencies.

Its the right size to buy and merge (if you want to do that), and its not so big that it ruins the affordability for a buyer. Unfortunately, with rate increases, some of our books have exceeded that number.

But all that being said, it might be time to finally put our money where our mouth is and sell one of these books. We’ve grown them, increased bundling, improved retention. We’ve done the work.

In the past, we’ve held off selling/divesting because we were growing AND maxing out the bonuses. But now we’re uncertain on bonus, and we have large books that we’re looking to sell in a time when many people are looking to buy.

We bought all of our books around the $2million mark, and now our smallest book is the $3.7million ECP (which we’re no longer writing much in).

So, in short:

We need to buy another small book and sell one of our larger books.

This is our version of a strategic retreat. Sell an agency, refill the coffers, pay off some debt, then re-invest the rest back in growth.

But if you’re in GA (or looking to get into GA) and want to buy a book…

Holla at your boy.

Morale and Motivation (in tough times)

One of the questions I’ve been hearing a lot lately is:

“How do you keep your team motivated when the rates and guidelines are so tough? My team is getting demotivated and morale is sinking”

Its a fair question. Its not easy to keep everyone’s head up and moving forward.

That being said - Thats the job of the leader. Its the leader’s job to set the tone, and keep the team moving forward. If you’re the leader, that means you.

It means me. It means my managers. It takes all of us.

There are a lot of tactics to manage morale and motivation. The key is not waiting until things are tough to start implementing morale boosting tactics.

Morale and motivation is embedded in your culture. No culture? No chance at motivating people.

Lets dive in to the tools:

Weekly One-on-Ones

Holding weekly one-one-ones was the single best thing I ever implemented as a manager and leader. They were recommended to me by a consultant who was working with us at the time.

At first I was dubious. Where was I going to find the time?

“If you’re doing your 1:1s properly, it will stop random interruptions, give you a time to delegate conversations to, and engagement with your team will improve.”

Thats what the podcast told me that I was instructed to listen to. I gave it a shot. It worked.

Now - Weekly 1:1s are required for all managers in the organization.

Some benefits:

• Relationship building

• Dedicated time + Attention

• Understanding for both parties where they stand with each other.

I use the method suggested by “Manager Tools” which I’ll link to below. It basically says that every one-one-one should be 1/3 time for the employee, 1/3 time for the manager, and 1/3 to talk about an action plan between now and the next meeting.

They can be 30 minutes, or an hour. Many start with 30 minute check-ins, and go up to an hour over time.

Most crucially - 1:1s give a place to build a strong relationship between manager and employee. When there is a strong relationship, accountability gets easier.

In a great culture, a leader can push the team, and the team can push the leader. Its healthy conflict. Its no big deal. Why?

Because each party knows they have each other’s back.

That relationship is built in the 1:1s.

If you take 1 action item away from this newsletter - Start doing 1:1s.

Daily Huddles

Getting your team together for a few minutes every day just makes sense. It allows you to get everyone on the same page, set the tone for the day, and share any last minute news.

Think of a huddle in sports. Whenever they’re getting ready to start play, they huddle, come up with a plan, and roll. The team will do this several times per game. Huddles allow you to do the same thing.

As we stated before, some benefits are:

• Getting the team on the same page

• Setting the tone and focus areas for the day

• Gives people a place to ask questions in an open forum

• Most important: Sharing yesterday’s quote volume

Over time, as the culture of daily huddles is ingrained in the team, consider having huddles peer-led a few times per week.

We all know what its like when we hear the same person, drone on about the same things, day after day. It becomes background noise. Yawn.

Ask people to volunteer, and volunteer for people (aka they’re voluntold) that you think might make good managers. Its a low-stakes chance to practice leading, public speaking, presenting, and more.

We’re in a fully-remote environment, and we’re not on zoom all day. So our daily huddles are a chance for the team to see each other, chat, and build relationships.

On Fridays - keep it light. Have a team member share about themselves, or just have a coffee chat.

Shoutouts!

Energy is important for the team morale. And nothing brings energy like shoutouts, anthems, and direct recognition for a sale/milestone.

When we were in office, we used a service called Hoopla for a while, and later a service called Ambition. Every time someone would make a sale or customer save, it would go on the leaderboard. Everyone was able to set their own video, song, message, and more.

It was a way to celebrate after a win. A little showboating if you will.

Now, in a remote environment, we don’t have a large TV in the middle of the room to bring the noise. So we do it via message in group channels where we share the win, and some details about it. Here is an example:

More recognition never hurts. People want recognition, and they want it publicly. Shoutouts make that a reality.

But most importantly, I love shoutouts because they:

• Give a chance for people share and support each others wins

• Provide leaders a chance to bring focus to areas we want to encourage.

• These don’t have to be from managers to employees only - People can give kudos and shoutouts to each other too - When this happens, you know you have a great culture!

Training + Drilling

Training, instruction, and practice can be the difference between being in the 98th percentile (top 2%) and being average (Source - Two sigma problem).

If you want to be a top team, or you want someone to be a top performer, its going to come down to what the leaders do to help them improve.

Remember, you can teach them, train them, or drill with them.

• Teach = You talking at them

• Train = You doing it with them

• Drill = Them doing it on their own at your prompt.

People don’t like feeling like they have no way to get better, especially if they’re missing their goals. And if they don’t want to train or drill, they probably have no place on a top performing team.

Everyone needs a coach.

Everyone needs a push some of the time.

As I wrote above, the difference in a 14% close rate vs a 21% close rate is worth about $80k for us. Its worth a lot of money for the producer too.

Oh, and don’t forget to train your top producers.

One of the most common mistakes people make (and I’ve made too) is thinking that your top people just want to be left alone. That’s true for minutae and B.S. That is NOT true for training, practice, etc.

If you have someone crushing it on the primary lines, how are they with life insurance or financial services? How about commercial? What about referrals or centers of influence?

There is always something to learn, and always something to improve.

Share the vision

The vision of the organization is an important one. It shows the team what direction we’re going, and what the goal is.

For us, you already know it. To be at $100million in premiums, ideally by the end of 2028.

Thats a long-term vision. But short term visions are important too. That can be something as simple as:

• Being the top producing agency in the state/country.

• Achieving a certain level of retention and growth.

• Ensuring we create the best possible customer experience on every single call.

Share the vision itself and WHY its important.

Then, tie those two things back to the employee’s role and why their role is important in achieving that vision.

When people know the vision, they can start to see themselves in it. And often in a growing or advanced role over time.

If you’re having trouble, think about your goals for the agency. Why not share them?

If they’re strictly financial, is there a way to make it a win-win for everyone? Perhaps your goal is to hit a certain size and exit.

Thats ok. What if you said “Our goal is to grow to this size in x amount of years, and improve the skills, income, and experience of all members of the agency.”

Share your goal with the team. Tell them why you have it. Then tie it back to their individual job, goals, and dreams.

Development Plans

We made a decision several years ago that we were only going to promote from within. We will go outside the organization from time to time to hire a specialist, but if we can avoid it, we develop and promote.

We knew that when we made this decision, we needed to start developing our future leaders. One of the biggest detriments to agencies growing is the lack of middle-management and the a shortage of qualified people to fill those positions as needed.

Development should be employee led, manager supported. But that doesn’t mean the responsibility is 100% on the employee’s shoulders. As leaders, its our job to encourage growth, ask about growth, enable growth, and celebrate growth.

People often need a push, and thats ok. The manager/leader can tie the interests and skills of the employee to the vision of the company. Together, they can work to try and come up with a plan that accomplishes this.

But more importantly, occasionally its uncovered that what the employee wants growth to look like either doesn’t fit within the monetary constraints of the company and/or the future needs of the company.

In those cases, we work to help them gain skills so they can move on from the organization and find the next opportunity.

We’ve had several success stories internally, and several with people leaving to open their own agencies, or transition into tech sales.

Both are ok.

When people know that you’re there to support their goals, even if their goals don’t directly correlate with yours, it goes a long way. They’re engaged. They’re “for the cause” while they’re here.

And when its time to go, they don’t run off in the night and leave you high and dry.

Start talking to your team about professional development. Talk what, when, where, and why. And talk money too. How much money would you like to make, and by when?

If its realistic, build a roadmap. If its not, be honest.

Do whats right for the employee, and they’re going to do right by you.

And if you’re feeling like this isn’t a fit for you and your agency because you can’t provide the growth, but feel uneasy about moving them along, that’s ok. Instead what my friend (and amazing agent) Ben Bucher calls “Dream Meetings”

This is where you set financial, personal, or maybe even some career goals together. This is a way to show the team that you support them and their goals.

And when people know you support their goals, they tend to stick around.

On my mind this week:

Closed mouths don’t get fed

This year has been tough for a lot of us in the insurance industry. While some people have thrived, and found ways to win, many have been dealing with tough rate environments, tight underwriting restrictions, non-renewals, and downright closures.

Companies are changing commission structures all across the industry. In almost all cases, commission is going down, costs are going up, and there is a lot of uncertainty and doubt.

To make it worse, the chatter in the echo chambers a.k.a social media groups is overwhelmingly “doomer” or negative. I get it. Fear is high right now.

We can see that fear is high based on the number of anonymous posts that are being shared in insurance agent groups. But, have you ever noticed that the anonymous posts are almost always negative? In fact, I’m not sure I’ve seen a single constructive post by an anonymous poster.

In my opinion, anonymous post = direct signal to ignore the post. There are reasons to post anonymously, but in most cases, if intent is good and positive, its probably unnecessary.

I don’t discount their fears, concerns, anxieties, etc. I’m not saying they’re invalid. But be mindful of what you put into your brain. Negativity is contagious. Fear is contagious.

In times like these its important to talk to the leaders of the companies that you represent. The corporate team to so speak. And while it can be frustrating from time to time, its worth the effort it takes. I’ve heard things like “Its a waste of your breath” - I firmly reject that notion.

Don’t forget that people at corporate are people too. Human beings with often the same fears, uncertainty, and frustrations that we hold as well. Just because they don’t do something after talking with you doesn’t mean they don’t agree or don’t want to do something. They have constraints just like we do. Find how to make it a yes. Understand their constraints and the why behind the decisions.

But most importantly, our conversations are meant to be a dialogue. That means a TWO-way conversation. Not us complaining at them. Not them asking us for life insurance (I couldn’t help myself).

Its supposed to be a collaborative exercise. A partnership. But it takes two to tango (Us and them - and we don’t always get so lucky nor do they).

There is an art to “talking” corporate, especially at group events. Most people do it wrong.

They either make a long-winded statement where they’re simply complaining OR they just spread negativity. So, whenever you’re talking to corporate representatives:

Ask a Question or Make a Statement + ASK FOR WHAT YOU WANT/NEED

If you don’t include what you need - Don’t expect to have anything change. Many of us believe we’re being clear in what we want and need, but never actually explicitly state what it is that we’re looking for.

People can’t read minds.

Closed mouths don’t get fed.

If you don’t have an ask - are you just complaining out loud?

Be constructive.

And when they say they’ll get back to you, follow up. Don’t wait on them. They’re not avoiding you. They’re busy.

Help them help you.

Look for win-wins, build each other up, spread positivity, and eliminate fear and uncertainty.

One of the best ways to do that?

Think and talk about what we’re grateful for.

Peachy Insurance might not be getting a year end bonus, but guess what? We’re grateful because:

• We’ve had incredible growth this year.

• We’ve been able to continue writing large amounts of New business in spite of rate increases.

• We haven’t been shut down.

• We’ve hired, and developed a few new stars.

And so much more.

Gratitude goes a long way.

Andrew’s Picks

Genghis Khan was one of the greatest leaders in the world - Learn from his life on one of my favorite podcasts: Link

Manager Tools is a great resource for any manager, especially a new one, here is the 1:1 link: Link

The Two Sigma Problem is an interesting one, here is a short podcast talking about the value of coaching and training: Link

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