The All Aboard Newsletter

In today’s newsletter we’re going to be covering the agency’s growth results for June, explore using Customer Service as a revenue driver, and talk about the value of networking with other insurance professionals

Lets take a ride!

Growth Update!

In June we wrote 853 items, so we were expecting some strong growth numbers.

From a premium perspective, we grew by $336,055!

And while thats a great step forward, I was a little disappointed.

Given the NB item count from June AND that we had been growing by almost double that the last few months, the growth number was ultimately expected to be higher.

So why did growth slow down?

In September 2022, we took a pretty large rate increase. Therefore, by the end of April, all of our renewals had cleared the new hurdle.

One of the benefits of taking an auto rate that averaged 25%, is that you’re going to grow A LOT.

Its one of the silver linings that accompanies being battered with rate increase calls and terminating 500+ items per month.

But the terminations finally slowed down.

Retention improved a full 1%

And the service team is getting significantly less calls from customers wondering why their rate went up.

So even though the growth isn’t what it has been ($600k+), at least we’re through the storm.

From an item and point perspective, growth was amazing.

We’re now 1,684 items to the positive on the year!

Here is how the growth breaks down:

As you can see, a lot of our growth points are coming from Home and Auto lines.

But what I’m the happiest about is the growth of Specialty Auto and Other Property lines.

Coming into 2023, quotes outside of the Auto or Property lines were nearly nonexistant.

We’ve started to make inroads on the “Three Lines Every Time” mentality, and the results are showing.

So as we enter the back half of the year, don’t forget overlook these extra lines.

They can be a huge boon for your year-end bonus efforts, and often can be produced without any extra marketing dollars simply by cross-selling deeper into the household.

That is especially true if you’ve ignored these lines in the past.

If they have been ignored, you’re likely not losing many policies month over month, and it will allow you to grow those lines very easily.

Remember, the smaller the book, the easier it is to grow.

Think of each product line like its own book of business, then consider if it makes sense to use that “book” as a way to get to bonus.

Points are pretty safe for the rest of the year.

Calculating it manually, we’re at 25,044 points through June!

Unfortunately though, Loss Ratio continues to get worse for us

Our Loss Ratio on Line 10 Auto is:

• 12mm = 74%

• 24mm = 72%

Its unlikely at this point we’re going to be able to dig out of the hole we’re in.

We had a $840k Claim Payout Month Fall off, and a $1.3million month come on.

We can quickly see how that’s not a formula thats going to play in our favor.

We’ll be continuing to focus on improving our Loss Ratio, and will be making a hard push for Full-Pay the rest of the year.

How much revenue to expect from Customer Service.

Something I’ve been thinking about lately is the role and impact of the customer service team in the agency.

There are a couple general approaches that agencies tend to employ.

Some choose to focus fully on creating a pleasant customer experience where their number one goal is to keep the client happy.

Other people look to their customer service team as a second sales team, with the goal of finding sales opportunities amongst current clients.

But most people choose to use a hybrid strategy that is more focused on support than sales.

Whether you specialize, or run hybrid agents, it is important to know the economic impact that decision has on the business.

We’ve chosen to run a hybrid approach, with “sales-lite” goals.

The team is made up of 10 people, and the breakdown is as follows:

• Inbound Call Specialists = 6

• Onboarding Specialist = 1

• Sr. Agents (Cancel/Review) = 2

• Customer Experience Manager = 1

The payroll for this group is roughly $500,000.

At first glance, that number seems massive for a customer service team.

But 10 people, that number is probably right in line given the size of the agency.

We’ve always used a ratio of “premium to people” to determine the size of the customer service team.

That ratio ends up being about 1 Customer Service person for every $3,000,000 in premium.

But since premium varies by state, that converts to roughly 1 person per 3,400 items in force ($3million/$890 per item).

But whether that number is right or not, its a hard pill to swallow.

The idea that we need to pay $500,000 just to service our clients feels expensive

And it IS expensive.

So, what to do it about it?

Profit Center vs Cost Center

Have you ever heard the term “Cost Center?”

How about “Profit Center?”

If you haven’t, no worries.

We’ll define it!

The difference is relatively simple and laid out below:

For most people, the customer service team is a cost center, while the sales team would be a profit center.

So how can you tell whether your customer service team is in fact a cost center?

Ask yourself the following question:

“Does my Customer Service team generates more revenue than they cost me each month?”

If the answer is “No”, your customer service team represents a cost center.

I asked myself the same question!

What did I find?

Welp - Our customer service team was only covering 18% of their seat!

Ooof - Cost Center… Big time.

So what to do?

First - A decision must be made:

Do you want your service team’s focus to be generating revenue?

Or, do you want them focused on solving the problem and getting the customer on their way?

Next - If you do want them to try and generate revenue, how much revenue would you reasonably expect them to cover?

My answers to these questions are:

• Yes, I want my customer service team to generate revenue.

• I would ideally like the team to cover 50% of the total cost of the team ($250,000 in revenue).

At $500,000 for the team’s payroll, every 1% increase of their “Revenue to Salary” ratio is worth $5,000 to the bottom line.

That means that going from 18% of the seat covered to 50% of the seat covered creates a whopping $160,000 in profit.

Woah!

How do we get the team there?

Most importantly, you must ensure that your team is the right fit for a revenue generating model.

If they’re not a fit, or don’t buy in, you’re only going to be frustrated with their results and THEY will be frustrated with you and the goals.

From my experience, many customer service people will tell you that they don’t want to sell.

Thats totally fine

I don’t want my customer to sell either, thats why I have a sales team.

What I DO want them to do is protect our clients, give recommendations, and advise them on their risks.

That means they should be finding gaps, and making at least 1 recommendation on every single call.

The reframe from “selling” to “recommending” is an important one.

I don’t want my team pushing a product or putting pressure on a current client to buy something.

I don’t want my team getting bogged down in an extensive amount of quotes, because I need them there to answer the 160+ calls we get a day.

And I certainly don’t want my team to get stuck doing follow-ups messing up the efficiency of the inbound phone lines.

My customer service team is built on efficiency and speed.

The formula is relatively straightforward.

Pick up the phone, be pleasant, make some recommendations, and move on.

If it takes more than 5-10 minutes, the customer service team probably shouldn’t be doing it.

So what can they do in 5-10 minutes that generate revenue?

Here is what I came up with:

• Add Platinum and Enhanced to Policies (10% Lift in Premium)

• Add coverage and/or raise bodily injury limits

• Use Cash-On-Delivery to write ancillary products like Umbrellas, Boats, Motorcycles, ATVs, and Golf Carts

• Send Auto, Commercial Auto, Property, and Landlord quotes over to the sales team (Live transfers only - No call backs)

• Ask for referrals from clients they gave great service to and pass to the sales team.

• Generate Life Insurance Apps by passing opportunities to a life specialist or LSP

As it stands today, our Customer Service team has the following goals:

• $5,000 of added premium per month

• Add Platinum/Enhanced to 10 policies per month

• 10 Live X-sells to the Sales team per month

If every single person hit these goals, we’d be at about 40% of salary covered.

However, we’ve fallen short in recent months and have hit:

• 4 Cross-Sells per person per month

• 5 Platinum/Enhanced per month

• $3,000 in premium added per month

Thats leaving us around 18% covered, so we have some work to do.

But we’re going to do it, and here is what we think is 100% reasonable to get there:

This won’t happen overnight, but its worth pursuing, and we’re confident we’ll need to pivot over time.

Regardless, we’re going for it!

Personally, I believe that retention is largely impacted by rates, and we’ve seen that claim supported by data multiple times over the years in our books.

But if rates are the biggest lever, and we don’t control the rates…

Well, then we should focus on what we CAN control.

There are so many metrics and goals that are given to us by the companies that we work with, sell for, and represent.

But never forget, that the main goal of your business should be to post a profit and remain cashflow positive.

That gets easier when you find ways to improve the profitability of cost-centers in your business.

If you need any help calculating what it looks like for you, shoot me an email and I’ll try to point you in the right direction!

On my mind this week:

The value of networking with other agents

I’ve worked in the insurance industry for the last decade.

Until last year, I largely kept to myself.

When people would try to network, or get together and share tactics, I always resisted.

The reason why is simple:

I always felt that if I shared what was working for me, then I would lose my edge…

My competitive advantage if you will.

But that was such a stupid mindset. Like seriously dumb.

We live in a world of abundance, and besides, its not the big ideas that differentiate mediocre organizations from amazing ones.

Its all the little ideas and contributions from the team over time that combine to create a robust strategic advantage.

These are the things that are hard to recognize and quantify at first glance.

So if you think like I used to - Knock it off.

Snap out of it!

Because networking with other agents is one of the highest ROI activities you can invest your time in.

In the last year alone I’ve made new friends, learned about transformative technology, and had deep conversations around strategy that have led me to new insights and ideas.

But those are just surface level benefits if I’m being real with you.

The real benefit is that you’re in a circle of people that have the same struggles, stressors, and challenges that you do.

While I’ve always been blessed to have partners who I can rely on, and share my challenges with,

Not everyone does.

In fact, many people in the insurance industry are “Solopreneurs”

And if you’re not an agency owner, perhaps you are one of a couple people in your office.

Being around people with shared challenges and stressors gives you someone that you can share those challenges with.

Because lets face it…

Our spouses, significant others, and families don’t really want to hear about the things that pissed us off at work.

Its an emotional drain for them, and while they may be empathetic, they probably don’t really understand.

Your peers in the industry will, and do.

Its lonely at the top, but it doesn’t have to be.

Some people will have more experience than you by a mile.

Others will have significantly less experience than you do.

But we can all learn from people in both groups.

Everyone has their own “zone of genius”

That thing that they’re uniquely good at.

Its up to us to decide if we’re going to share our own talents and skills with each other.

But something that is vitally important is to take care with how you build your circle.

This is NOT where I say:

“You are the average of the 5 people you spend the most time with”

or

“You should always try to be around people who are better than you”

That advice isn’t necessarily bad.

We should all want to strive to be better.

To learn from those who do something better than we do.

But make sure you don’t pull the ladder up behind you.

Make time for people who are earlier on their journey with you, and help them too.

Not everyone is going to be able to add value right away

Some people might not be able to add value ever

Great!

That’s totally fine.

Have you always added value to everyone who gave you mentorship, advice, help, or guidance?

Probably not.

We all know the person who is constantly “upgrading” to new friends or better friends.

It sucks

So just remember: Paying it forward is vital

If you’re successful today, I’m confident you’ve worked your tail off to achieve that success.

I’m also confident that you got a lot of help from a lot of people along the way.

I sure as hell know I’ve gotten a TON of help over the years.

So make sure you do the same for others.

In closing, I’ll leave you with this final thought:

Amateur networkers only want to meet and network with people who can add value to what they need.

The best networkers take an active interest in people and connect them with people who will get value from each other.

The key difference?

They’re focused on giving, not receiving.

Do that, and it will come back to you 10-fold.

I promise

Andrew’s Picks

Have you been building your agency’s Google reviews? Some food for thought on how to approach asking for reviews: Link

If you’ve never heard of Dan Sullivan, you’re missing out. He recently wrote a book called “10x is easier than 2x” - It had a profound effect on how I view my goals and business: Link

I’ve been writing daily in 2023, if you’re looking to improve your writing, here are some tips: Link

Have a question you want me to answer in the next newsletter? Submit a question here: Link

What did you think of this week’s newsletter - Shoot me a reply with a comment, question, feedback, or something else!

I’d love to hear from you!