Al Diamond focuses on planning methods that will help you move your business forward.
Agents who haven’t yet formalized their plans are once again asking, 'Why do you bother with formal plans? We sell insurance and we work hard every year to excel. What difference does it make to spend all this time formulating plans and forcing yourselves to meet your goals?'
There’s no satisfactory answer for some agents. They feel that they’ve succeeded in the past 'flying by the seat of their pants' and that writing down objectives, action plans, and budgets won’t make a difference in their performance. Planning is much like following a sensible diet and exercise routine to lose weight and enhance health — if you don’t believe you can achieve your goals, you certainly won’t! Similarly, if you don’t believe that proactively pursuing objectives will give you a better chance of reaching those goals, you won’t participate in a planning process, and, if forced to do so, will disregard it when the opportunity arises.
Of course, the same people who refuse to believe that business planning is an effective tool for enhanced performance will spend months planning a vacation to assure its success. The reason that they plan for their vacations, but not for the success of their business, is Fear of Failure. If agents fear that performing the activities required to sell more insurance and build their retention rate would lead to disappointment, they might shy away from the process completely. They believe that their past successes are simply luck and that they can blame failures on others or on circumstances. They’ll enjoy the successes of their business (whether due to their efforts or to accident), but if they don’t assume the mantle of responsibility, they feel that they don’t have to blame themselves for any failures.
Another reason agents avoid the planning process is Fear of Success. Many agents don’t work full time to manage their agencies. Because they (or their parents or predecessors) have built a business that supports them in a 'comfort zone' they have no incentive to plan. To implement a plan, they’d have to extend their efforts beyond what’s needed to give them a comfortable life style. Agents with this attitude have a legitimate reason not to plan.
However, if you believe that planning toward success is a viable way of operating your agency, if you’d like a larger, more profitable business whose value keeps building, and if you’re not afraid of working to achieve these goals, now’s the time to get started!
The process is the same whether you’re a one-person operation or the head of a multi-location business with hundreds of employees. If you’ve never done strategic planning, seek professional help (you can reach us at (800) 779-2430 or e-mail [email protected]). After all, would you trust the repair of your car to someone who’s read a few books on the subject? A bad brake job can cost you your life or the lives of your loved ones. A flawed plan can cost you time, frustration, the respect of your employees, lost growth and profits, and — in the worst case scenario — your business.
Most agents who use professional planners to get started find that they can do their own planning within a few years. However, many continue to rely on consultants to provide an outside perspective on the process.
Whether you use a consultant or do it yourself, here are the steps in creating a five-year strategic plan:
1. Create Mission and Vision Statements. The owners and key managers gather to discuss what they’d like the agency to be in five years. The discussions lead to two written statements: A Mission Statement and a Vision Statement.
The Mission Statement defines the business goals of the agency in quantitative terms, such as size, profitability, area served, customer base, product and specialties. The Vision Statement describes how the agency presents itself to key players — its owners, employees, clients, carriers and the communities that it serves — in terms of professionalism, speed and friendliness of service, underwriting capabilities, marketing aggressiveness, responsiveness to community activities, and so forth.
2. Develop Strategies to implement the Mission and Vision Statements. Underline the sections of the Mission and Vision Statements that don’t define the agency’s current performance (there’s no need to strategize performance that already exists). Each underlined area requires the creation of a Strategy: what the agency must do differently during the next five years to reach a goal in the Mission or Vision Statement
3. Set annual Objectives for each Strategy. Use a reality-based approach that defines what’s reasonable to accomplish over the five-year period and what’s out of reach due to lack of time, money, or human resources. Each Objective must have an 'owner' (a principal, manager, or employee who will track its progress throughout the year). The Objective owner does not have to be the same person who implements the Objective. Creating Objectives based on Strategies avoids the pursuit of goals that are 'hot' at the moment, but have nothing to do with the Mission or Vision Statement
4. Create a one-year Tactical Plan. Including staff members (managers and employees) in this process, rather than simply dictating objectives from above, will win their commitment to achieve the goals that they’ve helped set. Employee participation in the planning process also empowers staff members to take on more responsibilities and helps the principals identify potential successors
5. Develop Action Plans. Objectives state the result desired by the end of the year. Action Plans define how to achieve these Objectives
6. Set Benchmarks. Each Objective needs a series of monthly Benchmarks that tell agency principals and managers whether the Action Plans are meeting their projected results. These Benchmarks must be objective — as opposed to subjective — measurable, and realistic.
After publishing the Plan, all those responsible for Objectives should meet at the close of each month to compare actual results with their Benchmarks. Don’t allow any changes to Benchmarks, Action Plans, or Objectives during these meetings.
At the end each quarter, hold a meeting to review monthly and quarterly results. If Action Plans have led to results above or below expectations, the owner of the Objective must alter the Plan or Objective accordingly. If an Action Plan hasn’t been implemented, the Objective owner must provide an explanation and an alternative to achieve the desired results during the rest of the year. Require participants to develop their reasons, rationales, and alternatives before the meeting.
Every step in the Tactical Plan must support a budget created by a financial manager who has a good grasp on historical revenues and expenses. Factors that can alter the budget include growth, new business, and retention Objectives of the operating departments, together with needs for equipment, personnel, or marketing costs to assure the success of the Objectives. At each monthly meeting the financial manager reports on actual results for the month and year to date (YTD), compared with budgeted revenue and expense projections (and historical monthly and YTD results from the prior year).
The goal of Tactical Planning is to project year-end financial results as closely as possible and as early in the year as possible. By the fourth or fifth year of planning, most agencies find that they might have to adjust the budget at the end of the first quarter; otherwise the results tend to dovetail with their budgeted expectations.
Whether you use a professional to facilitate the planning process or do it yourself, the first step is to get started! Success breeds success. Once you realize the effectiveness of this business tool, you’ll give the planning process a key role in growing your agency.
Opening New Territories
We often encounter agents whose growth goals require them to penetrate new geographic territories. They open offices, hire or move employees, and expect business to flow in. Unfortunately, many of these ventures can’t make headway against local agents who’ve had years to cultivate relationships in the local community. Agents who succeed in entering new markets employ a 'success template' that includes a Familiarization Campaign, Targeting Centers of Influence, and Focused Target Marketing.
The best time to move into a territory is when the local Yellow Pages directory comes out. A Yellow Pages ad with a local address will add credibility to any new business. Because the deadline for entry into telephone books is often three or more months before publication you’ll need a location and telephone number by then. However, don’t make the telephone book the main factor in opening a new office unless you expect business generated from the Yellow Pages listing to account for a substantial percentage of your book (such as Non-Standard Auto).
FAMILIARIZATION CAMPAIGN
Whenever someone sees the gecko on television they think of GEICO, even though most people don’t know what GEICO stands for. When they see or hear a duck quacking in an ad they think of AFLAC (again, without knowing what AFLAC means). These insurance companies have made the public familiar with their names — and, familiarization breeds sales: when consumers need an Auto quote they might call GEICO and when they want Health insurance, they’ll tend to think of AFLAC.
What GEICO and AFLAC do on a national level, you can do in your community.
Some 70 years ago a company president found that his product wasn’t catching on because he couldn’t get the public to ask for it at local stores.
He decided to post signs where people could see them from a relatively new mode of transportation: the automobile. Because people go past signs relatively quickly, he felt that they couldn’t absorb the message he wanted to convey on a single sign. So he placed sets of staggered signs along roadways in Middle America — and the Burma Shave signs were born. When he started rhyming the lines and making them entertaining, drivers actually looked for the signs and slowed to read his stanzas. Suddenly thousands of people were asking for Burma Shave (a brushless shaving cream in the days of shaving brushes) at their local pharmacies.
You can use the same concept to familiarize communities and target markets with your name by combining direct mail, storefront advertising, and hand-delivered flyers.
Launch the Familiarization Program with a flyer or mailing, coordinated with a newspaper ad, that announces the opening of your agency and invites people to drop by for a free gift (such as a pen, or a card-size calendar). The flyer should have an agency magnet — a highly effective long-term Personal Lines advertising specialty item — enclosed that people could put on their refrigerators.
Then mail a series of post-card sized 'road signs' such as the sample below to a targeted community on a daily basis for a week. On Monday, send a card that contains one line on a road-sign image. Follow up on each successive day with a card that adds a line to the stanza. Put your agency name and address at the bottom of the completed slogan on Friday.
Although some agents have used this concept in e-mail advertising, it can generate a backlash against 'spamming.'
Simultaneous with the delivery of the cards, place a lit sign in front of the agency (or in its window) that presents the same series of lines, one per day. People will find themselves driving past the agency just to see how the stanza develops.
By the second or third week of the marketing program, your prospects will know who and where you are, and what products and services you offer. You’ll be familiar to them.
TARGETING CENTERS OF INFLUENCE
If your agency sells Auto, Homeowners, Commercial Lines or Life/Health products, you need to make yourself well known to local car dealers, realtors, accountants, and/or attorneys.
Create a marketing plan for each of these groups to introduce yourself and familiarize them with your agency. Auto dealers and real estate offices react well to personal visits by friendly people, bearing gifts of candy or flowers. For example, you might give them a coffee mug bearing your agency logo and filled with the flowers of the season. However, a single delivery won’t accomplish much. To make these firms comfortable with you and your agency, re-visit them every few weeks. Deliver a box designed with two sections: one for agency brochures, the other for candy or lollipops. This gives you an excuse to visit and become friends with the staffers at each dealership or real estate office as you re-fill both sections. Your goal is to establish relationships that will lead them to provide you with referrals.
Although flowers and candy also work well for accounting and legal firms, these professionals need more than a drop-in. Be prepared to develop mutual referral programs with them. Present your agency as a center of influence that insures the types of individuals and businesses to which they cater — and ask them to act as a center of influence for you.
FOCUSED TARGET MARKETING
Finally, don’t attempt to offer your services to every business in the area. Being all things to all people will make you a 'specialist' to none. Market yourself to one business segment at a time (contractors, retailers, professional offices, and so forth) as a specialist in their type of business — and watch your referrals, and sales, grow.