As a management consultant and one of the authors of The Best Practices Study, it's sometimes a temptation to become so focused on the data associated with Best Practices agencies that the larger picture of these firms becomes obscured.
I recently had an opportunity to participate in several two-day roundtable discussions with 12 large clients (each having average revenues higher than $25 million). As I listened to this group of the 'very best of the best,' several themes emerged, and they may explain why this group of agencies and many of the Best Practices agencies are so successful. It was an opportunity to step back for a moment and hear firsthand the philosophies that precede and make possible the Best Practices results. Here are a few observations regarding these top organizations:
These agencies really value their employees. This may seem a trite observation given the focus today on empowerment, bottom-up management, servant-based leadership, and so on. Unfortunately, these lofty concepts are still largely theoretical in the insurance world. Agency leaders recognize that the success of their agencies depends on the individual successes of those they lead. These agencies appreciate their employees, encourage them to reach their fullest potential, and reward and celebrate their successes. These agencies trust their employees. They also have fun; you would want to work for them.
These agencies will not compete solely on price. If you find yourself competing on a large commercial account with one of these agencies, don't expect to compete solely on the basis of price-that's not how they will beat you. In fact, they may be willing to walk away from a prospect when it becomes clear they're being evaluated strictly on price. These firms compete largely on the basis of value and are quite comfortable quoting fee-based business. The agents represent the same markets and feel the same premium pressures as the rest of the industry, so it only makes sense that they gain a competitive advantage by moving away from a price-sensitive to a value-rich sales approach. Make no mistake, these are deep organizations with a wide array of products and services to offer. As such, they routinely sell accounts without the lowest price but delivering much greater value than their competitors.
These agencies are sales organizations. These agencies are, first and foremost, about selling. Everyone sells-from top to bottom. In an environment of increased competition, reduced premiums, and normal attrition (much of it resulting from client consolidation), growth demands an almost compulsive sales orientation, and these firms have it. They structure themselves to reward sales successes whenever possible. Cross-selling is an agency priority. Producers are compensated to produce. CSRs are licensed, empowered, and compensated to support the sales efforts of producers. Young sales talent is nurtured, mentored, and provided with a proven track to run on. Niches and areas of expertise are aggressively developed and used to gain a competitive advantage.
Not only are accounts fully rounded, but these agencies find ways to 'touch the premium as many times as you can'-that is, to provide as much service (and earn as much revenue) as possible during the insurance transaction. This involves providing (or for smaller agencies, subcontracting) a wide array of value-added services ,such as premium finance, risk management, claims adjusting, third-party administration, self-insurance programs, and loss control/engineering to maximize potential revenue from each account. We all know it's easier to keep (and ideally to cross-sell) an existing account than it is to produce a new one.
It's also interesting to note the points at which these agencies are willing to depart from conventional sales wisdom. Many of them expressed a willingness to walk away from business that doesn't meet a minimum revenue threshold. These agencies don't write just anything; it must be profitable business and make sense. They know their strengths and go after business that play to those strengths. These are sales organizations, but they focus on the right sales.
These agencies achieve superior operating efficiencies. They recognize that they are being squeezed from all sides and that, if nothing changes, their profitability will decline. As a result, they focus on achieving superior operating efficiencies by being selective about the business they pursue and creating an environment in which superior productivity can be achieved while delivering superior quality. This superior quality is a product of prudent hiring, thorough training, well-developed and carefully communicated operating procedures, extensive automation usage, and effective management. These agencies don't simply hope for superior results; they set high standards and provide the necessary resources-and management makes sure that the superior results happen.
These agencies have dynamic leadership. Each has an individual (if not several) who is providing dynamic, effective leadership. These leaders are helping the organization create and understand a vision of what they want to accomplish. In words and actions, they are setting the course and creating an environment in which the organization succeeds-and so may each of the employees. These leaders make tough decisions and set high standards for themselves and for the organization. They invest a great deal of time in recruiting efforts and are instrumental in successfully identifying and attracting talented people to their organizations.
These agencies are excited about the future. These organizations are obviously planning to be around for some time. The agents don't sound defensive, lament the demise of our industry, or discuss exit strategies. The much-discussed threats to the agency ranks aren't causing them to lose any sleep. They speak of opportunities and possibilities, not fear for the future. These agencies are thinking outside the box, constantly considering alternative ways of doing business, developing strategic alliances with other organizations, developing new programs, discontinuing unprofitable business lines, and developing strategic plans to carry them into the next century. They are hiring and training promising producers, acquiring seasoned producers and their books of business, acquiring other agencies, investing heavily in technology, and providing extensive training to develop their most precious assets, their employees. These agencies are proactively preparing for the future.
We hope these observations will provide you with some food for thought. It has been said that repetition is the mother of success. To be successful yourself, find someone who is successful, identify what they're doing well (their Best Practices), and repeat it faithfully. As you do, don't just look at the impressive results being achieved-look at the business practices, business philosophies, and strategies that allow the results to be achieved. Focus on these and the results will follow.