F E AT U R E
AGENCY VITAL SIGNS By Al Diamond, President, Agency Consulting Group, Inc.
Agents throughout the agency universe have asked us how they can determine the health of their agencies – in a nutshell.
of the boat and hope it doesn’t sink to the bottom of the sea. Until the water reached a vital organ, they thought they had a swimming pool.
We tell them that the first indicator is the feeling at the pit of their stomachs. It never lies, but it can be fooled in either direction. If you have a cold feeling in the pit of your stomach that something is wrong, it probably needs further analysis. Sometimes it happens when you can’t pay your bills. Other times it happens when, one after another, several of your customers that you have assumed were “safe” find other homes without giving a real reason. Something is wrong, but you can’t put your finger on it.
What each of these types of agents DIDN’T HAVE was a way to measure their VITAL SIGNS, the business equivalents of the blood work, the blood pressure gauges and the lab work that your doctor does to determine how well your physical body works.
Most agents have pretty substantial egos and will point the fickle finger of accusation toward the carriers’ actions, the activity, or lack thereof, of the employees, the market, the economy, and the clients themselves. The only person without blame is the agent themselves – for becoming lackadaisical and not paying attention to the very things that made them successful in the first place. Some of these agents have “retired in place.” Whatever the cause, after investigating and find problems within your agency, the cold feeling was right and changes need to take place. More insidious is the feeling that we fooled ourselves into believing that everything is all right, even when the indicators turn downward and go “into the red.” Countless agents have called Agency Consulting Group, Inc. when the wolf was at the door and they were at the verge of bankruptcy – too late to do anything but bail the water out
There are similar signs that are available to you to determine how well your agency works. ACG would be happy to establish them for you, give you a baseline and design a plan to resolve the problems that exist within your agency that could spell trouble for you soon or in the future. Here are some of the VITAL SIGNS that you can measure in your agency. This should be done monthly – but not just for the month. It should be done on a Year-To-Date and Rolling12-Month basis to properly judge where you stand and whether trends are changing for your business. NET GROWTH OF CLIENTS – How many clients did you have in the previous period YTD and Rolling 12? How many do you have now? We know that the market tends to harden and soften and changes the revenue that we obtain from our customers. But the agency will generally remain healthy as long as it has more clients every year. Counting clients is not easy in most agencies because agency management systems don’t provide that kind of data. But if you count active policyholders at the end of a year and then
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