In the 1800s, Vilfredo Pareto, a businessman and mathematician, developed the 80/20 rule. He noted that 80 percent of Italy’s income went to 20 percent of the population. In the mid-1930s, business experts resurrected the theorem and applied it to business–80 percent of your revenue comes from 20 percent of your clients. The concept has basically held true throughout the years.

If we follow this principle, 20 percent of agencies write 80 percent of the business, meaning that 80 percent of the agencies share in only 20 percent of the marketplace. Scary thought, isn’t it?
Do these agencies have better salespeople, access to better markets and carriers, or do they advertise more? Have they found miraculous sales training schools? No–these agencies are like every other, except the key difference is planning.
Pareto’s principle holds true for business planning–only about 20 percent of businesses take it seriously. The same 20 percent focused on planning is writing 80 percent of the business in their areas.
Nearly everyone says they “plan.” The misnomer is that a budget equals a plan. Many agencies have a budget they develop each year. Unfortunately, it is usually a reworking from a prior year. Budgeting is a mathematical process, not a plan. Serious planning involves all employees–a 6- to 8-week process annually. Here are some steps to take:
1. Obtain input from all staff on upcoming needs, desires and dreams
2. Have department heads assimilate such input and make a prioritized list for their specific segment of the operations
3. Hire an outside moderator to run a 1- to 2-day offsite planning session
4. Achieve consensus from the group on specific agency-wide and departmental projects for the upcoming year
5. Prioritize the list and identifying projects to be undertaken
6. Coordinate the planning decisions with the budget
7. Put tasks and projects into an action plan for ongoing management.
Oops! There’s a joker in the cards– marketing. Of the agencies that hold strategic planning sessions, Pareto’s principle comes into play again. Only 20 percent of those agencies also plan marketing. Most merely set sales goals with commission and bonus plans to motivate producers. Again, they rely on numbers–not creative thinking and strategic implementation. Ask these questions each year:
>> Have you investigated new niches for producer passion and carrier interest? How can you expand your niches? Do you need more producers? How will you integrate new producers into your culture?
>> Have you reviewed advertising for quantitative and qualitative effectiveness? Are you placing advertising in the right media? Have you targeted your advertising to specific niches, or do you expect action from “brand” or “generic” advertising? What promotions are you planning?
>> Do you have materials and displays for presentations, conferences and conventions? Will you conduct education workshops for clients and prospects or host a client appreciation event? Do you have templates for sales letters, PowerPoint presentations, brochures and other materials specific to individual niche markets?
>> Have you met the news media in your area? Do they ask your agency for commentary? Are you sending press releases to support your brand and sales?
I know an agency that is moving from good to great because they are willing to change their marketing. It became apparent at a planning session that the advertising was primarily a branding variety. They already had a solid brand identity in the area. We developed a new advertising template, reinforcing the brand. Then we created content for 10 ads, each focused on a unique market segment. The ads rotated in area newspapers and magazines, each a call to action, increasing new prospects. They feature a person representative of the industry niche with testimonial-style, first-person ad copy. We also advertised in nontraditional media within each segment: association newsletters, industry trade magazines, Internet resources, etc. This was more effective and less costly. Another agency decided to go after governmental entities by focusing on workers’ comp coverages. Much effort went into planning and strategizing before anyone knocked on a door. Less than a year later, this agency is writing 75 percent of the municipalities and counties in its area. Plus, the workers’ comp entr?e has enabled this agency to pick up the health and employee benefits business, too. The key was creating resources to help these government organizations mitigate operational problems. It has been easy to pick up agent/broker of record letters and literally write the requests for proposals on behalf of the entities.
To paraphrase Dwight D. Eisenhower, “Planning may not win a war, but lack of planning will definitely lose a war.” Operational planning is important to your organizational success, but planning efforts on the marketing side are critical.