Rethink sales approach

During my career, I have attended meetings—sponsored by companies and featuring motivational speakers, authors of the latest books on sales and various company executives— that would generate high heat and energy. But these talks and methods did not have much effect on either production or retention.

The material was always repackaged from what someone else said 40 years ago. Although it made someone else money, it made me frustrated.

Instead of relying on this advice, I became a student of the industry and marketplace, hoping the lessons I learned might bring better insights to my business plan, improve production, retention and service.

What I learned was that simple lessons that made sense may not be academic, but were effective. By applying these lessons, my office production skyrocketed and our retention numbers improved. My agency lapse/cancellation ratio went from about 16 percent to less than 8 percent over the next 2 years, and stayed low throughout my years as an agency owner.

My starting point was my office. In the insurance business, agents have a tendency to attract people like "you." If you are in your mid-30s, the bulk of your clients will fall within 10 years either side of your age. If you do nothing to change it, over time your book of business will tend to fall within your general age and social range. Your book will then "age" as you do unless you change how it is going to look.

As an agency owner, I needed to get all of my employees to gather and use the information they gleaned from the client to enhance client loyalty and sell more policies. The first step was to get them to understand that "every call is a sales call." CSRs are traditionally trained to avoid that concept, which frustrates producers. Although handling a client's call does not have to create the sale, it absolutely must not close the door for a future sale.

Once the CSR understands they are not responsible for setting up the sale, it takes the pressure off, then they are more open to the kind of conversation that leaves the client liking the agency and the CSR feels a part of the team. The producer/agent is put into a positive position so when they do contact or deal with the client, they are walking through a welcome and open door.

You as an agency owner spend much of your time in the "business of running your business."  Perhaps some of what I learned will help you.

Keep your policy lapse ratio low

You have heard "it costs 6 to 7 times more to acquire new business than retain on-board clients." First, it is almost "free" income at virtually no acquisition costs. Second, long-term clients have far fewer losses, thereby driving loss ratios down.

My agency loss ratios in personal and commercial auto dropped to well under 50 when the target numbers were 65 to 70. Personal and commercial property-casualty numbers dropped to under 27 when the target number was 55 to 65. The profits of the companies we represented were more than substantial. My agency production bonus increased and we also raised base commissions.

These changes increased agency income by more than 16 percent in less than 2 years, with no significant added cost to the agency. My personal income went from around $250,000 to more than $500,000 annually over next 3 years. Agency income continued to increase every year until 2008, when I sold my agency and retired.

Use experienced producers and experts to create a plan

Weave together the scientific, financial and human aspects of successful business management, but most importantly, know your abilities and limitations. If you simply take someone else's advice without the internal knowledge of "you," the book you read or motivational talk you hear will collect dust. Just like a weight loss program started with good intentions that soon fades into a frustrated failure.

Your book of business will turn over every 7 to 10 years.

We had to bring in 14 percent of our base book as new business every year just to stay even. This expensive non-growth means the only way to gain revenue is control expenses and hope insurance companies will raise rates..

A healthy book has a wide range of ages that flows. Young people get older and bring their kids along; Middle-age people become seniors. You need to keep profitable age groups as clients because you make your income by keeping them as long-term policyholders. Do everything in your power to encourage them to like you and enjoy doing business with your office. This is more than just emphasizing customer service. A goal is to make clients actually enjoy calling or coming into your office.

Hire staff of all ages

If you are 40, hire people in their 20s and maybe someone in their 50s. A 26-year-old doesn't mind working with a 50-year-old if he knows there are other young people in the office.

These were the starting points for the direction in which I wanted to take my agency. There were several more but as a result of implementing these initial steps, the agency's policy lapse rates dropped to half of what they were and we wrote far more than the 14 percent of new policies we needed to grow.

We more than doubled that number from within our book. When we took on a program for writing new business, it also lowered the average acquisition cost to the agency by approximately 40 percent. My agency was growing at more than double the average of other agencies in my marketing area.