How return on time can create capacity for independent agencies

In addition to my work in insurance, I own a wedding venue with my wife. Recently, we had a venue tour scheduled with a prospective client. When they arrived, we immediately sensed something felt off. My wife initially figured she would have to go through with the tour, since she had scheduled this appointment and had their data open, but I reminded her we don’t have to do business with everyone that comes to our venue. We could profit from taking this business on, but it’s not a necessity and it may end up detracting from our other work. For that reason, we walked away and cancelled the appointment. This is return on time.

ROT allows an agency to work with the clients they want to work with, rather than focusing on bringing in as much business as possible. Instead of taking on accounts that may max out capacity to serve other clients, or simply saying yes to every new business opportunity, this process involves making strategic decisions to take on work that fits with an agency’s goals and style of business. This is critical in commercial lines, where good relationship building skills are essential. A ROT mindset can help an agency choose the types of accounts they want to pursue, establish the carrier relationships that make the most sense for their business model, and structure their day in a much more efficient way.

Examining the benefits of an ROT mindset

An ROT mindset can change the way an agency does business in the short and long term. In the short term, a focus on ROT provides team members with more time for revenue generating activities. Instead of having agents and producers chase down every lead possible, they can prioritize work and take time to study and understand the niches in which they work.

Typically, I have seen agencies that have focused on ROT have producers who can qualify prospects faster, lead with better hit ratios and submissions. Perhaps most importantly, these ROT-driven producers have much fewer service headaches because they have a better understanding and more experience with the particulars of their niche.

The long-term benefits are immense as well. From my personal experience, changing to a focus on ROT helped me become a better agency owner, father and husband. To make the transition, I had to take time to identify who I wanted to be as a producer and understand what I wanted to write. This clarity allowed me to embrace the ROT mindset and select clients and businesses that best fit my workflow, which translated to a much better work-life balance.

I had more time to be with my kids or to volunteer in my community and coach little league while still experiencing success at work. My stress level declined significantly and at work, my closing ratio skyrocketed around 30% because I was working with the clients I wanted to, not the ones I believed we had to accept. An agency that embraces ROT can see better ratios, stronger carrier relationships and a more scalable and sustainable business model that can lead to long term success.

What are the challenges?

Producers in the insurance industry often measure their success by volume. Too frequently, I hear agents and brokers express great pride at how many calls they made in a day or how many quotes they sent out, rather than being strategic about their work. Our culture has become rooted in this need to be busy, even when it is not profitable.

The greatest challenge I have experienced in shifting towards an ROT mindset is overcoming this focus on always being busy. Inherently, producers will push back against this model as they will see fewer quotes and less outreach as missed opportunities for revenue.

How can agency owners manage these concerns and create a company culture that embraces the transition? A few best practices include:

• Be proactive: An agency owner needs to be able to effectively communicate to their team why this new approach is necessary, what it will look like, and the end goal in a way that addresses their concerns and showcases how this can lead to even greater growth. For example, carriers may be concerned initially that they will see fewer submissions. Agency owners should proactively reach out and let their carriers know they may see fewer submissions in the months to come, but the quality will be much improved and lead to greater growth. Similarly, an agency owner would need to speak with their underwriters. Let them know to expect fewer quotes and submissions, but to also expect higher close ratios. This transparency can help mitigate stress levels ahead of such a significant shift in strategy.
• Focus on the benefits: Framing the conversation correctly is critical to a successful transition. Let producers know this is a growth accelerator and not a process that will limit their options. At my agency, I was able to provide concrete examples from my business with colleges and auto part stores. I told my team how my closing ratio was 80 to 90%, while theirs were only around 30%, and shared how the difference in our approach made up the difference.
• Celebrate the right wins: Stop celebrating how many quotes team members have and focus on wins that are relevant to an ROT approach. Focus on improved close ratios, how long it takes to quote business, and how many times you need to reach out before binding the business. Team members will see these wins and take pride in their work. This is what will drive the culture shift.
• Measure correctly: Tracking the right metrics can help prove the efficacy of an ROT mindset. Close ratio is critical but there’s more to consider. In an effective ROT system, revenue per client and retention rate should consistently increase while the time to service accounts should decrease significantly. Although this may not be as measurable, team stress should also decrease because team members will have much greater capacity in their workloads.
  

Partnering with a professional network such as SIAA can accelerate this process as well. Tools such as SIAA’s Commercial Lines Boot Camp can help train agency members to understand what it means to be intentional when qualifying prospects rather than accepting all new business prospects. They can help find the best questions to ask and provide support to measure return on time, such as submission checklists, prospect scoring sheets and more. The right network can help an agency work smarter, with more freedom and less stress.

Return on investment will always be a critical indicator of success for an independent agency, but agencies can see greater success and improved workplace culture by combining ROI with an ROT mindset. A focus on ROT can free up agency capacity, allow producers to focus on more rewarding work and better learn and embrace the intricacies of their niche. As agencies look for new tactics to grow their book of business in a challenging market, a simple mindset shift to ROT can pay major dividends, if implemented correctly.

Jerry Thacker is Director of Business Development for Commercial Lines at SIAA. Thacker can be reached at jerry.thacker@siaa.com.  

See also:

• Photos: The unfolding, earthquake-fueled crisis in SE Asia
• Insurance leaders driven to close $1.8 trillion protection gap
• These states spend the most on earthquake insurance