Organic Growth – Helpful Metrics

In my post last week, I talked about the old concept of taking the assets (i.e., customers, employees, equipment, technology, etc.) that a business currently has and using those assets in a new or more efficient way to increase its revenue, that is now being called “organic growth.”  I also mentioned some resources that are available for agencies to use to assist them with implementing this concept. (click here for the post).

Since I wrote that post, I came across an article written by Chuck Blondino of Safeco Insurance for the Agents Council for Technology on the central distinguishing feature of  high growth agencies in his territory.  Although Mr. Blondino was focusing on personal lines agencies, his central point applies to all kinds of insurance.  As Mr. Blondino put it, “your marketing efforts should be the result of knowing where your new business comes from, and how much revenue you make from the new business, so you can focus on how to drive in more and keep more.”  The high growth agencies in Mr. Blondino’s territory did this by tracking their marketing efforts using metrics that focused on new business, average revenue per customer, and retention.

With respect to new business, its essential for an agency to know where it comes from and which types of new business sources result in the highest close ratios.  Determining an agency’s average revenue per customer within the types of customers of the agency will tell it which type of customers are the most profitable and thus, should be the focus of the agency’s marketing efforts.  Perhaps most eye-opening for me was the power over time of increasing an agency’s retention rate by only a few percentage points.  In the example used by Mr. Blondino, an agency with $1,000,000 in annual revenues would see an increase in total revenue over a 10 year period of over $880,000 by increasing its annual retention rate just 3 percentage points.  This without taking into account any new business. Click here to read the entire article which explains in detail how to track the above information.

On the subject of customer retention, Jim Schubert of Southern States Insurance has a recent post on his agency’s blog in which he suggests three ways to create strong relationships with your agency’s customers.  As with many things in the marketing area, his ideas seem like common sense, but they take effort and discipline to implement.  He suggests that you consider your agency’s customers to be like your friends.  In doing so, you will want to learn about your customers’ personal characteristics,  stay in touch with them regularly, and praise them or promote their business.  Click here to read his suggestions for how to do these three things.

If you have any other ideas on how to achieve “organic growth”, please feel free to share them with the readers of this blog by posting a comment.  In the meantime, best wishes for a Happy Thanksgiving holiday for all my readers and their families.

 

Organic Growth – What Is It & How Is It Done?

This month’s cover story for the IA Magazine is titled “Operation Organic” and reports on agencies that have been experiencing record growth rates over the past few years.  According to a survey done by Reagan Consulting of 125 mid-size and large agencies, they had a median organic growth rate of 6.9% in their revenues during the second quarter of 2013.  This growth rate was the largest recorded by Reagan Consulting since it began doing this survey in 2008 and was not dependent on the size of the agency.

“Organic growth” is a term that has been used with increasing frequency over the past several years.  Although it has a somewhat exotic ring to it, the term actually refers to the expansion of a business due to increases in its customer base, revenue per customer, or output per employee, as opposed to the purchase of or merger with another business.  In other words, its the process of taking the assets (i.e., customers, employees, equipment, technology, etc.) that a business currently has and using those assets in a new or more efficient way to increase its revenue.

As noted in the magazine article, there is no magic formula for achieving organic growth.  In fact, how that can be done will vary from agency to agency depending on the assets of the agency in question.  One agency mentioned in the article did it by creating specialty insurance programs centered around the interests and expertise of its producers.  Another agency focuses on retaining its current customers and selling new lines of insurance to them by providing value added services related to those new lines of insurance that were developed by its producers.

So you are probably asking at this point, where do I start.  Fortunately, there is a wealth of information available for agency owners and producers looking to grow their books of business organically.  The IIABA had a program at its Fall Conference titled “Taking Your Agency and our Distribution System to the Next Level”.  Click here for podcasts of the speakers and downloads of their written materials.   The IIABA has also posted You Tube videos featuring “10 Tips to Making your Social Media Outlets Fabulous.”  The IIABA Young Agents committee will broadcast a free webinar on December 6, 2013 at 1 pm on how to enhance the online presence of your agency.  The webinar will be hosted by the Marketing Process Manager for Progressive Insurance and will focus on a three step process for achieving that goal.  Click here for more information and a link to register for the webinar.

For information on how to use You Tube and LinkedIn to generate business leads, click here to see videos by Jeremiah Desmarais, an award-winning insurance marketing consultant, that give the viewer practical hands on advice regarding the use of these two social media outlets to connect with your agency’s target market customers.  If you think you will need help in getting started with your agency’s digital marketing efforts, IIAG now offers  Agents Go Digital, a program that will assist your agency with establishing or enhancing its online presence and then using that presence to market its services and increase its book of business.

Finally, for a low tech idea on how to generate some positive publicity for your agency and in the process maybe pick up some new customers, click here to read about a Ohio insurance agent’s program that she calls “Quotes for Charity.”  In a nutshell, the agency will donate one canned food item to its local food bank for each quote that it writes until it reaches a preset goal.  The tie-in with the holiday season is obvious, but that should only serve to make the program more attractive to potential new customers.  This concept can also be used to support other worthy charities in your agency’s hometown and surrounding area and can be done at any time of the year.

 

Do CSR’s Have to be Licensed?

This question came up when I was asked by a caller to the Free Legal Service Program that I operate for IIAG members (click here for an explanation of the program) if an agency employee who accepts premium payments and handles claims had to have a subagent’s license.  To begin with, since a subagent is defined by the Georgia Insurance Code as “any licensed agent”, the same rules that apply to agents also apply to subagents.  Under the Code, an agent is a person “who sells, solicits, or negotiates insurance.”  In addition, the Code prohibits the payment of all or part of a commission received for the placing of an insurance policy to anyone who is not properly licensed by the Insurance Commissioner’s Office.

Therefore, if the tasks being performed by a person do not involve the sale, solicitation, or negotiation of an insurance policy or other coverage and that person is not being paid all or part of a commission received for the placing of such coverage, that person does not have to be licensed as an agent or subagent to perform that task.  The Insurance Code helps answer the question of what tasks can be done by an agency employee who does not have a license by specifically exempting from its licensing requirements the performance of the following tasks: (i) executive, administrative, managerial, clerical, or a combination of these, that are only indirectly related to the sale, solicitation, or negotiation of insurance; (ii) underwriting, loss control, inspection, or the processing, adjusting, investigating, or settling of a claim on a contract of insurance; or (iii) acting in the capacity of a special agent or agency supervisor assisting insurance agents where the person’s activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation, or negotiation of insurance.

From the above, it is clear that a CSR or any other agency employee can handle claims without having to be licensed.  The acceptance of premium payments is a closer question, as you can’t have a sale of insurance without the payment of a premium, but if taken to its logical conclusion, this would require that a licensed agent open any mail that may contain a premium payment, which is not practical.  I told the caller that an unlicensed person should not be sent out of the agency’s office to pick up a premium payment from a customer, but I didn’t think the Insurance Commissioner’s Office would be upset by the fact that an unlicensed person opened the agency’s mail, which may contain a premium payment, or accepted a check from a customer who had come into the office to make such a payment, as long as that was all that happened.

Those agencies whose CSR’s are expected to be the primary point of contact with a customer regarding the renewal of an existing insurance policy or who want to provide an incentive to their CSR’s by giving them a bonus based on the amount of commissions received by the agency on business handled by the CSR should strongly consider having their CSR’s obtain the appropriate license from the Insurance Commissioner’s Office.

Are Employers Required to Give Their Employees Time Off to Vote?

Since Tuesday is election day this year for many city and county offices, I thought it would be a good idea to remind my readers of the rules governing the giving of time off to employees to vote.  The short answer to the above question is YES, but only if the employee’s normal working hours do not begin until at least two hours after the polls open or end at least two hours before the polls close.  Thus, if the employee’s normal working hours are 9 am to 5 pm, they are not entitled to receive time off to vote, if the polls open at 7 am or earlier and close at 7 pm or later, which is the case in most elections held in Georgia.

For more detail on what an employee must do in order to be given time off to vote, what limitations the employer can impose on the time off to be taken, and whether the employer has to pay the employee for the time taken from work to vote, please click here for my post on this subject from last November.