Everything you do is about getting a result and results are about solving problems. When I look at agencies and brokerages that I've worked with through the years, and talking to people about what's going on in their business on a regular basis, I see that there are some common problems faced by agencies and brokerages and these quite frankly are the problems that The Better Way System, the management and marketing system solves.
So some of the problems, let's see if you have these.
- Lack of growth. The organic growth rate in the average agency quite frankly is unacceptable. We're just not growing fast enough where we're really impacting the profitability and the value of the company. With a lot of agencies, they're growing, but so are their expenses so they're not really improving their results.
- Lack of operating profit. In the average agency today, if you take away their contingency/profit sharing income, they're not nearly as profitable as they should be. If you take away the contingency/profit sharing income and the revenue from the top five percent of their customers the vast majority of agencies and brokerages would be bankrupt. So we've got to work more on creating an acceptable operating profit, then improving contingency income go get a better result.
- Commodization is a huge problem facing all of us now. Let's face it. You've got competitors out there that are really pushing the concept of commodization. Insurance is a price only purchase. All you worry about is getting a lower price. And this increased competition is spending billions of dollars a year. Have you heard this? Spend 15 minutes, save 15 percent. There's one out there now that says you don't need to spend 15 minutes, spend 7 ½ minutes, you'll save more. You've got Google. You've got Amazon. You've got Overstock.com. They're all getting into this business but they're all driving people to think, click here for a free quote. Click here to save money, but what they're not getting is the protection, the security, the risk management plans that they need.
- There's a huge talent gap. When you look at the average age of owners, the average age of producers, average age of internal staff, there's a huge gap of bringing people into the business. One of the things we clearly solve is how to bring non-insurance people into the business and start adding some great quality staff to build our overall company. Way too many producers, quite frankly get to a pretty good level with three or four hundred thousand dollars of revenue in their book. They're making more money than they thought they'd ever make, they quite frankly quit selling and we don't have the systems and procedures in place to drive better results to motivate them, to hold them accountable.
- Automation usage is a huge problem in an agency. You're spending hundreds of thousands of dollars on your automation system and yet it gets under-utilized. Angela Adams, one of our partners in the program, a content partner, I was talking to her just this morning before we filmed this and I wanted to confirm some numbers. What percent of the system does an average agency use today? Less than 50 percent. So we have these great tools here, this automation and technology that should be driving productivity, and it really is not happening in the average agency today.
- The changing buyers. Your buyers themselves are changing. They're much more knowledgeable than they've ever been about our business. They check you out before you check them out. They know more about you. They demand more from you.
When people asked me, “Roger, why is it the better way?” I think the best way to describe why it's the better way is to take a look at the Critical Success Factors.
Critical Success Factors
The few basic things we'll do exceedingly well all the time. So what are the Critical Success Factors for The Better Way Agency?
- Culture of Accountability. Did you do what you said you were going to do? Did we as a team do what we said we were going to do? It is missing in probably 90 percent of the agencies out there, that they have a great idea. They're going to implement something new and different but people are not held accountable to do what they say they're going to do nor get the results that they have promised.
- Annual Account Review. It's really a cornerstone for the whole system that every customer receives an annual review. What percent of agencies do you think in your marketplace do that today? Maybe zero. But again it’s a cornerstone, something we'll do exceedingly well all the time. A theme.
- Knowing vs. Guessing. All too often we see that people just don't know what's going on in their company. They don't know strategies, behaviors, numbers, results, key performance indicators, whatever. They guess. When you ask them a question about their company, and say well what's happening here? What's your revenue per employee? Spread per employee? Closing ratio. The answers you normally here are...Well, it's about. That means you're guessing. You can't guess. If you're going to grow a great company, which you will with The Better Way, you're going to know what's going on and we'll talk about that a little more in depth.
- Entrepreneurial and Incentive Based Compensation. You're going to see that when we get into the models, the individual pods, the individual people will start thinking more like entrepreneurs. They'll care more about their clients and you're going to see that the vast majority of your team will be on incentive compensation. They'll be able to earn a raise by getting better results.
- Maximizing Automation. Well, we've talked about this a couple of times already with Angela Adams. What they will bring to you...how to use your system and get a better return on it will drive the efficiency and productivity to really unheard of levels in our industry. Having collaborative teams or pods that work together. It's not about one person. It's about creating team effort and teams that work together to get better results.
- GrowFit. It's the percent of growth and the percent of profit. So, if I have ten percent growth and ten percent operating profit, my GrowFit number is 20. Well, the minimum acceptable to me is 25 and I really want us to get used to that 40 and 50 number as soon as we possibly can.
- Continuation Process. Most agencies renew accounts. We don't want to just renew accounts. We don't want the annual event known as a renewal. We want to continue relationships because this is again a relationship based agency not a commodity based agency.
- Client Experience. The client experience overall includes doing annual reviews, we will be doing a risk assessment, we will be having long term plans with them, we will know them better. They're not just going to be sent off to somebody for service that they don't even know. That client experience is going to be over the top. Something where the client will really say “Wow”. Every client is going to be treated as a VIP client within the system.
- Fill the Talent Gap. Remember there's a big gap out there right now in our industry. The systems and procedures and the training will allow us to bring in non-insurance people, hire really good people and get them into our business and get success quickly.