24. Staffing Your Insurance Agency Dynasty

How Insurance Agency Owners Staff Profitable Multiline Agencies that are Great for Decades -- So They Never Have to Retire.

Full (Edited) Transcript

Today, I'm going to share with you about how you can staff your insurance agency in a way that makes it as simple as possible for you to grow your business profitably for years, for decades, so you don't have to retire, you don't have to leave, sell your business, anything like that, and make things happen as simply and as quickly as possible. Now, there are different rules, natural laws to how you grow an agency, and I'm going to share some of those with you today. The first thing is if you keep things simple, if you remember why you started your insurance agency, you remember there's two primary objectives you want to look at. Number one is that you get your renewal agency staffed for growth as quickly as possible, regardless of whether or not you have great production, even if you're not hitting your company goals, you want to be able to be a business owner, not an employee. For that to happen, you need to be in a situation where your agency is making money continuously, month after month, it's cash flowing, it's making you a profit, regardless of whether or not you have high levels of production.

The second thing is to then create a profitable growth plan for your agency that leads into your future. Decide how you want to grow, what positions you want to fill, and then find the people that fill those positions. Rather than saying, I'm going to hire Johnny and Betty and Susie, and I'm going to find a role for them, you want to have a sense of what you're hiring. The same way if you were starting an airline and you know I need a certain number of pilots per plane, I need a certain number of flight attendants, a certain number of people to do ground crew and baggage, and a certain number of people to do administrative and ticketing or whatever it might be. You know your roles, it makes it a lot easier. Then every other plan in your agency, I'm going to suggest to you for the rest of your career, is going to in some way follow these objectives. It doesn't mean you do not care about your company goals or your promotions or your life production or whatever it might be. It's just that these things come first. And if you look at your agency income, your agency income will reflect that these things come first.

I'm going to give you a simple analogy to help you understand the roles in your agency. These are really true in any part of business. We use specific words. We want to retain customers, we want to grow our business, and we also want to cross-sell. We use words like retain, acquire, or grow and multiline. I'm going to give you a basketball analogy. In basketball, every time you have the ball in your hands and you're within a certain range of the basket, you have a shooting opportunity. Every time you put the ball in the basket, you score. In basketball, we say every shot you make divided by the shots taken is your shooting percentage. If you make one basket and you took two shots, that would be a 50 % shooting percentage. Similarly, whenever you have a multiline opportunity, it's going to be the case that that's created because you had a PNC sale and a multiline sale is an actual basket. So multiline sales divided by PNC sales equals your multilining percentage, like your shooting percentage. Some people can score, they can multiline, and others can't and are just better off playing defense. They're better off doing service and renewals.

Those with the higher scoring percentages, the higher sales conversion ratios, should get the most amount of scoring opportunities, the PNC sales, whether they're add-ons, walk-ins, call-ins, whatever it might be, internet leads. The person who can actually turn that PNC opportunity into a multiline sale, that's the person I want doing my multiline. Now, if you cannot score, you don't get the ball, is what we eventually want to get to. In other words, the new sales opportunities that come in, if you can't multiline, you simply focus on the retention part. And if you cannot score or defend, if you can't sell our service, then you need to go. Just because you're bad at sales does not mean you're great at service. Just because you're short in the NBA doesn't mean you're a great point guard. You can be a franchise player that's like an absolute superstar that the whole franchise or the whole agency centers around. You can be an all-star. You can be a role player. But you've got to be great and I have to know what I'm getting from you. Your numbers are going to let me know who you are. Your production, your retention, all those things let me know what you're actually doing and what's relevant.

When a lot of agency owners start, some will start with one or two team members, some will start from scratch. It really depends on your company model. If you're an independent, if you're a captive, how things start. Some start out as pure solopreneurs, and they might have some people that help a couple of things, but it's mainly them. They're writing everything. Then the second stage of the business is what I'm going to call the generalist agency. Some people jump right into this. In the generalist agency, basically, we've got, let's say, two people, and they are doing some sales and some service. In this case, each of them is writing 10 auto and 10 fire, 10 homes, condos, renters, boats, liability, umbrella, however you refer them to your company. Then two life and then two-health slash annuity, whatever is your non-demand type product. They're writing 20 products that are PNC. They're writing four non-demand or multiline products. They're a multiline ratio. Their shooting percentage is 20%. Then usually there's two others, let's say if you grow an agency, or your numbers might be half of these. You might have two people, and one is like the person up top and one is like the person below.

But usually you're going to have some people that do a good job servicing, retaining business, but they don't sell any life or annuity or health or or whatever it might be disability. What happens is in this model, the agency owner has to write the for life, the for health, the for annuity, whatever it is, to hit the agency goals. There's nothing wrong with that. It's a step in the evolution. But if we took this generalist agency and got a little more specific with it, we could get better results. What we can do here is say we're going to get more specific in our role definitions, and the people that can put the ball in the basket, the people that can multiline, we're going to give them more. In fact, going to give them all of the auto and home sales. Again, your ratios in some markets, it might be three autos to two-fire or whatever it might be. I'm just keeping the math nice and pretty and simple. But so here, instead of the 40 auto and 40-fire being split up among four people, it's being divided amongst two people because we're going with the hypothesis that these two people could multiline the same percentage rate.

Now we're getting 40 auto, 40-fire, and then eight-life, and then eight-health slash, annuity. Then the people on the bottom, they're just focused on retaining the business. They want that 10% lapse rate or 90% retention ratio, however you like to refer to that. They're setting up appointments. Their basic job is to free up the salespeople and make sure they can do great at what they're doing. Because of that, now the agency owner is not needed to hit the agency production goals. The agency owner can focus on other things, new opportunities, growing the business, networking, putting butts in chairs, drumming up leads, whatever it might be. But this is not where it stops. This is where it stops if you don't have a rainmaker type. Right now, we just have two people, the multiline and the retention expert. If we can eventually get somebody that also is just awesome at P&C sales. In fact, I said also, but actually the right word is really only has to be good at P&C sales. I don't need them to sell life, health, annuity, disability. I just need them to be able to solicit business. That's a very key word.

They're stirring up business. They have centers of influence. They're hustling. They're networking. They're not just writing new business that walks in the door. They're not an order taker. They're an order getter. In this example here, the person is now adding another 20 auto and 20 fire to the agency. Now the agency numbers go up, which allow some more cash, some more ability to pay more bonuses, but also to eventually grow the agency. As we keep going down this road, we hopefully perhaps get another one of these, and then we get an even higher level, multiline type salesperson. I like to call them a client review specialist. That's the person that maybe they have their CLU, their CHFC, they're at a higher level of presentation. They could get up in front of a group of 50 people and give a presentation about life insurance, about disability insurance, about annuities. They can explain to you what a MEK is on a life policy and why return of premium, when it's good and when it's not good, and all those different things. That person, again, we're slowly, basically, if you haven't noticed, we're slowly giving off different parts that originally the agency owner was doing all of them.

As this person gets going, we're going to get more of the non-demand product sales, the life, the health, the annuity. Then ultimately, if we wanted to, the agency owner could then bring on a personal assistant slash results automator. Now, those are actually two different positions, so you can do it a couple of different ways, which we'll look at shortly. But basically what we have here is the agency owner saying, Look, I just need this to keep going. Maybe I'm about to open another agency branch and I'm going to go start with my energy there. It doesn't mean I've retired. It might mean that I'm semi-retired. It might mean that I'm starting a new location, or I'm developing a new product line, or I'm working on commercial and agricultural, or I'm working on big estate planning and large life cases and newties and retirement planning, stuff that's beyond this PNC multiline model right here. With this team now, the owner has the freedom to do the things that they want. This is where many of the age owners I work with, my father is one of them. He's a 46-plus year estate farm agent. Before that was in what?

Another company, North American Life. He now has this agency to where he's doing high-end stuff. He does a lot of the annuity stuff, the life health stuff. He's working on the third part of his CHFC. He's a lifetime MDRT. But he doesn't have to be involved for the day to day, not even the complaint calls. He's not involved. In this model here, this could be what it looks like, but you might say, Well, wait, I don't have eight people or I'm not going to get to eight people. I have three to four people. Well, you can use the same ratios or the same concept. It doesn't have to be this exact way, but this is the concept of at least being clear about how you're going to grow it. If we now take this concept and we understand that once the team is around the agency owner, the agency owner can be part of the equation, they can open a new location, whatever it might be, then we start to look at, well, how are we going to staff your agency? If you're intentional about this, you can be growing your agency in such a way where every 1-2 years you're adding either one person or a half person, like in other words, a part time person.

Many agency owners, when I suggest that say, Well, wait, that's too slow. I want to go more quickly than that. Okay, that's certainly possible, and we'll get an example is that. But I want you to think about something. For most agency owners, at least that I've worked with, let's say they've been a 10-year agency owner. Most 10-year agency owners don't have 10 team members. Most 20-year agency owners don't have 20 team members. The idea of simply adding one team member per year, it might sound slow, and yet in the long run, it's big. Here's one example here. This is a new agent, and they're starting out. Let's say right now, under where it says now here, they have one team member that does retention. Over in the middle-ish here, we've got the agency gross income. They've got 100,000 of gross income. That means that's 100,000 of income per employee. Further over to the right, the agency owner is taking home $30,000 of that $100,000. Their profit ratio in the yellow is 30%. Okay. A year later, in year one or in one year, the agency owner says, You know what? I just need somebody to free up my time more.

I'm going to do it slightly differently than the model I just showed you. I'm going to actually hire that personal assistant to really just free me up. I don't want to be scheduling my appointments. I don't want to be picking up my laundry. I don't want to be... Some of these things are very specific insurance related tasks. Some of these are just freeing you up. I don't want to be scheduling my flights. I don't want to be dealing with the groceries. I want somebody to schedule the groceries and have those delivered. It doesn't mean they're picking them up, but they're scheduled to be delivered. Whatever it is, any hour that you're investing in something that's not your top dollar work, you still could be having perhaps somebody who's a personal assistant who does not need to be trained at a very high level taking that work off of you. And so in this case here, every year, they're growing by one half of a team member. Now it's a part-time team member. If you look at the purple column, total team members about the middle of the screen, they go from one team member to one and a half to two to two and a half to three to three and a half, so just gradually growing.

The column just to the right to that, the first green column called annual agency gross income, they're doing this in a way that they're timing this in a way where they're saying, Look, each time I grow another $50,000 of gross income, I can afford another part-time team member. Now, of course, it's possible if the income grows faster or slower than this. Again, it's just an example with pretty numbers or nice round numbers. But what's happening is in year one, one year, the agency owner is now taking home 45,000. They're still taking home 30%. And in fact, down the page in this simple example, they're constantly taking home 30%. What they're doing is they're consistently just growing by a half team member. Sometimes that might be two people. It might be a person that does part time of one thing, part time of another, but they're growing in that way. That's a, let's say, new and steady. A person who wants to grow more quickly says, I'm still new, but I'm grown by one person per year. Now to make this happen, so I'm growing in this purple column by total team members, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 to make this happen profitably, I'm probably going to need to make sure that my agency gross income keeps going up.

Again, in this example, it doesn't mean the team members cause the gross income. It's actually more the reverse. It's when I get the gross income, I can afford the additional team member. But again, my agency owner income, the third column from the right, is still going up from 20,000 to 40,000 to 75,000. Let's say this is a person who's got a little more money saved or they have a spouse or partner that's allowing them to grow into this more gradually, or maybe this is a second location for you. Over time, though, the profit ratio is going from 20 % for the each owner to 25 % to 30 %. They're making more. Then this is third example here. Let's say somebody who already has three team members, and one of them does retention, one of them does acquisition, and one of them does multilining. They've got 300,000 of agency gross income. Again, they want to grow at a pretty aggressive clip. They want to grow about one team member every year. But again, they're growing really every $100,000 is their benchmark that they know that they can afford more. The agency owner actually is slowly reducing slightly their percentage because they want to grow and then eventually they'll increase a little bit more.

But overall, the agency owner still keeps increasing their income each year. They grow their team. They're able to pay for high quality people. And if you do this intentionally and if you do this in a way that is affordable, you can do this without a whole lot of stress. Most of the stress comes when agency owners get too quick with this. And so what I want to suggest to you is you can grow at whatever pace you want. This does not have to be fast. This does not have to be crazy. In fact, you want to really obey the numbers. If the numbers are telling you you've not grown enough yet, then don't hire that person. Going back to the example here, until I get to 400,000, I'm not going to hire that next part time person or that full person. Maybe I'll hire a part time person. I'll do it part of the way. This allows me to know that every single month I'm profitable, I'm not counting on my company bonuses to make me money. I know that I'm going to be good and my team is going to be good, but I can afford this at every step of the way.

I hope you find this helpful. If you have any questions on this, let me know. As always, I look forward to helping you create more impact for the people you serve and more income for you, your family, your team members, the companies you represent. Do that in less time so you can fully enjoy your family, your friends, your freedom, and your life. Please let me know what I can do to serve you and have an awesome week.

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