If you own an insurance agency, your number one responsibility is to… what?
- Hire producers?
Your Number One Responsibility
None of the above. Your number one responsibility is to make sure your agency’s culture gives you a competitive advantage. If it’s your business, no one can fill the role of cultural architect but you.
In our industry, a lot of agents move from employee to agency owner; but once they have opened their own insurance company, they end up doing everything they did for their previous employer. They’re no happier, and their business suffers as a result.
Think Like an Investor
If you own an agency, you must take a broad view of your agency in terms of process, systems, team building, and technology. In short, you need to start thinking like an investor. Making this mental shift is what will take us into the future.
Some thinkers and writers refer to this as working on your business instead of working in your business. That’s a catchy way of framing the difference, but I’m not a pure believer in the dichotomy. I say it’s more important to play to your strengths. I know a man who owns an agency and yet produces around $100,000 in revenue every month. His secret? He hired his highly capable son to run the business. That’s smart.
However, most of us who run independent agencies will remain in charge. As a result, we face this unavoidable reality: if you’re going to grow your agency, you first must have the right culture. This is what it means to think like an investor. My investing partners weren’t primarily interested in my business plan (which was a relief, because I spent a whopping two hours on it). They wanted to know my vision for the company’s culture. That took nine months (and was totally worth it).
When you’re creating something you want people to invest in, the first question you should ask is, Would you invest in your own agency? Is your vision clear? Is your message consistent? Do people like working for you?
Is That Really Your Biggest Problem?
The second question you want to ask is, What problem are we trying to solve? In the same vein, the biggest problem I’ve heard through conversations with hundreds of insurance agents across the country is that most of them feel like they need a good producer and don’t know how to get one.
Sound familiar? Do you believe that’s your biggest problem?
It probably isn’t.
I recently spoke with the owner of a $30 million agency. He said he needed a new producer. I got onto his website and saw they’ve been around for close to 150 years. While that sounds impressive, they were doing an awful job telling their story. No brand. No clarity. No message.
I said, “What in the world makes you think you need to hire a producer? You have no clarity of message. Nothing distinguishes you from any other insurance company. I wouldn’t want to work for you.”
Now, I do know his company’s story. Any producer would be happy working there. My point is that you have no reason to think hiring a producer will solve your problems if you don’t know who you are. Unfortunately, this happens all the time.
A Brief History Lesson
We have a problem in our industry. The old way of thinking is so ingrained–sell, sell, sell. Few people emphasize the importance of attending to our culture. But if you’re still not convinced, perhaps a brief history lesson will help (I have to admit, I’m a bit of a nerd when it comes to the history of insurance, especially with regard to the independent agency).
About 70 years ago, people bought personal lines from captives and independents at about a 50/50 ratio. But in the 1960s, captives began dominating the personal lines thanks to the advent of the personal computer. They leveraged technology to disseminate information and share best practices while independent agents, who couldn’t afford such technology, continued working in barbershops and butcher stores. Over a 20-year period, captives took 90% of the personal lines market, leaving independents with the lion’s share of the commercial market.
Fast forward to today. Although I am an independent agent, technology gives me the ability to compete against State Farm, AllState, Farm Bureau, GEICO, Liberty Mutual and more. I can compete against them because 1) I make sure we’re not drowning in bureaucracy and 2) apps virtually allow us to do whatever we want! We can innovate better than the big companies because it takes them forever to change directions. They’re like an RV trying to perform a three-point turn. Independent agents can turn on a dime.
But while technology has leveled the playing field, the mentality of independent agents hasn’t changed, especially with regard to personal lines.
When independent agents found themselves at a technological disadvantage forty or fifty years ago, they had little choice but to punt on personal lines. They focused on commercial products where they knew they could win. Today, independent agents continue to focus on commercial lines and give personal lines to entry-level employees who aren’t invested in the business because they’ve never been properly incentivized. They spend most of their workday moving papers from one side of the desk to the other, and at 4:29 p.m. they’re waiting for the elevator.
That’s a cultural issue, and it’s one that must change. What if those employees knew their success would increase their income? Improve people’s lives? Contribute to a winning team?
You’re the Cultural Architect!
When we bring processes, systems, and technology together, we put ourselves in a position that, honestly, no one can beat. The big companies, who become bloated through acquisitions, are actually creating headaches and tumult right now. Their clients experience it and hate it. More and more fed-up customers are going to look for somewhere else to go.
Instead of focusing on buying other agencies, we can organically acquire business. That won’t come from hiring the right producer. It will come from building the right culture.
You’re the cultural architect, so get to work!