How an Independent Insurance Agent Knows When to Grow

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    As an independent insurance agent, being small and personable is your strength. And what a strength it is.

    A 2017 survey by the Independent Insurance Agents and Brokers of America found that the majority of P&C premiums (35.5 percent of personal and 83 percent of commercial) were secured by independent agents.

    In fact, many experts preach that you should always use an independent agent over a captive agent. As Syncfusion’s Robert Lynch points out, an independent agent will help you get the best price and provide the best service.

    Like other small businesses, your company’s size makes you an important part of the economy. Jose Vasquez, CEO of Quez Media Marketing, gives four key reasons why:

    • Small businesses increase competition and can innovate stale industries.
    • They hire locally and can be a huge driver in job growth.
    • They are inherently more diverse — and the more diverse the economy is the better it can withstand tough economic conditions.
    • They can sometimes fail, which is actually a good thing as turnover offers entrepreneurs a chance to learn and regrow.

    No matter how small, though, success will compel a moment at which the business must grow. In the words of Jeff Sauer at Jeffalytics, “If you’re not growing, you’re dying”.

    While this may come across as extreme, Sauer makes a very valid point. You may think that you are treading water and you don’t need to grow. But if you’ve made decisions based on your current year’s revenue, you will almost certainly have to grow the following year or risk losing profitability or employees.

    Of course, making the decision to grow your business can be scary. It often means taking on new responsibilities such as a paying the salary of a new employee or the rent of an office building. It can also be hard to tell when is the right time to pull the trigger.

    Until now. In this article, we’ll look at some key signs that will tell you when your business is growing, and when it is time to invest in employees, resources or a bigger office.

     

    When Your Policyholders Start to Complain

    Customer service is important in any industry, but it is even more so when it comes to independent insurance agents.

    The 2015 Independent Agent Survey by Accenture found that not only do agents believe their competitive advantage stems from the high quality customer experience that they are able to deliver, but that achieving a better and more consistent customer service is one of their top priorities.

    The last thing a new independent agent wants is complaints about their service, right? Well, not necessarily.

    Don’t just think of complaints as a bad thing, argues Jessica Stillman at Inc. They are also a sign that you’re probably ready to scale up. This is because, according to Lisa Furgison at Bplans, complaints are “a sign that you’re spread too thin. If you’re not able to commit yourself to each and every project, you’ll want to hire an additional employee. Bad word of mouth can damage your reputation and revenue, so you should hire someone soon if this is happening at your business.”
     
    strong headache during work at the office - when to grow

     

    When You Can’t Respond to Quote Requests Quickly or Have to Turn Down New Business

    Complaints may signify that your workforce needs upgrading, but hiring customer service staff may not be the way to go.

    Neil Patel suggests that there are only two reasons for startups to hire employees: to make money for the business or to save money for the business. As a new independent agent, your focus will almost definitely be the former. That’s why you might need hire a salesperson to generate more business. This is particularly true if you are already failing to respond to quotes in a timely fashion.

    It’s also true if you aren’t taking advantage of the many cross-sell opportunities available to independent insurance agents. Cross-selling is something we’ve discussed before, and it should be a key revenue generator for any agent. As Redbird Advisors founder Drew Gurley makes clear, cross-selling life insurance to business owners is pretty much a no-brainer given that your clients already know and trust you. If you can prove the value of another insurance product to your clients, what’s stopping them from buying from you?

    If you’ve been putting off cross-selling to clients because you are “too busy” with your current workload, it’s a sure sign that you’re ready to upgrade your business and hire a salesperson.

     

    When Word-of-Mouth Referrals Are Coming Quickly

    The real trick with hiring staff for your independent agency is to do so just before business starts to swell. One way you can try to predict future sales is through your customer referral rates. If you’re getting referrals, it’s almost always a sign that your business is set to grow.

    Referrals are especially important in the insurance industry. Business coach Patrick Galvin notes that 79 percent of people ask friends or family when shopping for insurance, and 65 percent ask colleagues and acquaintances.

    Yet when referrals are given, they are not given lightly. Neil Petch, chairman of The Vitru Group who writes that although 83 percent of people will claim they are willing to make a referral on the back of a good experience, only 29 percent follow through.

    As a result, referrals are often great signs that it’s time to hire new staff.
     
    open office - when to grow

     

    When Privacy Becomes an Issue

    Coworking spaces can be a great place to start your fledgling insurance business. But you can quickly outgrow them, even if you don’t hire new staff. Why? Because of privacy concerns.

    Jonathan Wasserstrum, CEO and co-founder of SquareFoot, points out that coworking spaces can become a minefield when it comes to confidentiality. This can be particularly troublesome in the insurance industry, where customers are routinely asked for personal information such as their social security numbers and their finances.

    Law firm M&R points out that independent agents, as custodians of non-public personal information, have a legal responsibility to protect this data securely. Coworking spaces, with communal wifi and little in the way of secure storage, don’t just make it difficult to keep private phone conversations private. They also make it difficult to securely store customer data.

    When customer phone calls become frequent, or when agents worry about leaving their laptop or phone unattended in a coworking space, an office upgrade is often the only solution.

     

    When You Stop Focusing on Marketing and Strategy

    This is a huge stumbling block that many new agents face, and it is one that has been made prominent by Michael E. Gerber in The E-Myth. Using Gerber’s language: Rather than having an “entrepreneur’s perspective” of working on their company, agents risk have a “technician’s perspective” that sees them work in the business.

    The reason you have gotten this far with your business as a new agent is because you focused on marketing and strategy in the beginning. It’s gotten you this far, so when you realize that you are no longer focusing on these areas at all, it’s time to upgrade.

    How can you tell? Start by looking at your website, if you have one in the first place. Is it mobile-responsive? Does it have a self-service client portal? Both of these elements are crucial for the ongoing success of insurance agents in the eyes of Sarah Deak.

    What about your social media strategy? Have you neglected Facebook, Twitter and other social networks? Social media is a great way to raise your profile in the community, deliver targeted ads to potential customers and grow your brand.

    And it can also be used to encourage online referrals. We discussed the importance of referrals above, but it is also important to be aware that, as Nathan Labenz points out at Property Casualty 360, many of your referrals will be facilitated online by social media platforms as much as by physical word of mouth. Of course, you can only tap into this source if you have a strong social presence.

    Do you have an agency management systems in place? If not, it’s worth looking to hire employees to handle the day-to-day work so you can put processes in place to help your business grow further. After all, new business will help grow your agency, but its improved operations that bring profitability, says consultant Steve Anderson.

    You might be hesitant to take on more responsibility or invest more money in your company, but if you want your business to grow, you’ll need to take these kind of leaps. By keeping these five indicators in mind, however, you’ll be better placed to act fast, absorb risk and grow your business even faster.

     
    Images by: ammentorp/©123RF Stock Photo, gpointstudio/©123RF Stock Photo, pressmaster/©123RF Stock Photo

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