For years I’ve coined the term, “cross-roads” of an agency. All agencies have cross-roads which is a time when a decision needs to be made.  It’s very important to know when you’ll hit yours next. 

 

Confused?

 

Let me define what the cross-roads of an agency is … 

 

 

The question is, at what point of growth do you want your agency to hit this cross-road? 

 

This point is based upon how many clients and policies your staff are able to handle each.  Another way to look at this could be, how many policies or how much premium per CSR do you want your staff to be able to handle before needing to hire another CSR?  We’re also going to get into profitability issues so stick with me here.

 

 

To explain this concept we need to establish some numbers we can use. For illustrational purposes let’s say you’re 50/50 personal lines and commercial lines (in real life I separate PL & CL) and that your average policy pays 14% commission and the average premium is $4000 per year. This equals an average commission of $560 per average policy. Let’s also say you have 10 CSR’s who spend 100% of their time servicing your customers equaling 400 customer service hours per week.

 

Remember, this is just an example to illustrate this point. You can plug your own numbers into the formula for your agency.

 

The scenario is that your 10 CSR’s are no longer able to handle all of the work for the day causing work to pile up with each day causing the staff to get further and further behind. 

 

 

I’m going to show you how so make sure you read this whole article …

 

As an agency let’s say your total book of business is $5,357,143. That would mean each of the 10 CSR’s would be managing $535,714 each. At a 14% average commission this shows each CSR is managing $75,000 of commissions each. 

 

As a side note, this is your baseline for the amount of policies, premium and commission each CSR as an average can manage (I’d want this broke down by CSR so I knew the baseline per CSR).  It’s these numbers you want to work on and improve upon. You always want to know what each CSR’s baseline is to establish each CSR’s effectiveness and to show you who needs more training.  As these numbers improve so does your profits.  At the end I tighten this down further to help you more effectively analyze your agency, your CSR’s and establish your productivity.

 

 

Let’s say you purchase a new management system and this new management system will allow your CSR’s to now manage up to $100,000 of commissions each. 

 

(You need to understand that every management system has a cap at how many policies a CSR can handle with this example being just an example … I am not referring to any specific one here.  I will say, however, that if an agency management system only allows the CSR to manage $100,000 of commissions, that’s not very good.)

 

So let’s compare the previous baseline with the new baseline and how they affect the agencies cross-road …

 

So what’s happened here is as an agency you’ve increased how long between cross-roads because your CSR’s are now able to manage more business each.  You’ve also help increase the profitability per CSR.

 

With the new baseline you wouldn’t need to bring a new CSR on until you have written another $833,333 of business versus the previously needed $625,000.  Make sense?

 

Another way of looking at this is you’ve increased each CSR’s productivity by $208,000 of premium, or $25,000 of commissions increasing your profit margin by $25,000 per CSR. 

 

I should also point out here that the more profitable an agency is per CSR traditionally the higher the CSR’s are paid so it would behoove the CSR’s to be committed to increased productivity.

 

Teaching your CSR’s to use their current agency management system better.  The better you know your system the faster you’ll be able to find what you’re looking for, do data-entry and handle a task.  However, when it comes to your management system nothing will increase your productivity more than …

Teach your CSR’s workflows with your management system.  Workflows is truly where you maximize productivity in agency. 

However, many systems weren’t designed for this because they’re glorified databases or the creator didn’t understand workflows when the system was designed and built.  It’s not enough to just be able to handle, say, an endorsement.  HOW does the system handle an endorsement?  What are the steps?  How is it automated?

Teach your CSR’s productivity strategies.  This includes strategies that have nothing to do with your agency management system.

Teach your CSR’s how to more efficiently use the other software your agency uses like rating programs, company websites, etc.

Are you using Outlook?  If so, are you using Rules to better manage your inbound and outbound emails?  Rules is a beautiful feature.  I use it very heavily myself!

If you use other programs, can they be integrated together?  For example, MS Word has some amazing mail-merge functionality that may help you increase productivity. 

I’ve helped agencies merge data from their management system and other software programs into a MS Word document.  For continuously used documents we even create templates with the merge fields already on it so all the user has to do is open that template and hit print!  Nice!

Make sure each CSR’s computer is setup for maximum effectiveness.  You can setup the desktop and Internet Explorer to increase productivity. 

I did a video on each of these.  When I find them I’ll edit this article and put a link to them here. 

You’ll be amazed at how much more efficient you can be when you know how to setup your desktop and Internet Explorer properly.  Another very nice strategy.

Make sure you’re using a management system that will allow you to maximize the productivity of your staff.  Nothing will do more to increasing the productivity of your staff than your agency management system.

As I’ve already pointed out, every management system has a cap as to how productive each CSR can be based upon the design of the system, how easy it is to use, workflows, providing the features you need and being single entry.

Are you starting to get the idea? 

Cross-roads and profitability is also why increased productivity was foundational to the Desktop CSR and TIME System.  I very clearly understand how important it is to your profits to increase the productivity and efficiency in your agency, as I hope you can see by what you’re reading here. Like I’ve always said, “Productivity equals profitability!”

 

Having said all of this, be very clear to understand that how productive you are is in direct relationship to the system you’re using.  Nothing affects your productivity more than the automation that you use and your proficiency in using it!

 

With the low-end systems which traditionally have a lot of double entry, a poor workflow and don’t provide the level of functionality to service clients & policies like the more advanced systems, there’s a lower cap of how productive you can be. In other words, your staff won’t be able to service as many clients and policies.  Don’t shoot the messenger here … I’m just telling you the way it is! 

 

And yes, even the more expensive full feature systems have a cap but it’s quite a bit higher than the low end system. With proper training to become proficient on the full-feature system, which may take quite a few months due to how much more complex and harder to use they are, you’ll find you’re able to service more clients and policies than the low-end products.

 

Because our products have been designed from the ground floor up to massively increase your productivity starting by very efficiently handling your day-to-day workload we expect our systems to allow a CSR to handle a much larger book of business and workload than any other system. This is foundational to our systems!

 

Since we’re on the subject of increased profitability, which is a by-product of how productive you are, here’s something else for you to consider … if you think you don’t need an agency management system and think you can run your agency jumping from carrier website to website, you are loosing hundreds of thousands of dollars in profits every year (depending on your size).  I’ve proven this point time and time again with agencies. That’s all I want to say about this at this time.

 

Now you know what an agency “cross-road” is and what a baseline is. Now you need to figure out what yours is for your agency so you know what to improve upon.

 

As a vendor, our first goal is to get your CSR labor hours to $200,000 of commissions per CSR.  How productive and profitable would that make you?

 

Next to owning a management system that offers the ability to massively increase your productivity, training is the next most important thing you can do. However, not always can you get the kind of training you need to increase your productivity.

 

In the area of training, there are two types of trainers and two types of training. Let me explain.

 

For types of training there is …

 

1) Product Knowledge training. This is teaching you “how” to use a specific feature. How to add a note, how to add a client record, how to add a policy, etc. You get the idea.

 

2) Productivity Training. Here you learn “workflow” strategies which is showing you the best steps to processing a task. In addition, it’s teaching other strategies to increase agency productivity. Productivity courses could include automation strategies and non-computer strategies like how a receptionist handles call-in’s.

 

Regarding trainers, there are company trainers and there are consultants. 

 

Earlier I somewhat already addressed consultants versus vendor trainers.  My experience is that the high majority of vendor hired trainers only teach product knowledge. Vendor trainers teach what the vendor tells them to teach with very few having any workflow experience and therefore they aren’t able to teach that. Most vendor trainers simply teach what’s in their own manual and other training courses! (You should be having a “huhmm” moment at this point.) 

 

Pretty consistently agencies are turning to consultants like myself to learn effective workflow strategies and how to more effectively use their management system to increase productivity. 

 

I remember a training workshop I did with a group of agencies with the last system I represented. At this workshop, of the other 20 people, there were 3 CSR’s who had been using the system for 6 years and had no idea why the owner felt they needed to be at this workshop believing they had the system mastered. They had serious reservations about being at the workshop, they bluntly told me when they arrived!

 

At the end of the first day after teach just the “basics” to proper workflows and showing them step by step what a proper workflow process was, all 3 of these CSR’s came up to me and apologized! They were absolutely amazed at how much they didn’t know!  All 3 swore they just increased their productivity by at least 15%, saying what I taught them that day was monumental in their using their management system.

 

The CSR’s also questioned why the training staff at the company didn’t teach this stuff.  

 

Because they’re not consultants who “specialize in productivity and workflow strategies”.  To teach it you must know it and understand it.  Make sense? 

 

Then, you may be wondering, how can someone write an agency management system that’s productivity driven and maximizes workflows if they don’t understand workflows and productivity strategies? 

 

Ding, ding, ding … is the light coming on?

 

This is why I decided to take on the huge task of having an agency management system written… so you’d have a system tailor made to the insurance agency to increase your productivity and thus increase your profitability. THEN, once that’s in place, we’ll bring into your agency the additional elements to really make you shine, grow and prosper! 

 

But it all starts with the foundation of being able to handle your day to day work in the fastest, most productive way possible.  It’s here that big profits are gained or lost!  It’s here where true agency management systems are separated from glorified database programs with ACORD forms in them like the new systems being introduced to the industry these days. There are also quite a few low-end systems that have been out on the market that fit this description.

 

What do you want? What results are you after with your agency management system? What direction is your agency going? 

 

I would think you’d want to be as profitable as possible! 

 

Since I’ve discussed “baselines” and “cross-roads” in this article, if you’re going to actually analyze your own agency I felt I better add this additional information because there’s more to it than what I’ve already shared and I want you to have proper and accurate information. 

 

So here’s the scenario.  You’re getting ready to analyze your agency to establish your baseline so you can more accurately project when or how close your agency is to coming up to a cross-road so you can plan for it.

 

As an added bonus, this information is key to help you analyze the effectiveness of your staff AND automation!

 

As a business, you should break down your labor hours down by customer service, accounting, marketing, sales and administration.  That way you know how much time is spent in each area to help you analyze your agency accurately.

Here’s what you do … if an employee spent his/her full 8 hours of work today doing customer service that would be 8 hours under customer service.  As we discuss this example, you’ll understand why you should do it this way.  If the employee spent 2 hours doing quoting and you consider this a sales task then this CSR would’ve only spent 6 hours doing Customer Service tasks.  Make sense?

A very common way of measuring an agencies productivity is by taking the total commission coming into the agency and dividing it by …

… what to divide it by is controversial.  Some say you should divide it by your total staff while other say you should divide it by the number of CSR’s you have making sure to exclude producers.  The real answer is, what you divide it by is based upon what you’re trying to determine or accomplish with the analysis.

My preference is to divide it by your customer service labor hours.  This is how you determine how productive you are. 

You see, it’s your CSR’s who are servicing your book of business and as a business I want to know what size book of business my CSR’s can manage.  Once I know this  it allows me to make some very important decisions, which is another topic for another day.  For today I want to stay focused on your productivity in relationship to your agency. 

So let’s put some numbers to this (this is an example only).

This time let’s say you have 10 employees and for illustrational purposes you use 240 customer service hours each week to service your clients which is equivalent to 6 CSR’s (240 hours divided by 40 hours per week). 

Then let’s say you’ve got $750,000 of commissions coming into your agency.

We’re now going to take that $750,000 and divide it by 6 CSR’s (240 CSR Hrs divided by the work week of 40 hrs per week) to equal $125,000.  This means each CSR is able to manage $125,000 of commissions each.  If the average commission in your agency is 15%, that’s means each CSR is able to manage $833,333 of volume each. 

Are you following me so far?  This is important stuff.

Your agency management system should be able to tell you most of these figures.  Having said that, I am aware that for many of the systems, getting this information is next to impossible.

Does this make things more clear?

The point in this article is productivity and how to increase it, and being able to predict when your agency will be htting its next cross-road so you can be pro-active.  Along with these core points, I hit on a number of other important points that I hope got you thinking on how to improve the productivity in your agency. 

As I’ve said for years …

Productivity equals Profitability!  And increasing your Productivity starts with being able to quickly and efficiently handle your day-to-day workload.  This is where BIG agency profits are GAINED or LOST!

Future Articles Based Upon This Article …

I will be using the information from this article in an upcoming article covering “Agency Management Systems:  How To Choose Them (Part x)”  where I’ll discuss these elements in comparison to your agency management system.  In this upcoming article I’ll illustrate from a financial point of view the end financial results to an agency that’s considering switching systems thinking they’re paying too much money in support fees.  You’ll definately want to read this article because you’ll find it very enlightening!

In addition, because cross-roads and agency productivity affect the small agency far more than mid-sized and larger agency’s due to their much smaller profit margins and a few other elements, small agencies need to be able to put in place cost effective productive strategies so they can grow, which I’ll also address in a future article.

I know, I know … I’m getting a lot of emails thanking me for these educational articles, but they want more information.  Like I said in the first article I did on choosing agency management systems (part 1), this is a monstrous topic that should really be handled in a book, not via articles or blogs because there’s so much too it and so many elements to consider and so many variables that change the results/outcome. 

This is why agencies hired me to help them choose the right system for their agency … because there is so much to it and because I know it all so intimately!

Unfortunately I don’t have the time to write a book.  Therefore you’ll have to settle for my articles in this blog.  Eventually I’ll have it all out and in print so you can read each of the articles to learn about productivity strategies and your agency, how to effectively analyze and compare management systems and much more.

I love this industry, and love helping agency’s prosper and grow.  I hope you found this article on productivity helpful to your agency.

Remember, at our home page for our agency management systems you’ll find product information.