Video transcript: Drive these 5 Key Growth Levers to Accelerate Your Agency Growth
Interested in doubling your cash flow? How about doubling the value of your agency? While that might seem farther off now during this crisis than ever before, it’s even more important now to focus on proactive growth strategies for your agency. You have a choice to sit back and let the economy and this crisis control you, or you can control your outcomes.
In a previous blog post on agency growth, we looked at an example of how, over a 10-year window, a $10M premium agency could increase their cash flow by $5M and agency valuation by $5M by increasing their compound annual growth rate (CAGR) from 3% to 7%. If that growth rate were to increase to 10% annually, then they’d double both their growth rate and value of their agency.
While that almost sounds too good to be true, I’m here to tell you it’s not. So how is this possible? You’re probably thinking I’m going to tell you to go hire a producer, buy leads, or implement a social media strategy. While none of those are bad ideas, the reality is that they’re not the best ones to start with for most agencies. They are expensive, they typically take a long time to realize any significant ROI, and they often fail.
After 20 years of working with 100+ agency members of all sizes and structures here at Renaissance, we’ve been able to see what works and what doesn’t. We collectively analyze and share best practices with our members. So what have we learned about how can you drive significant growth? Small incremental improvements in what we call the 5 Key Growth Levers can add up to big results.
- Retention is foundational to growth. Insurance renewals are the gift that keeps on giving, as long as you keep your customers. By retaining as much premium year over year as possible, you can significantly contribute to your growth.
- Cross Sell or Account Rounding is improving the number of policies per customer. Adding new lines of coverage is often much easier than bringing on a completely new customer.
- Improving Close Ratio or hit ratio by winning more accounts you are quoting.
- Carrier Optimization is getting paid more by carriers for the same business you are already writing.
- Lead Generation focuses on bringing in more quality leads in to the agency.
Did you notice that 4 of the 5 growth levers focus all on existing customers or opportunity, without ever bringing in a new client?
By increasing each of the growth levers by a small and manageable 5%, it adds up to a total premium growth of 15% for the year. If premium goes up, so does cash flow, and agency valuation.
Now you’re probably thinking to yourself: ‘Leanne, of course these are things I should be focused on with my agency. There’s nothing new here.’ And you’re right. There’s no voodoo, no magic. A consistent focus on generating small improvements in some or all of the five key growth levers can deliver outsized results. But how many times have you thought about implementing these strategies, and ran out of time? Or instead focused on answering the phone or responding to emails instead of proactively working on these initiatives? Our members have access to our team of 80+ employees, including a dedicated Agency Growth Partner, that help them focus proactively on these levers using our Agency Growth Accelerator process. Which is why they grow at double the local and national rate on average.