The Eight Steps to Building a Profitable Agency

Having a proven roadmap to follow in building a private enterprise is a coveted possession. In the late 1950’s when franchising had its more contemporary birth, the idea of starting a systemized business where the processes where known and the look and feel of the operation was well defined was manna from heaven.

McDonalds put this concept on the map providing its franchisees with a well define template to follow. Some organizations perfected their systems and others did not. Those that did grew and those that did not experienced lack luster success. If you need a home town Inland Empire example, do some research on the local chain of fast food restaurants called Bakers. Bakers started the same time McDonalds did, but did they experience the rocket success of Ray Kroc? No! And there were good reasons…

The heart of their problem was in their basic business building recipe. It simply did not create the kind of synergy that McDonalds did. You see, everyone wants a sure thing or at least a deck stacked in their favor so as to believe that attractive results will follow a predictable are worked plan. That's what McDonalds had and the rest is history! By the way, reading about both of these stories is facinating!

Over many years I have observed that there are some very fundamental building blocks that contribute to the development of a profitable business. I have seen this recipe play out time and time again across many industries, especially in personal service corps. Since the mid 1980's I have seen this phenomenon in action. For simplicity, I have narrowed these success building blocks into eight simple steps. You'd be wrong to think this is conjecture or theory! This success recipe also provides a long-term business building framework for the general insurance industry and even better for the growing multi-line agency owner.

The building blocks provide new Reserve Agents as well as established “growth minded” full-time agents a helpful checklist to manage their agencies. It provides a template to determine if a particular advisor is on track or not. As I have observed and coached agents over the years, I have found these steps to be most critical for success. Trust these steps; they have been historically proven as a foundation for success in many business environments. Miss any step and over time you will rob your business of the energy and power it needs to be a growing enterprise. Oh, you may not see the erosion immediately, but the seeds have been planted and you will pay the price.

Here is my time tested recipe of business building steps. Read on for a more detailed discussion of each building block:

1. Personal Use - Become an all Farmers house.

2. Attitude: Personal Growth - Books/Tapes/CD’s - Focus on personal development by reading 10-15 minutes each day from an inspiring source. Listen to an inspiring tape or CD each day. Participate in continuing education.

3. Functions - Attend all District, Division and Farmers events.

4. Association - Associate with winners both in and out of the business.

5. Constant Coaching - Counsel with District Manager for growth!

6. Execute a Consistent & Effective Marketing Plan
· Develop a continuous flow of leads
· Maintain 5 active, well defined marketing strategies
· Plan your work and work your plan

7. Generate New Business Commissions - During the first 3-5 years of operation, solidify 500 (2 p/wk) clients (a household with 3 or more lines of Farmers business) with whom the agency earns $500 - $1,000 in commissions per year. You and your team should be generating the following sales on a monthly basis:
· Selling 30+ property & casualty policies per month
· Selling 5+ life policies per month
· Set-up 5+ FFS accounts per month

8. Account Retention - Maintain an on-going pool of satisfied, loyal clients. Achieve a product density factor of 3.0 and maintain profitability in all lines.

A narrative of each of the Eight Steps is as follows:

Step 1: Personal Use - Advisors must become an all Farmers house. They must use their own products. They should be insured and protected by Farmers. Advisors can’t sell something they don’t believe enough in to own themselves. If an advisor has the need for a particular product that Farmers offers, then advisors should embrace it! To not do so is to kill one’s own attitude. This philosophy builds personal belief in one’s own business. You can’t sell a Chevy while driving a Ford! To skip this step is to tear away at the fragile belief that is at the core of one’s independent enterprise.

Step 2: Attitude: Personal Growth – Books/Tapes/CD’s - Advisors must understand one element truth, “One cannot succeed beyond the level of one’s own self-image!” Advisors must incorporate a habit of life long personal development. Listening to success oriented tapes and CD’s helps develop a strong self-image. A great man once said, “You will become a sum total of the books you read and the people you associate with”. Without question, “Readers are Leaders and Leaders are Readers”. Advisors are encouraged to read from success oriented books. A monthly recommended book program will be developed to provide advisors access to great reading materials. The “Power of the Mastermind” explained by Glenn Bland in his book, “Success the Glenn Bland Method” is alive and well in District 34.

Step 3: Functions - Advisors must make attendance at District, Division and Farmers events a priority. No matter what these functions might be, active attendance and involvement is essential for success. In many respects, the template for success is found, taught, modeled, and reinforced at these meetings. Missing these events will cause an advisor to lose valuable time in the building of his/her enterprise.

Step 4: Association - Since people tend to become like the people they hang around, associating with positive, “on the grow” people is a known success principle. Advisors are encouraged to seek out people who are experiencing the success they would like. In his book entitled, “Unlimited Power”, Tony Robbins said, “Find someone who has what you want and then model what they do”. Modeling is a powerful concept. In the Farmers family, those individuals to “model” can be found by attending the various achievement clubs and incentive trips throughout the fiscal year. Advisors are encouraged to associate with these and other winners in the District and Division!

Step 5: Constant Coaching - As an advisor builds his/her business he/she will need to take corrective action to sustain growth. Before making significant changes, advisors are encouraged to counsel with a business coach, meaning with their District Manager, to review agency plans and objectives. These changes might include office relocation, staff hiring or firing, budgetary concerns, reviewing an annual business plan and/or possibly discussing the need to make a significant shift in product line focus. These opportunities are a great time for the advisor to establish a relationship of accountability. Division Specialists might also be considered as individuals to seek product line knowledge and expertise.

Step 6: Execute a Consistent & Effective Marketing Plan - Developing a continuous flow of leads is essential for success. Agencies begin to slow, when they stop this critical business building step. If raw materials are not loaded onto the beginning of an assembly line, a finished product will never result. Agents must have an effective marketing game plan sufficient to produce the leads necessary to reach the desired production results. It is essential to maintain a minimum of 5 active, well-defined and executed marketing strategies. The old adage of “Plan your work and work your plan” is time-tested sage advice.

Step 7: Generate New Business Commissions All of the other steps can be performed with exactness, but without understanding the power of the Sales Pipeline, an agency will not generate the capital it needs to survive. A profitable advisor is a happy advisor. Master the following basic steps of the Consultative Selling Approach:
- Get to Know Your Client w/ F.O.R.E.
- Sell the Appointment
- Establish Rapport
- Understand the Prospect
- Align Product Benefits with Product Needs
- The Prospect Asks to Buy!

Become a master at this process and you will mitigate financial woes the rest of your life. During the first 3-5 years of operation, advisors should solidify 500 clients (2 p/wk) with whom the agency earns $500 - $1,000 in commissions per year. By executing the principles in this step, advisors will run to Agent Vision which is a $283,000 gross revenue target in 5 years. In addition, they will achieve many company sponsored achievement clubs and awards. Accomplish this longer-term target by developing a team that consistently generates the following volume:
· Selling 30+ property & casualty policies per month
· Selling 5+ life policies per month
· Set-up 5+ FFS accounts per month

Step 8: Account Retention - Maintain an on-going pool of satisfied, loyal clients. It doesn’t make any sense to load clients in one end of the agency only to watch them go out the other. To maintain a satisfied pool of loyal clients, advisors must hallmark the importance of relationships and “needs based” selling. A product density factor of 3.0 should be pursued as well as maintaining an “all lines” profit. Agencies should routinely provide a “high touch” environment for their clients. This is done in part by implementing some of the following strategies:
· Having Auto, Fire, Life in Every Household
· Farmers Friendly Review
· Client Referrals
· Outstanding Service
· Follow-up at Renewal
· Send Articles & Publications
· Seminars
· Thank-you Notes
· Regular Mailing Program
· “Friendly Review” Quarterly Publication
· Become a Reference Source
· Customer Satisfaction Survey


Eight Steps Summary

It is no wonder that four of the Eight Steps address the “agent’s attitude and personal development” and the remaining four address the “physical process of building an agency”. This power of this is shown below:

Personal Focus:
· Personal Growth - Books/Tapes
· Association With Winners
· Constant Coaching
· Attend District, Division & Farmers Events

Business Focus:
· Personal Use
· Execute a Consistent Marketing Plan
· Generate New Business Commissions
· Account Retention

Don’t discount the power of this business building recipe. It has weathered the test of time. Its daily application is life changing! Focus on these simple steps and you will build long-term wealth. Miss any of them consistently and you will lament the results.

Make it a great day!