2001 Best Practices Study

Analysis of Agencies with Revenues Between $2,500,000 and $5,000,000

R EVENUE G ROWTH

“If we are not growing, we can’t pay our people more; we can’t make new investments; we are dead in the water.” “In the past, we always grew a little, but never knew why. When we reached a size that made growth tough because of the diversity of our revenues, this became a central area for us to measure.” “Growth did not seem that important until one year we felt that we could not give meaningful raises and bonuses. Suddenly, everyone was committed to growth.”

Growth in revenues, and the ability to sustain growth over time, is a critical success factor for most businesses. The best agencies in this revenue category are investing in new producers, looking for cross-selling opportunities and improving customer retention. There is also an awareness as to the importance of increasing revenues, and the measurement tools needed in order to understand the source of new revenue. Many firms now measure net growth in a producer’s book of business (instead of new business and renewal business) and measure the pricing changes in the renewal of existing business in order to understand the impact of the firming market on revenues. The firms are having regular meetings with clients to discuss the impact of the market on the customer’s business. Other firm’s are realizing that if the producers with the largest books do not grow their books, meaningful growth for the agency as a whole is that much harder to achieve. As a result, these agencies are looking for ways to free up the most successful producer’s time so that they can continue to pursue new business. T ECHNOLOGY U TILIZATION The use of technology has gone from being an annoyance to being an area that the leading agencies feel is a core competency. The best agencies have invested in training, have screened new employees for automation competency and hold everyone to a higher standard in the use of automation. Abilities that were once only for the servicing staff are now critical for producers to have in order to service their books and to write new business. Producers are expected to have a functional understanding of basic issues on both the agency management system, and the use of third-party software, e-mail and the Internet. These agencies have made hardware costs, software costs and training costs a regular part of their budgeting. Failure to invest wisely in this area is having a dramatic impact in separating the most efficient agencies from the others.

“We make all of our producers take an automation competency test. It is mostly Internet and e-mail centered. These are skills that a producer has to have to compete in our market.” “We live in a new age, and technology is at the center of this age. We plan on staying around so we are trying to make sure we apply the right technologies to the right business strategies.”

82